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Investing.com – Bitcoin has finally managed to break free from the losses from the collapse of FTX, which sent the price down to its lowest level of $15,501 on November 11.
While on Friday, the day’s closing price of $19,927 already led to a test of the psychological mark of $20,000, the resistance of the psychological mark of $21,000 was tested already on Saturday. After a correction on Sunday, a new intermediate high could be formed today at 21,414 dollars.
With a value of 45, the Bitcoin Fear and Gread Index is about to move into the neutral zone, reflecting the positive market sentiment. On Sunday, the sentiment index reached this important zone by reaching a value of 52, its highest level since the beginning of April last year.
The very experienced trader Peter Brandt sees on the weekly and monthly charts that an inverted head-shoulder formation seems to be forming. He expects a near-term rise towards $25,000, hence a downward correction and a retest of the neckline for the chart formation he foresees. This neck line would be at $18,387 if the reverse head and shoulders formation he talks about actually occurs.
Looking further ahead, Brandt expects bitcoin to hit $50,000 again this year on its way to a new all-time high, before breaking the magic $100,000 mark in 2024. Brandt, who said repeatedly in his previous forecast that a floor would form no later than $13,000, no longer thinks we will actually see that level.
As Bloomberg reports, bitcoin is already up over 28% in January. This is the best start to the year so far. BTC was only able to beat this result in January 2020, when it was up 31 percent before the pandemic began.
The rise in risky assets, such as cryptocurrencies, seems to be linked to the market pricing in the end of the Fed’s tight monetary policy. Although the US central bank has been saying lately that interest rates will stay high for an extended period, investors seem to have a different view. They assume that the central bank will also be forced to change its mind on this point if a recession looms in the economy.
A correction in monetary policy stance is not new to the market, as for a long time Fed Chairman Powell and much of the FOMC members believed that the rise in inflation was only temporary.
It was only when this argument no longer held up that the monetary tightening cycle was triggered, causing cryptocurrencies to quickly pull back from their all-time highs.
John Reed Stark, former SEC employee, on the contrary, believes that the recent rise in the price of bitcoin is due to the fact that the market is manipulated.
It is based on an analysis by Forbes which reveals that 51% of the daily trading volume on the 157 exchanges studied is not real.
Bitcoin: technical benchmarks
Bitcoin is currently recording a gain of 0.77% with a BTC/USD price of $20,781, while the weekly gain stands at 22.73%.
The cryptocurrency hit a fresh mid high at $21,414 today, from where a downward correction occurred under pressure from overbought conditions (RSI at 85). The 23.6% fibo retracement offers support at $20,018, bolstered by the psychological level at $20,000.
A daily close below this level would favor an extension of the downside correction towards the 38.2% Fibo retracement at $19,155. As long as the 200-day MA at $19,524 is not permanently crossed, the medium-term outlook remains positive.
If the mid-high of $21,414 can be breached, focus will shift to the 123.6% Fibo expansion at $22,809, after the psychological mark of $22,000 has been breached.
By Marco Oehrl