From | Cointelegraph, Author | Kyle White, Translated by | PANews
Perhaps because the just-released U.S. Consumer Price Index (CPI) received relatively positive market feedback, on January 14, Bitcoin hit an annual high of $21,095.18, erasing all losses since the FTX crash. The entire market also rebounded strongly and witnessed an increase in bullish momentum.
For the crypto industry that has experienced a long bear market, this short-term rise is undoubtedly a shot in the arm, but where Bitcoin will go next is still worth paying attention to.
Is the Bitcoin Bear Market Over?
Compared to last week, Bitcoin's recent performance has indeed improved significantly, but technically the market is still in a bear market. Fortunately, investor sentiment is improving. According to the Fear and Greed Index (a cryptocurrency-specific indicator that measures market sentiment using five weighted indicator sources), investor bullishness on the market has hit a monthly high.
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The fact that Bitcoin price has now moved above the psychological $21,000 level is significant, and many analysts and traders have expressed their views on where Bitcoin price is headed next. Let’s explore some of the key takeaways.
Despite price rebound, Bitcoin trading volume remains a concern
Bitcoin prices have not yet fully recovered to pre-FTX bankruptcy levels, but reached $21,095, the highest level since November 8, 2022. Despite the recent strong gains, some analysts believe that Bitcoin prices must be able to further consolidate the $21,000 support level in order to maintain a bullish trend.
Blockchain data research company Glassnode analyzed: "Starting from January 1, 2023, a new round of bullish momentum is pushing Bitcoin to the $18,600-$18,900 level. However, the market needs to break through $19,000 to obtain a new trading channel around $19,000-$21,000. As Bitcoin faces a medium-term downward trend, it is expected that breaking through these levels will encounter certain resistance. If the price of Bitcoin fails to break through the trend line, it is expected to retreat to the $16,000-17,000 area."
Above: Comparison of Bitcoin price and transaction volume, source: Glassnode
In fact, the data shows that there is a lack of Bitcoin trading volume around $18,000, which indicates that the current on-chain and centralized exchange (CEX) activities are still relatively weak, and the range of more frequent trading volume and overall activity is basically still at the $16,000 level, which means that "$16,000" may be a relatively more solid price bottom (at least compared to the current price level). Due to the low on-chain volume around the level above $21,000, Bitcoin's rise may be limited to $21,095.
Will this rise be a “flash in the pan”?
Currently, Bitcoin still faces some unfavorable market factors, such as:
1. Macroeconomic tightening has led to large-scale layoffs in exchanges and crypto companies. 2. Legal issues facing Gemini, Genesis, and DCG. 3. The U.S. House of Representatives may set up a cryptocurrency subcommittee to strengthen supervision.
In addition, the Bitcoin Relative Strength Index (RSI) currently shows that BTC is in an overbought state and is at its highest level in nearly two years, close to February 8, 2021. According to the indicator data, as the price corrects, a sharp downward trend may form. Above: Bitcoin Relative Strength Index, Source: TradingView
On the other hand, the macro market is also in a state of "resistance". For example, the US dollar index (DXY) is currently at a key support level, which means that if the index rebounds, risk assets such as Bitcoin may start to sell off. In addition, Bitcoin still has a considerable degree of correlation with US stocks, and the SPX mini futures index also shows signs of a pullback. Crypto analysis KOL TraderSZ explained on social media that Bitcoin still faces huge resistance, while ETH is in the middle range in the macro sense. If it follows the law of pullback, there may be a market pullback later, and BTC may find it difficult to reach higher levels.
Historical analysis shows Bitcoin could be heading for a new bottom
Bitcoin is currently below its 200-week moving average. According to independent market analyst Rekt Capital, based on past data, the price of Bitcoin may have hit a macro bottom. The "death cross" level shows that the bottom of Bitcoin is approximately in the range of $19,700-23,500 (green bar range in the figure below), but it may also be as low as $15,500.
While traders and technical analysis cannot accurately predict how long a bull or bear market may last, we can make further assessments from historical data.
Independent market analyst Horn Hairs cited historical Bitcoin data since 2015 to estimate how long it would take for the crypto market to hit a new all-time high.
2015-2017 bull market: 1064 days 2017-2018 bear market: 364 days 2018-2021 bull market: 1064 days 2021-*current* market low: 364 days
From the above data, we can see that the bull run from 2015 to 2017 lasted 1,064 days, which coincides with the bull run from 2018 to 2021, which lasted the same number of days. If we match the bear market from 2017 to 2018 to the current market low after 2021, we will find that Bitcoin still needs 1,001 days to reach a new all-time high. Frankly speaking, every time the crypto market soars and plummets, there will be analysts and traders predicting future trends, but it turns out that many technical analysts' judgments are not accurate. Based on the current market situation and the current price breakthrough strength, whether Bitcoin will eventually return to a bull market remains unknown. For traders who want to avoid risks, they may need to continue to pay attention to market indicators.
