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Here’s Why The Bitcoin Price Rally Stalled For Now

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Here’s Why The Bitcoin Price Rally Stalled For Now

The Bitcoin price rally has stalled for five days now. After BTC experienced a furious surge from $21,000 to $23,000 last Friday, the price is now in a consolidation phase. The reasons for this are diverse.

As NewsBTC reported, Bitcoin’s Relative Strength Index (RSI) on a daily basis is showing severe overheating. The technical indicator reveals that the BTC price is in heavily oversold conditions.

During the recent upward movement, the daily RSI was near 90 at times but has since cooled to 78 at press time. The stalling of the BTC price at $23,000 could therefore signal a healthy consolidation and a reset before a new price rally could be on the cards.

Another key factor for the Bitcoin price in recent weeks has been its correlation with the U.S. Dollar Index (DXY) and the S&P 500. Generally speaking, a weakening dollar is bullish for risk assets like Bitcoin and the S&P 500.

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However, the weekly chart of the DXY reveals that the dollar index is still holding above its weekly support at 101, which experts consider an extremely crucial support level.

If the DXY breaks below this mark, things would be extremely bullish for the Bitcoin price. However, due to the still-standing support, the euphoria among risk investors may have also come to a halt for the moment.

DXY still holding support, 1-week chart | Source: DXY on TradingView.com

FOMC Meeting Will Be Decisive For Bitcoin Price

The next FOMC meeting of the U.S. central bank will take place in just one week, on February 1, and will probably set the course for another bull or bear trend.

According to the CME FedWatch tool, 98.2% currently assume that the Fed will further reduce its rate hike pace and raise only 25 basis points. But statements from Fed Chairman Jerome Powell will also be crucial.

Thomas Lee of Fundstrat Global Advisors assesses that inflation has “literally hit the wall” since October and that core inflation is not “sticky,” contrary to the Fed’s initial expectations. According to Lee, the bearish sentiment in the stock market in December was triggered by an “unforced error” by the Fed and led to the FOMC saying inflation was hotter in December.

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As a result, Fundstrat expects the FOMC to make a “course correction” in February, meaning financial conditions will loosen and the VIX will fall, which in turn will drive risk assets higher.

However, Lance Roberts, chief strategist at RIA Advisors, warns that the Fed doesn’t like the current rally in financial markets and will therefore take appropriate action.

The Fed really isn’t going to like the bulls running markets up and easing financial conditions this much. Don’t be surprised if Powell smacks the market again at the upcoming FOMC meeting.

On the other hand, Fed Governor Chris Waller recently came out in favor of a 25 basis point rate hike at the next FOMC meeting, thus solidifying expectations for the February FOMC meeting, as reported by Nick Timiraos of the Wall Street Journal aka the “Fed’s mouthpiece.”

As the chief economics correspondent wrote via Twitter, Waller made it clear that the Fed would not make a risk management mistake similar to the one it made in 2021 when it stuck to its forecast for persistent disinflation. Waller said, “this is different from 2021 because it’s easier for the Fed to cut if it’s wrong.”

“In other words, Waller sees the risk of having overtightened because inflation comes down quickly as a first-class problem,” Timiraos said.

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For Bitcoin’s price, the indication of an upcoming pivot and a 25 basis point hike would be a powerful reason for a new rally. At press time, the BTC price stood at $22,622.

Bitcoin price still consolidating, 1-day chart | Source: BTCUSD on TradingView.com

Featured image from iStock, Chart from TradingView.com

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24 hours

Bitcoin Rise In First Month Of 2023 Moves Crypto Fear Index From ‘Extreme Fear’ To ‘Greed’

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Bitcoin Rise In First Month Of 2023 Moves Crypto Fear Index From ‘Extreme Fear’ To ‘Greed’

Last month, statistics showed that the Crypto Fear and Greed Index (CFGI) had a score of 25, indicating “extreme fear.” Thirty days later, with a 39% increase in bitcoin prices against the U.S. dollar, the current CFGI score on Jan. 30, 2023, is 61, reflecting “greed.”

Crypto Fear Index Jumps to ‘Greed,’ Etoro Market Analyst Attributes Bitcoin’s Rise to Shift in Investor Expectations

Records show bitcoin (BTC) saw significant value growth in the first month of 2023, with a 39% increase against the U.S. dollar. On Jan. 29, 2023, BTC reached a 30-day high of $23,954 per unit, with prices ranging from that value to a low of $22,988 over the past 24 hours. This rise has significantly raised the Crypto Fear and Greed Index (CFGI) hosted on alternative.me, moving it from the “extreme fear” zone to the “greed” range in the course of the month.

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Last week, CFGI records showed a score of around 50, indicating “neutral,” according to alternative.me. Seven days later, the CFGI score rose to 61, meaning “greed.” The website states that when crypto investors become too greedy, it signals the market is due for a correction. The CFGI score has remained above the neutral range of 50 since Jan. 23, 2023, after spending a significant amount of time below 45 prior to Jan. 14, 2023. On Monday, bitcoin (BTC) prices saw weakness against the U.S. dollar as traders took profits.

Crypto Fear and Greed Index (CFGI) chart on Jan. 30, 2023.

In a note sent to Bitcoin.com News, Etoro’s market analyst, Simon Peters, attributed the halt in crypto price declines to a change in investor expectations regarding inflation and interest rate hikes from the Federal Reserve. Peters also noted that financial institution Goldman Sachs “published a positive note on Bitcoin,” citing a market performance sheet that was recently published, which shows Bitcoin outperforming all other major asset classes, including gold, real estate, and emerging markets.

“Bitcoin has performed extremely well so far in 2023, rising nearly 43% since 1 January on the eToro platform. From its lowest point in the past year – $15,523 – reached on 9 November, it’s up just over 50%,” Peters wrote. “With inflation and interest rate expectations now turning, most asset classes have halted the declines witnessed in 2022 as investors begin to think ‘where next’ for their portfolios beyond the 2022 rate hike crash,” the Etoro market analyst added.

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24 hours, 30-day high, 39% increase, above 50, alternative.me, Analysis, Bitcoin, Bitcoin (BTC), Bitcoin markets, BTC, BTC Market Sentiment, CFGI, CFGI ranking score, Correction, Crypto, Crypto Fear, Crypto Fear and Greed Index, crypto market update, Crypto markets, data, Emerging Markets, eToro, extreme fear, Fear, Federal Reserve, Goldman Sachs, Greed, Greedy, inflation, interest rate expectations, interest rate hikes, Jan 14 2023, market analyst, Market Interest, market sentiment, Markets, neutral, Portfolio, positive note, Price, Score, Simon Peters, U.S. dollar, Value Growth

What do you think is driving the increase in bitcoin prices and the shift in the Crypto Fear and Greed Index towards ‘greed’? Share your thoughts in the comments below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Bitcoin

Can February see Bitcoin [BTC] do a January? The odds are…

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Can February see Bitcoin [BTC] do a January? The odds are…

  • Bitcoin’s MVRV ratio and NUPL have not yet hit a strong accumulation zone
  • The coin’s UTXO may need to break out of its resistance to sustain January’s momentum while U.S interest rates could also affect BTC’s demand

Bitcoin’s [BTC] 43% hike in January surely brought rays of hope to investors dampened by 2022’s market display. In fact, it was one of the best first month performances of the coin in about ten years. However, on-chain data revealed that enthusiasts looking to accumulate more of the king coin might not find it challenging to pick out a guaranteed buying opportunity in February. 


Read Bitcoin’s [BTC] Price Prediction 2023-2024


Playing second fiddle in the second month?

According to On-chain Edge, a pseudonymous CryptoQuant analyst, expecting a replica of BTC’s performance in February could be a stretch. The analyst’s viewpoint was based on the Market Value to Realized Value (MVRV) ratio.

The MVRV ratio displays possible buying prospects due to the market capitalization and realized capitalization trend. However, On-chain Edge pointed out that the MVRV ratio was 1.16, at the time he published. Since it was not below a value of 1, the prevailing BTC position might be considered shaky as one to potentially make significant gains.

Source: CryptoQuant

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Besides the MVRV ratio condition, the analyst also focused on the state of the Net Unrealized Profit/Loss (NUPL). This metric is laser-focused on the market cap and realized cap difference. Hence, also revealing whether the Bitcoin network is in profit or loss. The analyst noted,

“​​The increase in unrealized profits over the last few weeks has led to a dramatic rise in the NUPL value, which is currently at 0.14, higher than before the FTX crash.”

While this could be considered a move in the positive direction, there is also a resistance that could draw back the NUPL’s improvement. 

At press time, the NUPL’s 0.14 value meant buying at the current BTC price remains risky. Meanwhile, a consistent increase would mean difficulty in re-entering an excellent buying zone. The analyst then concluded that investors could either wait on the next buying chance or hope for a significant breakout.

Source: CryptoQuant

January’s momentum could stay alive if…

While the data mentioned above means that a price reversal could be on the cards, bullish possibilities are also not down and out. Yonsei_dent, who dropped his two cents on the matter, was at the forefront of this opinion. 

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According to him, the six to twelve months Unspent Transaction Output (UTXO) Age bands could have a say in the coin’s trend.

Source: CryptoQuant

Yonsei_dent used the 2021 bull market and early 2022 bear condition as an illustration. The analyst mentioned that it is necessary to consider the UTXO due to its influence on BTC’s support and resistance. He wrote, 

“If the market price reaches the Realized Price (6m~12m), that level can act as a resistance zone. If it breaks out clearly at that level, it will build momentum into the bull market.”

Moreover, the release of the interest rates by the U.S Federal reserves could also impact BTC’s February trajectory. In fact, according to CME Group, there is a high chance of the Fed raising interest rates. This, in turn, could cut down investors’ palate concerning Bitcoin demand.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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Analysis

Bitcoin, Ethereum Technical Analysis: BTC Nears $24,000 Following Weekend Rally

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Bitcoin, Ethereum Technical Analysis: BTC Nears $24,000 Following Weekend Rally

Bitcoin started the week trading near a five-month high, as prices consolidated the weekend’s gains. Prices rose close to $24,000 on Sunday, following a breakout of a key resistance level. Ethereum fell back below $1,600 on Monday, after moving to a one-week high during yesterday’s session.

Bitcoin

Bitcoin (BTC) remained near a five-month high on Monday, following a strong rally towards $24,000 over the weekend.

Following a high of $23,919.89 on Sunday, BTC/USD fell to a low of $23,166.83 to start the week.

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Sunday’s surge saw BTC bulls push prices to their strongest point since August 26, however these same traders have already begun to retreat.

BTC/USD – Daily Chart

Looking at the chart, the decline commenced following a failed breakout of a ceiling at 85.00 on the 14-day relative strength index (RSI).

As of writing, the index is now tracking at 72.19, with a floor at 65.00 the only current visible target for bears.

Should this zone be hit, it is highly likely that BTC will be trading close to a support point at $22,500.

Ethereum

Ethereum (ETH) also edged lower to start the week, as sentiment shifted following a breakout of the $1,600 level

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ETH/USD slipped to a bottom of $1,582.18 earlier in the day, as bulls were unable to sustain Sunday’s high at $1,653.73.

Yesterday’s peak saw the world’s second largest cryptocurrency climb to its strongest point in one week, however traders used this as an ideal moment to secure recent gains.

ETH/USD – Daily Chart

The move saw ethereum marginally break out above a ceiling at $1,650, however bearish sentiment around this mark has reigned supreme over the last three months.

A breakout below a floor of 60.00 on the RSI also contributed to the decline, with the index now tracking at 58.40.

In the event today’s decline continues in the coming days, it is possible that ETH could be heading towards a floor at $1,550.

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Will sentiment in cryptocurrencies be bullish or bearish this week? Leave your thoughts in the comments below.

Eliman Dambell

Eliman brings an eclectic point of view to market analysis. He was previously a brokerage director and online trading educator. Currently, he acts as a commentator across various asset classes, including Crypto, Stocks and FX, whilst also a startup founder.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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