Bitcoin has risen for nearly a record number of days in a row. What else can we expect from this week?
The start of 2023 brought many cryptocurrency enthusiasts a distinct relief after months of falling prices for BTC and other coins, as well as record low volatility, that is, relative price stability. As a result, the major cryptocurrency managed to break above $21,000, but some experts are still pessimistic about the local rally. Let’s look at a few key factors that will have a big impact on Bitcoin this week.
As a reminder, analysts paid attention to how confidently Bitcoin was increasing in price the day before. It turned out that the current situation is second only to that of November 2013. That means a record is not long away.
Bitcoin records for the number of consecutive days of growth
The cryptocurrency continues to consolidate
Prior to Bitcoin’s local rise last week, there was a tentative consensus among analysts that the cryptocurrency’s price was predicted to fall all the way down to the $12,000 level. The plunge did not happen, but some experts are still waiting for a collapse to the aforementioned point.
Bitcoin exchange rate on the 1-hour chart
Here’s what a digital asset enthusiast under the nickname Material Indicators tweeted about it.
Another wall of $11 million worth of Bitcoin bids, which should protect the 2017 bullrun high. If we manage to hold above that level, there is a chance of a continued rally. But I think we need to hold at least above the 21-week moving average for the local trend to continue.
That is, the expert makes it clear that there are plenty of people willing to buy digital assets right now. Actually, their orders to buy cryptocurrencies at a certain price create the above-mentioned walls.
21-week moving average on the Bitcoin chart
The aforementioned line is now around $18,600. Another trader under the nickname Stockmoney Lizards posted the following chart and stated that the main cryptocurrency is likely to consolidate around the level he marked for a while longer.
Local resistance on Bitcoin chart
In any case, the longer Bitcoin can stay above $20,000, the stronger this level will become as support. A prolonged consolidation around it would open the way for growth to the next resistance levels, if the macroeconomic indicators are conducive to that.
What is going on in the stock market?
On January 18, the new producer price index (PPI) data will be published. This will take place amidst various speeches by US Federal Reserve officials. Meanwhile, the value of most US equities will fluctuate depending on this week’s earnings reports from major companies.
Earlier Bank of America analysts said that the S&P 500 index became especially sensitive to earnings reports, and their impact became even more significant than the Consumer Price Index. Here’s a quote from the bankers.
We believe this is a shift in market sentiment towards the Fed, inflation and the reporting season. Reaction to the release of the reports is increasing, while news about inflation and the increase in the base lending rate is losing ground.
Bitcoin exchange rate and the US Federal Reserve’s base lending rate hike
According to Cointelegraph’s sources, the next Federal Open Market Committee (FOMC) meeting will take place on February 1. At this event, among other things, a decision will be made on the next round of increases in the US base lending rate.
The last time it was raised was on 19 December 2022, with an increase of 50 basis points. Prior to that, the rate had been increased several times in a row by 75 basis points, so the current change is positive. By the way, at the next meeting there is also a chance of a rate hike of 25 basis points, which would surely be positive for digital asset holders.
Predicted value of a US Federal Reserve rate hike
Indeed, a rate hike is likely to be smaller than any other change since early 2022. According to CME Group's FedWatch Tool, market sentiment leans in favour of a 25 basis points or 0.25 per cent increase. This is relatively good news for the markets - a less aggressive rate hike is sure to provide more positivity for investors and an incentive to invest at the same time.
The difficulty of mining Bitcoin at its peak
The rapid rise in Bitcoin’s price the day before had a significant impact on the cryptocurrency’s fundamentals. As a result, the mining complexity of the major cryptocurrency jumped by 10 percent at once yesterday, the biggest increase since October 2022.
Bitcoin network complexity and hash rate
The current complexity is 37.59 T – which is the historical high of the index. Accordingly, the first cryptocurrency’s mining equipment is now bringing in more BTC than ever before.
At the same time, Bitcoin miners can breathe a sigh of relief: BTC is up significantly, which means that their business profitability is also up. This gives hope that miners will start to accumulate more bitcoins in their reserves again. This creates another incentive for cryptocurrency growth in the market.
The cryptocurrency market looks more positive now than at any time since the collapse of the FTX cryptocurrency exchange. We can only hope that the coin industry doesn't face another ecosystem collapse or cryptocurrency company bankruptcy in the near future, which will spoil what is happening. The only thing left for the most confident in the cryptocurrency niche is to keep accumulating their own positions.
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