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Bitcoin price rally over $21K prompts analysts to explore where BTC price might go next

January 15, 2023No Comments

After Bitcoin (BTC) hit a yearly high of $21,095 on January 13, where is it headed now?

Bitcoin is currently witness a pick-up in bullish momentum after the positively perceived Consumer Price Index (CPI) report was followed by a strong rally across the crypto market.

Bitcoin's recent rally is creating higher volume levels and more social engagement about whether the price is in a break fakeout mode.

Is the Bitcoin bear market over?

While the market is still technically in a bear market compared to last week, investor sentiment is improving. According to the Fear and Greed Index, a crypto-specific metric that measures sentiment using five weighted sources, investor sentiment about the market hit a monthly high.

Bitcoin Fear and Greed Index. Source: alternative.me

The Bitcoin price is now above the psychologically important $21,000 level and many analysts and traders are issuing their thoughts on where the BTC price might go next.

Let's explore some of these perspectives.

Bitcoin trade volumes remain a concern

The Bitcoin price has yet to recover from its pre-FTX levels, but it broke above $21,095 on January 13 for the first time since November 8, 2022. Despite the strength of the recent rally, some analysts believe that the BTC price must remain above $21,000 support before the current uptrend can be sustained.

According to Glassnode's analysis:

โ€œA renewed uptrend that started on Jan 1st took Bitcoin to the $18.6-$18.9k level, however a cross to $19k is necessary to claim a new trading channel around $19-$21k. Resistance is expected around these levels as bitcoin faces a medium-term downtrend. If the price fails to break above the trend line, we expect a pullback towards the $16-$17k area."

BTC price compared to volume. Source: Glassnode

The lack of trading volume around $18,000 shows the weakness in the current chain and centralized exchange (CEX) activity. The largest volumes and general activity appears to be around the $16,000 level, which suggests that it is a stronger floor than the current price range. With less volume around levels above $21,000, Bitcoin's rally could be capped at $21,095.

Is it just a bear market rally?

Bitcoin still faces headwinds, including massive currency layoffs in an increasingly narrow macroeconomy, Gemini and Genesis legal issues and the possible establishment of a US House of Representatives. crypto-focused subcommittee.

Also, Bitcoin's Relative Strength Index (RSI) currently shows that BTC is overbought. Based on RSI analysis, a strong downtrend may form as the price corrects.

Bitcoin RSI. Source: TradingView

The macro markets are also at important resistance levels. The US Dollar Index (DXY) is at key support, which means that risky assets like Bitcoin may start to see a sell-off if the index recovers. Bitcoin remains correlated with stocks and the SPX mini futures index is also showing signs of reversal.

TraderSZ explains below:

Since Bitcoin investors are taking profits as suggested by TraderSZ, it may be difficult for BTC to reach higher levels.

Historical Analysis Points to a New Bitcoin Bottom

Bitcoin is currently below its 200-week moving average, and according to independent market analyst Rekt Capital, the price of Bitcoin may already have bottomed out macro based on historical data. Historically, the "Cross of Death" level shows a bottom of $23,500.

While traders and technical analysts aren't known for accurately predicting how long a bull or bear market might last, independent market analyst HornHairs cited historical data from 2015 to estimate how long it will take for Bitcoin to reach a new all-time high.

The bull market from 2015 to 2017 lasted 1,064 days, coinciding with the bull market from 2018 to 2021 that lasted the same number of days. If traders match the bear market that followed between 2017, 2018, and 2021 with the current market, it would take 1,001 days for Bitcoin to reach a new all-time high.

Despite the current conditions and the strength of the current price breakout, Bitcoin has proven many technical analysts wrong in the past. Risk-averse traders might consider watching for increased trading volume at higher prices as an indicator of whether Bitcoin is finally back in a bull market.