The leading cryptocurrency, Bitcoin, is trading sideways, with the price remaining within a limited range of $22,500 to $23,350. On January 23rd, BTC/USD closed at $23,114 after reaching a high of $23,114.
Bitcoin Reaches Historic Highs, Surpassing $23K Mark
BTC, the world’s largest cryptocurrency by market capitalization, reached $23,000 for the first time since mid-August 2022 on Saturday. This level was breached again on Monday, indicating a possible bullish trend ahead.
This upward trend also pushed the total cryptocurrency market cap above $1 billion for the first time in 5 months. There were numerous reasons for the bullish momentum in Bitcoin prices that drove them above the $23K mark. Let us now examine them.
Positive CPI Data
The CPI report released on January 12 showed a 0.1% decrease in overall inflation, the largest drop since April 2020. The market became more optimistic as inflation continued to fall for six months in a row.
Furthermore, bets on the Federal Reserve backing down from an aggressive interest rate hike increased. As a result, BTC prices increased, raising the prospect of a broad crypto market recovery.
Exploring The US Dollar Index Weakness
Bitcoin prices were also benefiting from a weakening US Dollar Index. Historically, whenever the DXY falls, risk asset sentiment rises. As a result of the US Dollar Index’s weakness, Bitcoin is the riskier asset gain.
Given rising expectations for slower Fed rate hikes, the DXY was under pressure as the week began, testing a new 9-month low.
Bitcoin and Equities Correlation
The correlation coefficient between Bitcoin and major stock indices has recently been very high. The S&P500, Dow Jones, and NASDAQ are the major indices that provide a general overview of the economy. It is not uncommon for interest rates to be lowered, causing the economy to grow and, as a result, equities to rise.
As a result of their high correlation coefficient, better performance of these indices will provide a stronger push to Bitcoin prices. The bullish equity markets are also driving Bitcoin prices these days.
On Monday, the Dow Jones Industrial Average (DJI) gained 1.1%, the NASDAQ gained 2.4%, and the S&P 500 (SPX) gained 1.5%.
While the BTC price is indicating bullish prospects in the short term, amid renewed hopes for interest rate cuts, there are still numerous challenges to consider. The major risk of centralized exchange insolvency, as well as Binance reserve concerns.
In addition, the bankruptcy of Genesis and looming crypto legislation are some of the factors preventing BTC prices from rising further. Furthermore, all of these factors have led some analysts to believe that BTC could fall as low as $15,000 in the near future.
Bitcoin is currently worth $22,800 and has a 24-hour trading volume of $28 billion. In the last 24 hours, Bitcoin has surged by nearly 1%. CoinMarketCap currently ranks first with a live market cap of $435 billion.
On a daily basis, Bitcoin is encountering strong resistance near a double-top pattern at $22,830. If the candles close below this level, a bearish correction is likely to begin and continue until the $21,500 level is reached.
The RSI and MACD indicators are overbought, indicating the possibility of a bearish correction in BTC. If the price of Bitcoin falls below $21,500, it may fall as low as $20,450.
On the upside, Bitcoin’s immediate resistance is at $22,850, and a break above this level could expose BTC to levels as high as $23,900 and $25,150.
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If you’re looking for other high-potential crypto projects alongside BTC, we’ve reviewed the top 15 cryptocurrencies for 2023, as analyzed by the CryptoNews Industry Talk team.
The list is updated weekly with new altcoins and ICO projects.
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