The beginning of 2023 is pleased with the confident growth of Bitcoin. Users tired of the grueling bear market are probably wondering if what is happening does not mean a radical change in trend.
Armed with technical analysis tools, on-chain indicators and experts’ opinions, ForkLog understood the current situation.
- Bitcoin shows a recovery at the beginning of the year. Cryptocurrency quotes have already been overcome MA 200 — a sort of boundary between bear and bull markets.
- Many on-chain indicators in unison signal an impending trend break.
- Bitcoin’s correlation with the NASDAQ index fell to December 2021 values. This is a positive factor for the cryptocurrency market.
What do the indicators say?
Technical analysis tools
Since the beginning of the year, the price of the first cryptocurrency has increased by ~40% — from around $16,500 to ~$23,100 (as of January 24, 2023). However, digital gold is still very far from the 11/10/2021 all-time high (ATH) near $69,000.
However, positive changes in the market situation and indicators of many indicators are encouraging.
“Although the risk of rollback and retest remains [минимумов]it is quite likely that we are entering the early stages of a new bull market,” — shared his opinion Philip Swift, founder of Look Into Bitcoin.
On the weekly chart below, it can be seen that at the beginning of the year, the key level of support stood at B. Pushing away from it, the price, like a knife through butter, passed through zone A. The latter served as a support for the unstable market for quite a long time until collapse of FTX.
Swift does not rule out the possibility of a resumption of the downward trend. However, according to him, the path of least resistance is up. The next important goal is near the $25,000 mark.
For the first time since the end of December 2021, the price of bitcoin turned out to be above the 200-day simple moving average – a kind of boundary between bear and bull markets.
It is important that the January price recovery was supported by a significant increase in trading volumes.
Onchain indicators
At the beginning of November 2022, the quotes of the first cryptocurrency broke through the bottom of the previous market cycle. It seemed to many that after overcoming the lower extreme, consolidation with recovery and a new bullish trend is not far off. However, another one soon appeared “black swan” Sam Bankman-Fried’s huge business empire collapsed. Against the background of the collapse of FTX, digital gold reached the mark of $15,476 (in the BTC/USDT pair of the Binance exchange).
Indicators Cumulative Value Days Destroyed (CVDD) and balanced price in the second half of the year, they indicated a high probability of the quotations reaching a cyclical bottom. After some time, consolidation really began with the subsequent recovery of the market.
Every day after the price rebound from the key values of the metrics, the chances of the continuation of the rally increase, Philip Swift emphasized.
2022 was really difficult for miners — the growth of hashrate and complexity at a falling price has forced many players to sell digital stocks and/or exit the market.
Against the background of what is happening the Pewell multiplier fell into the accumulation zone. Currently, the indicator is leaving the “green zone”, which historically meant a change from a bearish phase to a bullish one.
Crossing the “hash tape” and exiting the “red zone” of the metric Hash Ribbons indicates that the worst times for miners are behind us, as well as the potential for the digital gold rally to continue.
According to Swift, the above indicators signal the return of investor confidence. Improvement of market sentiment can reduce potential sales pressure, which is also a favorable factor for the price.
Bitcoin quotes rose higher for the first time in a long period realized value. This is also a positive signal for market participants, indicating the likely end of the bearish phase.
Against the background of market panic due to the collapse of FTX and its consequences, the realized capitalization of bitcoin fell by 18.8% in relation to ATH at the end of December. This is the second largest indicator in history.
Similar drawdowns are a rare opportunity for buyers, analysts at Bitcoin Magazine believe. They are convinced that the purchase of the first cryptocurrency in such periods promises a significant profit in the long term.
The orange line of the indicator MVRV Z-Score leaves the “green zone” – this is another signal about the passage of the bottom.
The thesis about a change in market phases is also confirmed by a longer-term indicator — the RHODL Ratio. Ego’s orange line is getting ready to leave the oversold zone. The latter indicates the most favorable period for implementation Buy&Hold strategies and/or DCA.
The prolonged price drop did not particularly affect online activity. For example, in 2022, more than 556 million BTC worth almost $15 trillion passed through the network of the first cryptocurrency. In comparison with the previous year, the indicator increased by 102%.
Market sentiments
Indicator aSOPR, finally, overcame the 1.0 mark, from which it has not come out since the end of April last year. This is a sign of improved market sentiment, which also indicates the presence of sufficient demand to absorb sales caused by profit fixation.
The appearance of confidence among investors is also evidenced by the cryptocurrency “index of fear and greed”. It finally moved to neutral values, although from April 2022 practically did not leave the zone of “fear”.
Hodler’s address and assets
An important fundamental factor is the increase in the number of bitcoin addresses with a non-zero balance. He points to the growth in the number of market participants and the accumulation of coins in the wallets of those who believe in the long-term potential of bitcoin.
For example, in 2022, the number of addresses with a balance ≥ 1 BTC increased by 20%. The indicator increases exponentially, approaching the 1 million mark.
Positive dynamics from year to year are also observed in smaller addresses with at least 0.01 BTC and 0.1 BTC.
The number of bitcoins in hodlers’ wallets (taking into account coins with an “age” of more than 155 days) came close to the mark of 14 million BTC. This is ~72.5% of the total market volume of the first cryptocurrency.
“There are people all over the world who buy this asset. There is a huge and growing category of people who accumulate [биткоин]regardless of the price,” noted Dylan Leclerc of Bitcoin Magazine.
Weighed at the realized price HODL waves bitcoin indicate a complete “reset” of the market after the peak reached at the end of 2021 (red and yellow stripes). Similar “cooling” occurred at the bottom of previous bearish phases.
Macro factors
The limited supply and a number of other factors give reason to assume that mass adoption at the global level is capable of pushing the price of bitcoin to sky-high heights.
Capitalization of the first cryptocurrency is less than $500 billion. The corresponding figure for gold is almost $12 trillion, fixed income instruments are ~$127 trillion, and the residential real estate market is more than $250 trillion.
If the share of global wealth concentrated in bitcoin reaches at least 1%, the price of the cryptocurrency will exceed $300,000, and the capitalization will be $5.9 trillion.
It is common knowledge that the geopolitical situation and macro factors significantly influence capital markets and economic growth. Bitcoin price movement also does not occur in a vacuum. The first cryptocurrency rose in value against the background of the widespread infusion of liquidity caused by the corona crisis. But as soon as the US authorities tightened monetary policy, growth was quickly replaced by a fall.
According to forecasts, 61 out of 90 respondents Reuters economists, rate Fed will reach its peak at the level of 4.75%-5% in March. Then, probably, the regulator will keep the indicator at an unchanged level at least until the end of the year.
For a long time, the price of the first cryptocurrency moved almost synchronously with the American stock market. The latter, in turn, reacted sensitively to changes in the Fed rate.
However, at the beginning of 2023, the correlation of bitcoin with the NASDAQ index fell to 0.29. This is the lowest value since December 2021.
It is possible that thanks to the “decoupling” from the stock market, the forgotten narrative about bitcoin as a protective asset will soon resurface in the crypto community.
What do the experts say?
Bloomberg strategist Mike McGlone convinced, that the first cryptocurrency forms a bottom in the same way as it was before the beginning of the bull phase in 2019. The essential difference is the tightening of monetary policy in the world.
Four years ago, there was a widespread decrease in interest rates by monetary regulators. At the moment, they are still raising them, the specialist said.
“Then the Fed already started easing, and we held the bottom and broke out higher. […] They are aggressively tightening right now [политику]. Give it to him [биткоину] little time Overall, yes, a bullish picture,” explained McGlone.
Arcane Research senior analyst Vetle Lunde is also optimistic about the future prospects of digital gold.
“The decrease in correlation is a positive factor for the market,” he emphasized.
Taking into account the values of on-chain indicators, Swift predicts the development of an upward trend.
“It is quite possible that now is the best time to accumulate bitcoin before the start of a new bull rally,” the expert shared his thoughts.
Conclusions
This review examines the situation exclusively for digital gold. However, it is obvious to many that the growth of bitcoin will serve as a powerful driver for the recovery of the rest of the market, since most coins are closely correlated with the first cryptocurrency.
The unstoppable growth of the hash rate, despite the falling price, once again testifies to the continuous investments of miners in equipment and their confidence in the future prospects of the market.
The steadfastness of hodlers who accumulate assets, regardless of price dynamics, is impressive. The growth in the number of coins in various categories relative to “small” addresses is also encouraging.
Many on-chain indicators are already strongly signaling the end of the bearish phase of the market. This means that consolidation and bull rallies are just around the corner, it’s time to fasten your seat belts.
Read ForkLog bitcoin news in our Telegram — cryptocurrency news, courses and analytics.
Found an error in the text? Select it and press CTRL+ENTER