Bitcoin (BTC) shows potential to extend the sustained price recovery to $25,000 by March based on a combination of technical and bullish macro indicators.
Bitcoin price is out of the descending channel range
First, the possibility of Bitcoin reaching $25,000 comes from a breakout from the prevailing bearish channel range.
Running of the bulls or a bull trap?
Cointelegraph January 16, 2023
Notably, BTC price broke out of the range late last week, tracking an increase in trading volumes. The cryptocurrency’s bullish move also pushed the price above the confluence of resistance, which includes a psychological price ceiling of $20,000 and a 20-week exponential moving average (20-week exponential moving average; green wave) near $19,500, as shown. below.
The break of three resistance levels with strong volumes shows that traders are convinced of the long-term bullishness of the price. If this happens, the next upside target for Bitcoin appears at the 200-week moving average (yellow wave) at around $25,000 – up 20% from current price levels.
The dollar forms a “death cross”
The bullish technical outlook for Bitcoin comes on the back of a relatively weak US dollar, which has fallen on expectations that the Federal Reserve will stop raising interest rates as a result of lower inflation.
The two assets have been moving inversely since March 2020. On January 16, the daily correlation coefficient between Bitcoin and the US Dollar Index (DXY), a measure of the dollar’s strength against major currencies, was -0.83, according to TradingView.
The traditional technical setup expects more losses for the dollar in the future.
The setup, called a “death cross,” appears when the asset’s 50-period moving average crosses below the 200-period moving average. For the dollar, the death cross is showing its weak momentum, which means that its short-term trend is reversing its long-term trend.
“Expect further decline in the medium and long term,” He said Independent Market Analyst Crypto Ed commented on the dollar, adding:
Risks on assets should jump even further. Or better said: I expect BTC to break out of a bearish cycle as the big run in DXY is limited.”
Bitcoin price hike is not long term
Bitcoin is up 30% above $2023 so far, but the on-chain data shows that the buying trend is lacking support from institutional investors.
For example, the total amount of bitcoin held by digital assets such as trusts, exchange-traded funds and other funds has fallen during the coin’s price rally in recent months, according to CryptoQuant’s Fund Holdings Index.
Furthermore, no unusual transactions took place not on-chain but on cryptocurrency exchanges, according to comparisons made between CryptoQuant’s Token Transferred and Fund Flow Ratio metrics.
The converted token metric shows the number of currencies converted in a given period of time, while the Funds Flow Ratio is the ratio of currency transfers involving exchanges to total currency transfers across the entire network.
“Usually, institutional investors like to buy quietly with OTC trading at the bottom,” market analyst MAC_D noted, adding:
“This trading was actively conducted on the exchange only, and no unusual transactions took place on the chain. […] The current institutional investors have been quiet and just watching. OTC trading will be quick when they expect a complete turnaround to the upside.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
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