Leading the 2023 rally of the cryptocurrency market is Bitcoin, the touted king of crypto. As of writing, BTC is changing hands at $23,742 which enabled the alpha coins regain its August 2022 support level which is at $22,722. This made crypto Twitter abuzz with enjoyment as analysts went full bullish on BTC with some setting ridiculous targets like $1.3 million by the end of the year.
However, there are analysts which are extremely cautious of this current rally. The fear, uncertainty, and doubt surrounding Bitcoin now is how this rally could be seen as a bull trap which could potentially set up many long position holders for losses in the medium to long term.
But with the bullish momentum going strong, BTC could still have enough room for a push towards $25,000.
$BTC should hit 1.3m by this December. I got to this number by using the January gain average of 42% monthly.
Will be back around then to take profits. Easy math pic.twitter.com/6c3CZ3r7n8
— Pentoshi 🐧 (@Pentosh1) January 26, 2023
Short Positions Decimated By Previous Market Movements
CoinGlass data shows that a total of $29.64 million of short positions were liquidated among all exchanges as Bitcoin broke through $23k. This may seem insignificant compared to January 14th short position liquidations that were valued at $141 million, but these liquidations might force some bears to go long as Bitcoin continues its climb.
As of writing, the crypto king already climbed 42% upwards, according to Coingecko. This might continue as macroeconomics are somewhat improving.
Short to medium term, the top coin might experience pain as the bullish momentum slows. As of writing, January 30th, BTC bulls seem to be exhausted. If this slowing momentum continues, the coin might revert to its current support at $22,622. This support should be able to hold a strong bear momentum if it ever comes to that point.
Investors and traders should also watch the movement of stocks. This comes from the International Monetary Fund’s 2022 study between crypto’s relationship with stocks which shows a strong correlation between the two asset classes. As the time of writing, major tech stocks like Apple and AMD have strong correlation with Bitcoin.
BTC total market cap at $456 billion on the daily chart | Chart: TradingView.com
Indices like the S&P 500 and the Dow Jones, however, have lower correlation. But the relationship between Bitcoin and stocks makes BTC susceptible to macroeconomic woes. With company investors being skeptical despite the market rally which started this year, Bitcoin might experience volatility as February rolls in.
For now, $25k seems to be a medium to long term target for Bitcoin bulls. Consolidating gains and securing the coin’s current support would enable investors and traders to eventually reach and potentially break the $25k resistance.
Peter Brandt, a veteran trader and market analyst, predicts that Bitcoin will encounter significant resistance at $25,000 by March, with a subsequent retest of the $18,000 level.
If bulls maintain this level, the analyst anticipates another big advance that might result in the Bitcoin price approaching $35,000 by July 2023.
Featured image from Wired