The beginning of 2023 pleases with the steady growth of bitcoin. Tired of the exhausting bear market, users are probably wondering if what is happening does not mean a radical change in trend.
Armed with technical analysis tools, on-chain indicators and expert opinions, ForkLog figured out the current situation.
- Bitcoin at the beginning of the year shows a recovery. Cryptocurrency quotes have already overcome MA 200 – a kind of border between bear and bull markets.
- A lot of on-chain indicators in unison signal an impending trend break.
- The correlation of Bitcoin with the NASDAQ index fell to the values of December 2021. 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 grown at ~40% — from levels around $16,500 to ~$23,100 (as of 01/24/2023). However, digital gold is still very far from reaching its all-time high (ATH) near $69,000 reached on 11/10/2021.
However, the positive developments in the market environment and the performance of many indicators are encouraging.
“Although there remains the risk of a rollback and retest [минимумов]it is likely that we are entering the early stages of a new bull market.” shared his opinion Philip Swift, founder of Look Into Bitcoin.
The weekly chart below shows that at the beginning of the year the key support level B withstood. Having rebounded from it, the price passed zone A like a knife through butter. FTX collapse.
Swift does not rule out the possibility of a resumption of the downtrend. However, according to him, the path of least resistance is up. The next important target is near the $25,000 mark.
For the first time since the end of December 2021, the price of bitcoin was above the 200-day simple moving average – a kind of border between bear and bull markets.
It is important that the price recovery in January was supported by a significant increase in trading volumes.
On-chain indicators
At the beginning of November 2022, quotes of the first cryptocurrency broke the bottom of the previous market cycle. It seemed to many that after overcoming the lower extremum, consolidation with a recovery and a new bullish trend was just around the corner. However, soon there was another “black Swan” Sam Bankman-Freed’s huge business empire collapsed. Amid the collapse of FTX, digital gold reached $15,476 (in the BTC/USDT pair on the Binance exchange).
Indicator Cumulative Value Days Destroyed (CVDD) and balanced price in the second half of the year pointed to a high probability of hitting a cyclical bottom quotes. After some time, consolidation really began, with the subsequent recovery of the market.
Every day after the price rebounds from the key values of the metrics, the chances of the rally continuing increase, Philip Swift emphasized.
2022 has been a truly challenging year for miners – the growth of hashrate and complexity at a falling price forced many players to sell digital reserves and / or exit the market.
Against the background of what is happening multiplier Puella fell into the accumulation band. Currently, there is an exit of the indicator from the “green zone”, which historically meant a change from a bearish phase to a bullish one.
Crossing “hash tapes” and leaving 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.
The above indicators, according to Swift, signal a return of investor confidence. An improvement in market sentiment can reduce potential selling pressure, which is also a positive factor for the price.
Bitcoin quotes for the first time in a long period rose higher realized value. This is also a positive signal for market participants, indicating the likely end of the bearish phase.
Amid market panic due to the collapse of FTX and its consequences, the realized capitalization of bitcoin at the end of December fell by 18.8% against ATH. This is the second highest figure in history.
Such drawdowns are a rare opportunity for buyers, Bitcoin Magazine analysts are sure. They are convinced that the acquisition of the first cryptocurrency during such periods promises significant profits in the long run.
Orange indicator line MVRV Z-Score leaves the “green zone” – this is another signal about the passage of the bottom.
The thesis about the change of market phases is also confirmed by a longer-term indicator – RHODL Ratio. Its orange line is preparing to leave the oversold zone. The latter indicates the most favorable period for the implementation Buy&Hold strategies and or DCA.
The continued drop in price did not have much effect on on-chain activity. For example, in 2022, more than 556 million BTC worth almost $15 trillion passed through the network of the first cryptocurrency. Compared to the previous year, the figure increased by 102%.
Market sentiment
Indicator aSOPR, finally broke the 1.0 mark, from which he had not left since the end of April last year. This is a sign of improving market sentiment and also indicating that there is enough demand to absorb the selling caused by profit taking.
The emergence of confidence among investors is also evidenced by the cryptocurrency “index of fear and greed”. It has finally moved to neutral values, although since April 2022 practically did not leave the “fear” zone.
Addresses and holdings of hodlers
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 of ≥ 1 BTC grew by 20%. The figure is increasing exponentially, approaching the 1 million mark.
Positive dynamics from year to year is also observed for smaller addresses, which have at least 0.01 BTC and 0.1 BTC.
The number of bitcoins in hodlers’ wallets (coins older than 155 days are taken into account) has come close to 14 million BTC. This is ~72.5% of the total market supply of the first cryptocurrency.
“There are people all over the world who are acquiring this asset. There is a huge and growing category of people who accumulate [биткоин]regardless of the price,” said Dylan Leclerc of Bitcoin Magazine.
Weighed by realized price HODL waves bitcoin indicate a complete “reboot” of the market after the peak reached at the end of 2021 (red and yellow bars). A similar “cooling” occurred at the bottom of past bearish phases.
Macrofactors
Limited supply and a host of other factors suggest that massive global adoption could push the price of bitcoin to sky-high heights.
Capitalization of the first cryptocurrency is less than $500 billion. The corresponding indicator for gold is almost $12 trillion, fixed income instruments – ~ $127 trillion, and the residential real estate market – more than $250 trillion.
If the share of world 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 well known that the geopolitical situation and macro factors have a significant impact on capital markets and economic growth. The movement of the price of bitcoin also does not occur in a vacuum. The first cryptocurrency rose in price against the backdrop of a widespread injection of liquidity caused by the coronavirus crisis. But as soon as the US authorities tightened monetary policy, growth quickly turned into a fall.
According to the forecasts of 61 out of 90 respondents Reuters economists, rate Fed will peak at 4.75%-5% in March. Then, probably, the regulator will keep the indicator at a constant level, at least until the end of the year.
For a long time, the price of the first cryptocurrency moved almost in sync with the US stock market. The latter, in turn, reacted sensitively to changes in the Fed’s 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 already forgotten narrative about bitcoin as a protective asset will soon emerge in the crypto community.
What do the experts say?
Bloomberg Strategist Mike McGlone convincedthat the first cryptocurrency is bottoming in the same way as it did before the start of the bullish phase in 2019. The essential difference lies in the tightening of monetary policy in the world.
Four years ago there was a widespread reduction in interest rates by monetary regulators. At the moment they are still increasing them, the specialist said.
“Back then, the Fed had already started easing, and we held the bottom and broke higher. […] Right now they’re aggressively tightening up [политику]. give him [биткоину] a little time. In general, yes, a bullish picture, ”McGlone explained.
Arcane Research Senior Analyst Vetle Lunde is also optimistic about the future prospects of digital gold.
“Reducing the correlation is a positive factor for the market,” he stressed.
Given the values of on-chain indicators, Swift predicts the development of an uptrend.
“It is quite possible that now is the best time to accumulate bitcoin before the start of a new bullish rally,” the expert shared his thoughts.
findings
In this review, the situation is considered exclusively for digital gold. However, it is clear 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 hashrate despite the falling price once again testifies to the ongoing investment 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 in full swing signaling the end of the bearish phase of the market. This means that consolidation and a bullish rally are just around the corner, it’s time to fasten your seat belts.
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