Bitcoin has taken a breather at the start of the new year. In the past 24 hours, it has climbed a bit to the mid $17,000 level, but no new bursts are expected. To make things worse, experts have noticed worrying signs that might spell trouble going ahead.
Fed chair Jerome Powell failed to mention inflation altogether in his latest speech, which meant no fresh price catalyst for Bitcoin. The price has climbed back to $17K and stayed there for a week which is good news. But, if any bearish sentiments return, and many think they will, experts believe a dip to $14K is inevitable shortly.
Powell Is Quiet on Fed’s Policy
Hopes on a fresh price burst were squashed in the latest Fed report in which its chair Jerome Powell carefully avoided talking anything about upcoming policies. He addressed key stuff such as the Fed’s monetary policy independence and some other things, but was mum on inflation.
Due to that, neither Bitcoin nor US stocks had a good first hour in Wall Street trading. Volatility is expected through January 12 as we’re waiting on the release of the CPI for December. For nearly 2 months, buyers have been found below the $16.5K price level, while the 20-week moving average sits at $18.3K. That’s the current range and previous support. If Bitcoin manages to beat expectations and breaks that key level, the target would likely be $24,000.
But, that’s what most optimists think. In reality, we probably have a continuation of the bearish trend on the cards in 2023. Key macro-economic elements have not improved, and inflation is still rampant. Due to that, some believe that a dip down to $14K is pretty possibly, and coming fast. Liquidity data shows that getting to $24K will be a bit of an uphill climb, especially in the short run.
Bulls Take Control, but Worrying Signs Ahead
Bitcoin’s price is finally in an uptrend, surpassing the 50-day moving average. The latest rally may have caught some by surprise, but experts knew it was coming. The key now is to lock it in without further dips as bulls take control of the market. However, that might be squashed soon as data shows worrying signs going ahead.
The bullish momentum right now is not very strong. 4-hour charts show a double-bottom reversal pattern at $16,500. The price is forming higher highs and lows, reaching the Fibonacci retracement at 0.5. All the way up to 0.618, it’s a significant resistance zone in the correction stages. In layman’s terms, Bitcoin is currently locked in a vital resistance zone, trying to move higher. As a result, one possible outcome is a $17.5K resistance level.
Another metric, the Exchange Reverse, which represents the number of coins held in exchanges, is recovering slowly. Surges in this metric show high selling pressure, and is typically related to a trend reversal. People are currently sending Bitcoins to exchanges for distribution, and big spenders are seeing this rally as a selling opportunity before a crash. That’s why things are grim right now, but we’re hoping for some kind of ray of light to make things better.