Several scenarios at once. What will happen to bitcoin in the next week
Experts analyzed the market situation and told how it may change in the short term
On January 22, bitcoin is trading at $22.8 thousand, and during the past week, its price rose by more than 10%. Specialists have analyzed the situation in the market and assessed the prospects of bitcoin movement in the next seven days.
"It remains to be fixed".
The year 2023 started very optimistically for the cryptocurrency market. By the third decade of January, bitcoin was up 40% against the dollar to $23,335. The whole week the price was trading in the range of $20,600 - $21,650 and only by the close of the working week, buyers have tested the level of $22,000.
Volatility in the market increased at the American session during the last three trading days. On January 18, the pair BTC/USDt decreased to $20 407. Bitcoin fell in price following a sharp decline in the S&P 500 and Nasdaq indices. The flight from risky assets was caused by the statements of James Bullard, the head of the Federal Reserve Bank of St. Louis, about the US Federal Reserve's policy. He said that the Fed's policy should remain stricter in 2023.
Buyers were able to defend the $20,300-20,400 zone. On Jan. 19, bitcoin rebounded to $21,192. Demand for the cryptocurrency rose amid claims by the new head of FTX, John Ray, that the exchange could be revived. The news of the platform's relaunch caused the FTT token to rally 37%, to 2.48%. It was a speculative activity for quick profits on the pound, with bitcoin's appreciation being subdued.
On Friday, January 20, bitcoin gained 7.57% to $22,667 at the end of the day. Before the U.S. session, the price was trading at $21,000. On Saturday, January 21, buyers pushed the high to $23,335.
There are several factors explaining the increased buying activity and the acceleration in price:
- A drop in the dollar index to 101.74 points;
- A sharp 1.88% recovery in the S&P 500 Index to 3972.06 points;
- U.S. Federal Reserve Governor Christopher Waller, a proponent of aggressive rate hikes last year, advocated cutting the pace of rate hikes to 25 bps at the Feb. 1 meeting.
- U.S. Treasury Secretary Janet Yellen said that Congres's refusal to raise the borrowing ceiling (and it has already exceeded $31 trillion) would lead to a global financial crisis and default.
The BTC/USDt pair exceeded the resistance level of $22,500, rising to $23,335. According to data from Coinglass, $120 million worth of short positions were liquidated on the rise. Now, buyers are left to consolidate above $22,500 for the cryptozyme to end and the recovery phase to continue.
Janet Yellen scaring Congress simply reminded investors of the precarious position of the dollar and U.S. bonds. If investors point to bitcoin and tell it to wait out the "hurricane of dollar triumphalism," it could quickly return to $34k. New targets for it remain at $25k and $30k levels.
"Investors are tired of bad news."
ENCRY Foundation co-founder
Bitcoin, as usual, has several scenarios in its pocket at once - from a sharp reversal and transition to a fall to a continuation of bullish growth. But even if the bulls dominate, I still see a high probability of bitcoin falling below $18K.
The main positive on the crypto market comes from the same factors that helped the US stock market finish last trading week in the green zone. It all started with signals about the decline of the inflation rate in the United States, and consequently a slowdown in the rate of increase of the key rate of the U.S. Federal Reserve.
Although both are still at fairly high levels, investors were so tired of the bad news that they took the positive data with rare enthusiasm. Since then, or rather since the end of December, the market has continued to rise - both the stock market and the cryptocurrency market.
Due to the sharp rise in bitcoin, short positions of hundreds of millions of dollars were forcibly closed. There are still $5 billion worth of short positions open, and I think their owners are very nervous right now - if bitcoin rises even more, they risk getting forced liquidation.
This fear may encourage some shortlists to close their own positions, in which case they will have to buy bitcoins to pay off the coins borrowed to play the downside at the market price. And that, too, will cause bitcoin to rise in the short term.
This is the most likely scenario - bitcoin will continue to grow quite strong for a few more days, for example, until Wednesday, and then a period of correction will begin. It is hard to say how deep it will be.
I think bitcoin may finish the week at $20K but it is unlikely to hold that level in February. Due to high inflation and slowing consumption, the U.S. could face stagflation and that will hit the crypto market the hardest.
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