Best January since 2013? 5 things to know in Bitcoin this week

Source: Cointelegraph

Bitcoin BTC $23,037 starts a key week with a familiar cocktail of price spikes mixed with fear that the bear market will return.

After sealing its highest weekly close in almost six months, BTC/USD remains over 40% up year-to-date, with the monthly close just 48 hours away — can the gains hold?

Against all odds, Bitcoin has rallied beyond expectations this month, making January 2023 its best in a decade.

Throughout, concerns have called for an imminent comedown and even new macro BTC price lows as disbelief swept the market.

That grim turnaround has yet to come to fruition and the coming days could yet turn out to be a crucial period for Bitcoin’s long-term trend.

The catalysts are hardly in short supply. The United States Federal Reserve will decide on its next rate hike this week, with Fed Chairman Jerome Powell giving much-anticipated commentary on the economy and policy.

The European Central Bank (ECB) will make the same decision a day later.

Add to that the psychological pressure of the monthly close, and it is easy to see how the coming week could be more volatile in Bitcoin’s recent history.

Buckle up as Cointelegraph takes a look at five key issues to consider when it comes to BTC price action.

Bitcoin price eyes $24K with FOMC volatility predicted

Bitcoin continues to defy naysayers and shorters alike by spiking ever higher on lower timeframes.

The weekend proved no different to others in January, with BTC/USD hitting $23,950 overnight into Jan. 30 — a new five-and-a-half-month high.

The weekly close achieved the same feat, with Bitcoin failing to tackle the $24,000 mark for a final flourish.

At the time of writing, $23,700 formed a focal point, data from Cointelegraph Markets Pro and TradingView showed, with U.S. markets yet to begin trading.

At current prices, Bitcoin remains up a striking 43.1% in January — the best January since 2013 — Bitcoin’s first well-known bull market year.

BTC/USD monthly returns chart (screenshot). Source: Coinglass

Market analysts are keen to see what will happen around the Fed rate hike decision at The Federal Open Market Committee (FOMC) on Feb. 1. A definitive source of volatility, the event could impact the monthly candle significantly, only for BTC price action to change tack immediately.

“Perhaps with a little assistance from FOMC volatility? Not a prediction, but certainly a trade setup I’d be very interested in,” popular trader Crypto Chase commented on a chart predicting a retracement followed by further upside for BTC/USD.

Macro hinges on Fed rate hike, Powell

The coming week is set to be dominated by the Federal Reserve’s interest rate hike and accompanying comments from Powell.

In a familiar but still nerve-racking sequence of events for Bitcoin traders, the FOMC will meet on Feb. 1.

This time, the result may offer few surprises, with expectations almost unanimous in predicting a 25-basis-point hike. Nonetheless, the scope for volatility around the unveiling remains.

“The first two days of Feb are going to be volatile (much fun),” trader and commentator Pentoshi tweeted last week, also noting that the FOMC would be followed by a similar decision from the European Central Bank a day later.

According to CME Group’s FedWatch Tool, there is currently a 98.4% consensus that the Fed will hike by 25 basis points.

This will be a further reduction compared to other recent moves and the smallest upward adjustment since March 2022.

Index generates first “definitive buy signal” in 4 years

While few pundits are willing to go on record calling an end to the latest Bitcoin bear market, one on-chain metric is potentially leading the way.

The Profit and Loss (PnL) Index from on-chain analytics platform CryptoQuant has issued a “definitive buy signal” for BTC — the first since early 2019.

The PnL Index aims to provide normalized cycle top and bottom signals using combined data from three other on-chain metrics. When its value rises above its one-year moving average, it is taken as a long-term buying opportunity.

This has now occurred with January’s move up in BTC/USD, but while CryptoQuant acknowledges that the situation may flip bearish again, the implications are clear.

“Although it is still possible for the index to fall back below, the CryptoQuant PnL Index has issued a definitive buy signal for BTC, which occurs when the index (dark purple line) climbs above its 365-day moving average (light purple line),” it wrote in a blog post alongside an explanatory chart.

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Dacxi is a fintech company pioneering crowd finance, with a mission to change the lives of everyone with new wealth opportunities. Welcome!