Bitcoin rises fastest in months, but analysts fear a pullback

Bitcoin analist: koers begint medio 2023 weer hard te stijgen

The US consumer price index (CPI) did not cause any major surprises or new fears yesterday. Nevertheless, the prices, including those of bitcoin (BTC), became equally volatile.

Bitcoin fluctuated wildly between USD 17,900 and USD 18,400 shortly after CPI and then settled around USD 18,100. That was short-lived, because the price then made a big jump up and even shot above $ 19,000 on a number of exchanges and touched $ 19,150.

Since then, the price has been trying to get a grip on the $18,800 mark and at the time of writing is up to $18,860 on Binance and $17,370 on Bitvavo.

This means that the bitcoin price is up 4.2% today. Trading volume increased by 30% in the last 24 hours. The total market capitalization is $363 billion and the dominance is 40.1%. The Fear & Greed Index comes out at 31 (Fear).

CPI provides strongest increase in 2 months

US inflation data came in at 6.5% yesterday, as expected. A new dose of fear about Federal Reserve policy, as we saw in December, is therefore not forthcoming. It is a sign that investors are hoping that the Fed will be more cautious with rate hikes, i.e. more dovish then hawkish policy will pass.

That said, an actual policy reversal, a so-called “Fed pivot” still seems highly unlikely. We will know more on February 1, then the next Federal Open Market Committee (FOMC) will follow.

The CPI release yesterday caused bitcoin to rise by about 5%, the strongest increase in more than two months. It’s also the third best start to a year in bitcoin’s history so far, analyst TXMC reports:

Are the bitcoin whales waking up or not?

We have some conflicting findings today. For example, CryptoQuant analyst Cauê Oliveira reports that the low volume suggests that there is still little activity among institutional players and whales.

On the other hand, analysis company Santiment reports that the whales are finally starting to show interest and that the number of large transactions is increasing. The whales, according to Santiment, may even be responsible for the recent increase.

Bitcoin analysts warn of pullback

Although it is noticeable that market sentiment has become a lot more positive, many analysts still warn for caution. Should this upward trend continue immediately, we may soon see a test of the infamous 200-day moving average, which currently hovers around $19,500.

Still, many analysts expect a pullback. Then we may see a retest of the $17,300 area, now as support rather than resistance. However, if this one does not hold, then the chance of a new one increases low up again quickly. We have to take into account that market conditions are still far from ideal.

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