January 31, 2023
Bitcoin Pauses After 40% Pump in January
Dear Subscriber,
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| By Marija Matic |
Bitcoin (BTC, Tech/Adoption Grade “A-”) pumped 40% in January but paused right before reaching $24,000 yesterday. This caution is likely attributed to the latest interest rate hike that’s expected to be announced tomorrow, following the Federal Open Market Committee meeting.
Even though a smaller rate hike of 25 basis points is anticipated as inflation cools, there is a risk of hawkish comments by Fed Chair Jerome Powell.
However, negative comments are unlikely to shake off the bullishness of the market significantly.
Meanwhile, Tether’s (USDT, Stablecoin) supply is growing amid the Bitcoin price rally as new capital comes into the crypto market through this stablecoin — $1 billion in USDT entered the market in the past seven days alone.
On the other side, there is a decrease in USD Coin (USDC, Stablecoin) supply.
On top of that, CME Group — the largest financial derivatives exchange — has almost completely reduced its short positions. The last time this happened was August 2020, before the bull run.
In fact, CME’s open interest has been pushed to near all-time highs on Friday, representing the majority of the open interest. Institutions have taken an interest in crypto again.
Bitcoin is back in the trading channel between $23,300 and $22,500, after making a push for $24,000:
Sideways action within the channel is likely, including a test of the $22,500 level due to this week’s volatility.
Many investors are hoping for a local correction like that to collect liquidity, as they are looking for a good entry point.
Still lagging slightly, Ethereum (ETH, Tech/Adoption Grade “B”) has once again been rejected by the strong resistance level of $1,660 (purple line) as can be seen on this four-hour chart.
Current support can be found at the $1,520 level, slightly below the trading price at the time of writing. If that doesn’t hold, ETH could end up trading in a range between $1,390 and $1,430.
That will depend on the reaction to the macroeconomic news coming later this week.
Notable News, Notes & Tweets
What’s Next
Things may get volatile this week due to the expected rate hike and various other anticipated market announcements.
Still, the overall sentiment remains bullish.
Trading volumes tell us that investors are buying whenever there’s a dump, as many are looking for those prime entry prices, especially when it comes to altcoins.
But we’ll have to see what this eventful week brings in terms of earnings from Big Tech, job market updates and the first FOMC meeting in 2023, before we can say whether investors will get a chance to fill out their bags.
Best,
Marija
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