Bitcoin January 21, 2023 – The End of Purgatory for the King of Cryptos?

The crypto king’s bear run at the end of the run? – The beginning of the year 2023 on Bitcoin seems to be smiling on the bulls. In fact, Bitcoin would be on the way to confirm its strong rebound from last week. Especially since optimism is somewhat returning to cryptocurrencies thanks to a total market cap regaining $1000 billion. That said, the reasons that explain the current return to grace for the king of cryptos should encourage caution. Because basically, nothing would be written in stone.

Moreover, the prospect of a change in the FED’s monetary policy will not be achieved in 2023, according to doubts from some members of the FED about the ability to reduce inflation to around 2%. But for now Bitcoin (BTC) price unresponsive to his shocks and prefers to levitate by focusing on the slightest bit of good news.

Now, and in a market context where many investors would like to believe in a fairy tale, let’s review the latest technical analysis of Bitcoin and the key levels to watch in the context of a possible scenario for the end of purgatory.

Bitcoin in weekly units – three weeks in a row?

Probably chaining a third week in a row, Bitcoin would validate the crossing of $20,000 or 2017 ATH. This would constitute a first game won by the Bulls. So recent signals in weekly units would allow them to primarily look to the upside.

First, if the rally continues, breaking the bear downtrend line will start to look serious. Second, this week’s bullish candle has nothing to envy compared to the previous one. Thirdly, the courtyards succeed in straddling Kijun. And lately, Tenkan is starting a small recovery after the favorable momentum in the price of BTC at the beginning of the year.

Unfortunately, the war against bears is far from over. And with good reason, the price of Bitcoin and the Chikou spread still remains below the Kumo (Cloud ofIchimoku). Even if the other reconnects with prices and 200-week moving average (MM200 weekly). On the other hand, the thickness of the future Kumo could temper the bulls in the face of a favorable trend reversal.

Assuming next week is in line with the previous three, the situation would be tense for the bears. Because precisely, the price of BTC may approach the weekly 200-MA and the resistance at $26,000, not far from the lower limit of Kumo, Senkou Span A (SSA). Which would coincide with a Chikou Span, which would return towards Tenkan. And so this market scenario would avert the threat of new lows.

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Bitcoin in daily units – FTX bankruptcy chapter about to be closed

In daily units, yesterday’s bullish light could be a first psychological turning point on the bull side. Why ? Because the price of Bitcoin is distancing itself beyond $20,000 and the 200-day moving average (MM200 daily). And at the same time it consolidates its position over Kumo. Even better, we are in the process of closing the bankruptcy chapter in FTX.

But the fact that the recovery did not experience a downward breath could reveal signals of overbought, such as the wide gap between prices and the Tenkan. But as long as both are riding bullish momentum like they are right now, I wouldn’t be surprised if the king of the cryptos is still treading water for a while. With the feeling that it could rise towards $26,000a level that coincided with failures below the Kumo upper limit last August.

In the event that a rebound abortion occurs immediately, it will be interesting to observe if $20,000 confirms the change in polarity from resistance to support. And if the answer should be positive, then the price of BTC will make higher lows. This would mean that an uptrend is threatening with the aim of neutralizing once and for all its bear run since its last ATH in November 2021. On the other hand, an outright break below the recently crossed thresholds would question the bulls. With the fear of the resumption of the bear race returning to the table.

In summary, Bitcoin is supported by good news such as falling dollar and bond yields associated with hopes of a return to normal monetary policy from the FED. The icing on the cake, FTX’s pullback appears to be partially behind as prices are well within the danger zone or just $16,000.

Except that all this remains in the order of an expectation from the financial markets, which itself could be met at any time. Not only that, inflation in the US remains high despite the drop in commodity prices. But if it struggles to come down around the key 2% target, the return of a quantitative easing (fluid injection) would not stand up.

Personally, I think the Fed will continue to tighten monetary policy until something breaks. Therefore, let’s not talk too soon about the end of purgatory for the king of cryptos. Especially since nothing has been decided about the current uncertainty in the financial markets. Above all, high interest rate environments accompanied by a lack of liquidity have historically been conducive to unexpected external shocks. This is why investors should wisely wait for a favorable connection between fundamental analysis and technical analysis to increase their cryptocurrency exposures.

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