The crypto market closed the first month of 2023 on a green candle. Altcoins experienced a trading volume surge, with multiple altcoins posting triple digit gains and Bitcoin might be closing in on a bullish signal. Elon Musk pushed forward a Twitter payment solution that may include Bitcoin, while a new decentralized competitor appeared on the app stores.
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Bitcoin (BTC) spiked above $24k on Thursday for a very short time afer a first failed attempt on January 29th. This failed attempt came after the Federal Reserve increased interest rates by 0.25%. This week, BTC's mining difficulty hit again a new all-time high despite correcting. Meanwhile, BTC is trading at a 60% premium in Nigeria.
On the LTFs the HTF story is made even clearer, accumulative price action, drawing in liquidity on both sides of the market in the form of buy and sell orders, is leading to lows and highs being raided to fuel the opposite directional move as opposed to a smooth bullish trend.
This type of behavior in price is characteristic of interacting buyers and sellers. Price had raided the 1D SSL earlier this week, but it had only been an inducing break to entice traders to enter shorts, only to fuel the next bullish price leg.
Price is currently trading below the 50EMA and encountering resistance there; a deeper retracement into discount, aligning with bullish order blocks, and closing of fair value gaps could be the levels at which buyers anticipate value for purchase.
Alternatively, a bullish move into the $24,000 price level, would be where we would expect to find further resistance for a bearish leg, or if the bulls are in aggressive control, an impulsive, high volatility move to reach new highs would be expected.
BTC this week showed signs of slowing bullish momentum as we continued to find resistance at the extreme bearish order block of the monthly range.
Price continued to break higher, but failed to close above previous highs each time, indicating bearish pressure entering the market, where tranches of buying orders were met with an equal pressure of bearish orders waiting in the wings.
This accumulation schematic-esq nature of price action is typical at areas seen as potential value by buyers/sellers, and a confirmational confluence could see a healthy retracement initiate soon.
Price is currently sitting strongly above both the daily 50 and 200 EMA, both signals of a bullish direction that are getting us ever closer to a golden cross taking place. The last of which was a death cross after reaching new ATHs in 2021.
However, the following are likely future scenarios:
A healthy bearish retracement to the $20,000 price level, coinciding with the 50 & 200 EMA acting as support before a golden cross. Aligned with reaching discounted prices and bullish order blocks in discount to continue the bullish trend
Alternatively, if the bulls are aggressively in control we should see an impulsive break above the $25,200 psychological price level before seeing any form of significant pullback.
This week, altcoin trading volumes spiked across multiple exchanges as volatility decreased on Bitcoin. Ethereum (ETH) price followed BTC's price action and was not impacted by the launch of the Zhejiang testnet. However, many other altcoins shot up this week for various reasons:
ETH's story this week is reminiscent of BTC/USD's: a slowing of the bullish trend was evident as shown in the accumulative nature of price action; however, we continued to edge higher, running highs but failing to get strong closes.
ETH has only just been sustaining above the 200 EMA, and a golden cross gets ever closer. Given the raiding of 1D buy-side liquidity, we anticipate a healthy retracement once bearish order blocks in premium have been mitigated and fair value gaps have been closed.
Potential scenarios to watch out for moving forward:
• Price finds value for shorts to initiate at the $1750 price level, and we see a bearish leg breaking below the 200 and 50 EMAs down to at least the $1345 price levels. Coinciding with discount of the price range, bullish order block mitigation, and running of 1D sell-side liquidity
• Alternatively, we continue to edge higher deeper into the $1750-$2070 price range before retracements initiate
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