Bitcoin (BTC) starts a new week on a promising footing with BTC price action near one-month highs — can it last?In a new year’s boost to bulls, BTC/US
Bitcoin (BTC) starts a new week on a promising footing with BTC price action near one-month highs — can it last?
In a new year’s boost to bulls, BTC/USD is currently surfing levels not seen since mid-December, with the weekly close providing cause for optimism.
The move precedes a conspicuous macroeconomic week for crypto markets, with the December 2022 Consumer Price Index (CPI) print due from the United States.
Jerome Powell, Chair of the Federal Reserve, will also deliver a speech on the economy, with inflation on everyone’s radar.
Inside the crypto sphere, FTX contagion continues, with Digital Currency Group (DCG) at odds with institutional clients over its handling of solvency problems at subsidiary Genesis Trading.
At the same time, under the hood, Bitcoin still shows signs of recovery from the FTX turmoil, with miners among those catching a break.
Cointelegraph takes a look at these factors and more as the second trading week of January gets underway.
Bitcoin price passes $17,000
Bitcoin managed to spike higher at the Jan. 9 weekly close, hitting levels absent from the chart since Dec. 16.
Data from Cointelegraph Markets Pro and TradingView shows local highs coming in at $17,250 on Bitstamp.
Despite only adding several hundred dollars, the move on BTC/USD did not go unnoticed given the extremely compressed trading range in place for many previous weeks.
Nonetheless, eyeing potential continuation, traders were less than willing to change their longer-term conservative perspective.
“Onwards and upwards to my $17,300 – $17,500 target,” Crypto Tony told Twitter followers in an update on the day.
“I have taken some profit here on my scalp long, and remain in my short as long as we are below 17,500 on 4 hour closure.”
Michaël van de Poppe, founder and CEO of trading firm Eight, likewise left the door open for some modest upside continuation, but warned that the start of the week would present hurdles.
“Still watching a case like this on Bitcoin,” he confirmed alongside an explanatory chart.
“I think we’ll continue rallying coming week, but probably have a drop due to Gemini or correction on Monday first.”
Meanwhile, Venturefounder, a contributing analyst at on-chain analytics platform CryptoQuant, reminded investors to zoom out.
“Bitcoin has been stuck between $16k and $18.5k for 2 months now,” he acknowledged.
“Watch this range very very carefully, a break from either direction can bring 20% volatility, could happen soon. A definitive break of $16k could see $13k, make $18.5k support we can see $22.5k.”
CPI countdown returns as risk asset traders eye volatility
All eyes, including those of the Federal Reserve, are on inflation data this week with the December print of the Consumer Price Index (CPI) due for release.
CPI, which will greet markets on Jan. 12, is a key component of Fed policy, and traders and analysts alike are keenly aware that the signals it provides can lead to shifts in its stance.
Recently, CPI has been declining, hinting that the Fed’s existing interest rate hikes have had a positive impact on inflation.
Should this continue or even decline more than expected, hopes that the Fed will decrease rate hikes faster — or even cancel them altogether — will increase.
This in turn provides a window for risk assets, including crypto, to gain, as Fed policy easing ignites appetite for risk.
“Expecting enormous volatility. Huge cash position and light position size for me,” Ted Zhang, trader and research analyst at Revere Asset Management, told Twitter followers, describing the CPI event as a “huge week.”
Others noted the unusual timing of the CPI schedule, with the data coming two days after a speech on the economy by Fed Chair, Jerome Powell.
“Unfortunately or fortunately the speech is on Tuesday while cpi on Thursday so any hawkishness will be undone post cpi numbers on Thursday!” one response read, adding that market reactions to Powell’s speech may well amount to “noise.”
According to CME Group’s FedWatch Tool, the chances of a 25-basis-point rate hike this month currently stand at 75% versus a 25% chance of a large 50-basis-point move.
Longer term, skeptics, including “Big Short” investor Michael Burry, maintain that inflation will return, with the Fed obliged to raise rates again as a result.
“CPI inflation is unlikely to fall as low as 2%, let alone go negative,” gold bug Peter Schiff wrote in a response to Burry last week.
“But I agree with you that the Fed will return to QE and the official inflation rate will hit a new high. The unofficial actual rate will hit a new all-time record high.”
DCG publicly faces the music
As the fallout from the FTX saga rolls on, it is institutional investment giant Digital Currency…
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