Bitcoin (BTC) begins the first week of 2023 in an uninspiring place as volatility stays away — along with traders.
After failing to budge throughout the Christmas and new year break, BTC price action remains locked in a narrow range.
Having sealed yearly losses of nearly 65% in 2022, Bitcoin has arguably seen a classic bear market year, but for the time being, few are actively predicting a recovery.
The situation is complex for the average hodler, who is watching for macro triggers courtesy of the United States Federal Reserve and economic policy impact on dollar strength.
Prior to Wall Street returning on Jan. 3, Cointelegraph takes a look at the factors at play when it comes to BTC price performance in the coming week and beyond.
Bitcoin traders fear new lows amid flatlining price
Bitcoin hodlers may be wishing for volatility, but so far, BTC price action has remained distinctly comatose, data from Cointelegraph Markets Pro and TradingView shows.
It seems nothing — low-volume Christmas trading, the quarterly and yearly candle closes and even macro data prints before that — can shift the status quo.
As Cointelegraph reported, Bitcoin volatility even managed to hit new record lows in the run-up to the end of the year, as per the Bitcoin historical volatility index (BVOL).
Looking ahead, traders are thus conservative as to what lies in store for BTC/USD as signs of a fundamental shift remain wholly absent from market behavior.
“It takes a tiny pump into resistance to turn everyone bullish again. This same bull trap has been happening during the entire 2022, yet people don’t learn,” Il Capo of Crypto argued on the day.
“12k is very likely.”
His comments came alongside a modest shift upward for Bitcoin, which passed $16,700 for the first time in several days.
They were echoed by popular trader and analyst Pentoshi, who likewise flagged $12,000 as a key support zone for Bitcoin to revisit in terms of volume on higher timeframes.
Fellow analyst Toni Ghinea meanwhile once again doubled down on a $11,000-$14,000 floor for BTC/USD.
“Expecting all these levels to be reached in 2-3 months,” Twitter commentary confirmed on Jan. 1.
Michael Burry warns inflation will return
With another week to go until the United States Consumer Price Index (CPI) print for December hits, the first days of January are relatively calm when it comes to macro BTC price catalysts.
That does not mean that there is nothing to look out for, however, as Purchasing Managers’ Index (PMI) and non-farm payrolls data is all expected in the coming week.
The trend in the short to mid-term remains one of declining inflation, according to CME Group’s FedWatch Tool, this in turn allowing risk assets room for maneuver.
The Federal Reserve has yet to signal that it will pivot on its interest rate hikes, despite the pace of those hikes already beginning to fall. As soon as those signals come in, sentiment around risk-on should markedly strengthen.
The Fed will release minutes from its Federal Open Market Committee (FOMC) meeting on Jan. 4, providing clear guidance on policy going forward.
For “Big Short” investor Michael Burry, however, even that more permissive scenario is not the end of the inflation story.
“Inflation peaked. But it is not the last peak of this cycle,” he warned in a tweet on Jan. 2.
“We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition. Fed will cut and government will stimulate. And we will have another inflation spike. It’s not hard.”
The results of Fed policy have been clear to see for 2022 stock market performance, with the S&P 500 for example finishing the year 1,000 points below many of the most popular estimates.
While markets await the first Wall Street trading day of 2023, the U.S. dollar index is already struggling in what could be the year’s first silver lining for crypto assets.
The U.S. dollar index (DXY) is currently threatening to fall through support unchallenged for over six months, after which the 100 point level reenters.
“Markets: DXY on the verge of breaking down again, 10yr yields reaching resistance, WTI crude rebounded to resistance, gold paused at resistance, stocks treading water,” Callum Thomas, founder and head of research at macro research house Top Down Charts, summarized in part of Twitter comments on the day.
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