Bitcoin (BTC) is bracing for the US Presidential inauguration as traders prepare for volatility.
- Rangebound BTC/USD is tipped to deliver some surprises around the Jan. 20 inauguration, with key levels standing out.
- The week will see multiple core inflation prints as the Federal Reserve takes multiple interest rate cuts off the table.
- The Fed also faces a struggle to contain US dollar strength — a crypto headwind now at its highest since late 2022.
- Binance’s take buy/sell ratio shows signs that Bitcoin may become a firmer “bid” this month.
- Exchange inflows are cooling, with traders choosing to hodl BTC in the mid-$90,000 zone.
Bitcoin still risks breaking below $90,000
As the new week starts, Bitcoin continues to hold steady within a certain price range, with possible factors causing volatility yet to emerge.
Following a surge close to $96,000 towards the end of the week, Bitcoin‘s value against the US Dollar swiftly retreated back to approximately $93,000, as indicated by data from CryptoMoon Markets Pro and TradingView.
Examining potential influences on Bitcoin’s immediate price movement, well-known trader CrypNuevo has pinpointed two significant thresholds as crucial factors.
He explained that when considering Long Tail Fuse (LTF) liquidations, there are two significant areas to note:
1. The first zone is around $91,000, where we witness a sweep of price lows.
2. The second zone is between approximately $96,300 and $97,000, which currently hosts numerous liquidations and could potentially serve as an immediate target. Additionally, he mentioned that $96,600 stands out as the primary liquidation level.
CrypNuevo hinted at a potential hotspot where many exchange-triggered selloffs might possibly happen in large quantities.
Looking at a broader perspective, another graph showcased the extent BTC/USD would have to fluctuate in order to break free from its current price range.
He agreed that mid-range levels are frequently tested again following a breakout, for verification of their role as support or resistance, prior to any further progression.
In simple terms, fellow cryptocurrency trader Daan Crypto Trades advised keeping a close watch on the price ranges, particularly $104,700, as it could potentially trigger a breakout if surpassed.
In simpler terms, the trader Cold Blooded Shiller implies that the price of Bitcoin (BTC) is currently around $93k, and significant selling pressure or “aggression” won’t begin until this level is surpassed (or ‘lost’).
“Based on the TA it still looks likely that level will snap, and then it’s all about the downside total. Everyone wants $85k which means we probably scare those buyers by impulsing a little further.”
According to CryptoMoon’s report, several predictions indicate that Bitcoin could revisit the $90,000 mark or below in January.
CPI headlines a testing week for the Fed
For cryptocurrencies and risk assets, the month of January has been marked by a significant week, characterized by escalating inflation indicators and decisions from the U.S. Federal Reserve.
Over the next few days, we’ll get some crucial economic updates, such as the Consumer Price Index (CPI) and Producer Price Index (PPI) figures for December 2024.
As we approach the upcoming Fed meeting at month’s end, I find myself closely monitoring the current economic landscape, where inflation and unemployment rates are both on the rise. Understanding how these figures will impact their decisions regarding interest rate adjustments is crucial in my role as an analyst.
According to CryptoMoon’s recent updates, the Federal Reserve has become significantly more aggressive in its monetary policy over the past month, leading to a decrease in the likelihood of future interest rate reductions. This shift has had a ripple effect across various sectors including cryptocurrencies, stocks, and others. The result is less capital flowing into these markets, and overall trader sentiment has consequently decreased.
As an analyst, I find this week particularly significant with regards to inflation figures and the Federal Reserve’s response. In essence, the focus lies on the upcoming release of inflation data and how it may influence the Fed’s future actions.
Kobeissi pointed out that the Consumer Price Index (CPI) and Producer Price Index (PPI) will represent their final readings prior to the Federal Reserve’s interest rate decision, which is scheduled for January 29th.
Interest rates are expected to stay high for an extended period, according to the latest reports.
According to CME Group’s FedWatch Tool, the probability of a small 0.25% interest rate reduction in January is only 2.7%.
Initial jobless claims, meanwhile, round out the week on Jan. 16.
US dollar strength nears Fed “response” point
The value of the U.S. dollar is increasing as we approach the January 20th inauguration of President-elect Donald Trump.
A significant factor fueling the recent rise in risk assets is the anticipated return of President Trump. This resurgence comes on the heels of a noticeable strengthening of the U.S. dollar, a trend that historically has had an adverse effect on the crypto market’s growth.
The relationship between cryptocurrencies and the U.S. Dollar Index (DXY) remains subject to discussion, but it’s worth noting that cryptocurrencies are currently at their highest points in more than two years.
In October 2022, Bitcoin was just beginning its downturn phase – often referred to as a bear market – that concluded approximately two months later.
Trader Tony “The Bull” Severino disclosed recently that the relationship between these two entities has grown as strong as it was back in 2016.
According to The Trading Initiative, they are considering the DXY as a potential structural breakout, but this perspective may change if the situation doesn’t support it, as shared with their 12th of January audience.
“Risk assets likely to continue to struggle until the Dollar drops. Above 110 has historically elicited a response from the Fed as things often begin to break. 110.86 is the target.”
Data hints BTC sellers “losing strength”
According to the on-chain analysis platform CryptoQuant, there seems to be a promising outlook for Bitcoin during its current period of consolidation.
On January 12th, a contributor named Crazzyblockk pointed out optimistic findings from the buy/sell ratio indicator on Binance in one of their Quicktake blog posts.
The proportion between buying and selling activities is trending towards more selling, as suggested by a recent change in the 30-day Simple Moving Average (SMA). This was first indicated last week, as reported by CryptoMoon. On larger weekly timeframes, this ratio seems to be aiming for a higher settlement point.
As a researcher, I’m noticing an interesting development in the Binance taker buy/sell ratio: although it’s currently showing a -5% monthly decline, the emerging signs seem to indicate that sellers may be weakening.
“The positive shifts in this weekly ratio indicate that sellers are weakening and buying demand is on the rise.”
A chart that was included displayed the daily number of buyers versus sellers, along with a seven-day average line for clarity.
Crazzyblockk admitted that Binance’s significant influence on the cryptocurrency market means that their ratio data is likely the most important or relevant.
The balance between buyers and sellers, known as the taker-to-maker ratio, offers valuable insights into market opinions. Given Binance’s significant influence within the cryptocurrency sector, fluctuations in this ratio might suggest broader shifts in Bitcoin’s price movement.
As a researcher, I couldn’t help but notice that the broader cryptocurrency trading community didn’t ignore the data. In fact, figures like YouTube host Kyle Doops are expressing optimism about the possible resurgence of Bitcoin’s price uptrend.
“Could this be the start of a broader price move?” he queried on X.
Binance users choose to hodl
Showing further optimism from Binance, the flow of Bitcoin into trader’s wallets continues to gradually decrease.
The current daily average inflow of Bitcoin is roughly 6,000 BTC according to CryptoQuant, which represents about a 75% drop compared to the highest point observed in November.
The drop indicates that the urge to sell Bitcoin may be decreasing, as it seems investors are choosing to keep their Bitcoin instead of getting rid of it, according to a summary by contributor Darkfost in a different Quicktake article.
“By looking at Binance’s Bitcoin netflows, we can observe that outlows continue to dominate but the netflow volume has remained relatively flat in recent days.”
Darkfost pondered over the likelihood of a “more evenly distributed market” due to traders’ reluctance to continue profiting, given the current pricing levels.
If things continue as they are, we might see a phase of stabilization or a resurgence of positive market trends.
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2025-01-13 12:07