Saturday’s session witnessed Bitcoin climbing beyond $21K amidst positivity that inflation has peaked and the bellwether crypto could have bottomed. BTC gained around 7.5% to hit $21,299 before paring its gains as the session progressed.
Crypto Market Soars
Remember, Bitcoin hadn’t been beyond $20K since 8 November, and yesterday represented the 11th consecutive day of upsides. Meanwhile, the overall cryptocurrency industry recorded surges. The 2nd-largest crypto, Ether, gained approximately 9.7%, while the likes of Dogecoin and Cardano displayed notable gains.
Solana exploded as it gained around 35%. As a result, the market valuation of all digital coins climbed past $1 trillion. However, the metric has stayed below this territory since November’s early sessions (CoinGecko data).
Venn Link Partners CEO Cici Lu commented on BTC’s actions, staking that the leading cryptocurrency has steadily surged since 2023 started. He added that breaking the $20K resistance saw Bitcoin taking out some stops.
Remember, most market players consider $20K a primary level for BTC. United States near-term inflation anticipations dipped to the lowest in about two years early this year. University of Michigan’s survey reading indicated that such developments offered a higher-than-anticipated bolster to consumer sentiment.
Another report indicated that US consumer prices rose by 6.5% in the one year through December, translating to the lowest inflation in over a year.
Meantime, the United States Fed is on the course of downshifting to minor rate hikes following continued price cooling. However, it may keep hiking until a more definitive slowing signal surfaces. That has bolstered risk assets like NASDAQ 100 Index – which has seen gains for six consecutive days.
Fundstrat’s Sean Farrell stated that cryptocurrencies recorded stunning performance following the latest soft consumer inflation data, indicating that crypto’s relationship to macro is here for a while.
He added that this week’s price action is encouraging, and excluding forced liquidations from distressed crypto firm DCG means an increased probability of a decisive bottom in cryptocurrency prices.
Bitcoin had its price sandwiched between $16K and $17K for several weeks before the recent breakout. Meanwhile, the upside has caught short positions by surprise, which cryptocurrency short liquidations topping $100M in five out of the last six days (Coinglass data). Saturday’s highest number was $449 million.
What’s Next for BTC?
Fairlead Strategies co-founder Katie Stockton cautioned enthusiasts about the rally that saw Bitcoin climbing beyond its 200day Moving Average (MA) for the initial time in 2023. She stated that highly overbought near-term indications challenge optimistic momentum, advising investors to stop chasing the upside at current levels.
Stockton sees resistance at around $21.5K – where a 61% FIB retracement mark locates. Yet, the upside trajectory will likely amplify optimism within a market that has struggled to secure friendly news over the recent months.
CEO of social-trading site Alpha Impact Hayden Hughes stated that dipping COI and the updates that FTX liquidators recovered $5B in liquid assets gave cryptocurrency markets many reasons to overlook the macro outlook, which remains bearish.
Hughes added that the space has much optimistic momentum ahead of the FOMC conference later in January. So, has the crypto winter ended? Considering the market’s volatility, it may be early for such a conclusion.
Also, the latest upside didn’t cancel all bearish tendencies within the marketplace. Thus, upcoming hours can see the space on a minor dip before accumulating momentum to push further upside. Nonetheless, BTC overpowering the $21.5K resistance would mean near-term upside actions in the broad market.