Bitcoin (BTC) price is approaching a 3-week high. Bets are rising on BTC price action, which defines a higher push for Bitcoin and the current range as the macro base.
Eyes on CPI
TradingView data followed BTC, which briefly crossed $17,000 the previous day. Bitcoin saw sudden volatility after fresh economic data from the US. However, this failed to translate the key level as resistance and fell. However, the short-lived spike provided Bitcoin’s highest price point since December 20, 2022.
Reacting market participants continue to focus on next week’s Consumer Price Index (CPI) data as a major potential catalyst for risky assets. Michaël van de Poppe, founder and CEO of trading firm Eight, said in part of a summary tweet on Jan. 6, “Unemployment will rise in the coming months. If the CPI is low, yields will fall off the cliff,” he says.
“Relief rally for Bitcoin is near!”
Hopeful trader Kaleo continues, “Rally of relief is near.” In this context, the analyst makes the following statement:
Finally, BTC seems ready to break out of the $16,000-$17,000 key range where it has been stuck over the past few weeks. Start Squeeze.
Meanwhile, futures trader Satoshi Flipper says if CPI data show inflation falling faster than expected, it could fuel a journey to multi-month highs of around $19,000.
Data reveals extent of on-chain losses
Another analyst, Rekt Capital, agrees with the growing consensus on the current narrow trading range that is forming BTC’s next macro bottom. “The current BTC price action will likely form a key cluster in the formation of the Bear Market Sub-Accumulation Range,” the analyst says.
On-chain analytics firm Glassnode has shown that in another demonstration of the pain already endured by hodlers, Bitcoin has seen the second-largest frontier drop to occur. The realized cap defines the total price at which the BTC supply last moved. In addition, the decrease reflects the realized losses from the sale. Checkmate, Glassnode’s lead chain analyst, comments:
The 2022-23 Bitcoin Bear Market saw the boundary drop -18.8%. It’s the second-largest level in history and has only been dwarfed by the pico-bottom of 2011. Investors recovered a total Net Realized loss of $88 Billion.
Impact of macroeconomic news on the price of BTC
Building on the recent price action, crypto analyst Michaël van de Poppe states in a tweet on Jan. In this context, the analyst makes the following statement:
Bitcoin needs to hold above $16.6 to avoid a dump above $16.6K and maintain the upside momentum. In this context, with today’s data, I’m looking slightly lower towards $17,000 for long trades.
Why is the dollar death cross bullish for Bitcoin?
Bitcoin was created as a solution against fiat in the face of unprecedented quantitative easing and big bank bailouts. In many ways, his archenemy must naturally be the almighty dollar. BTC is also trading against the primary conversion rate and the most dominant trading pair USD. Crypto analyst Tony Spilotro notes that when the dollar is strong, Bitcoin tends to be weak. Spilotro continues his analysis in the following direction. Naturally, the opposite is also true. The dollar showed a potential sign of weakness to the world today with a death cross on DXY.
Although DXY does not include Bitcoin, BTC/USD seems particularly vulnerable to gold death-crosses in DXY. A death cross occurs when the 50-day moving average falls below the 200-day moving average, and a gold-cross occurs when the 50DMA rises above the 200DMA. Each are possible early signals of a trend change. DXY crossed daily for the first time since their golden cross at the end of July 2021. While this may not seem overly important, the data suggest otherwise.
Compared to 2015, DXY has crossed six in total, including today’s signal. Three such transitions took place from 2015 to 2017. Two more occurred in 2020, just before the latest bull run. Across five signals since the bottom of the 2015 bear market, Bitcoin price has increased by an average of 359%. Each of the three weakest signals yielded results between 64% and 120%. It has also seen plenty of volatility in the front and back of every rally.
The other two death crosses resulted in more dramatic decreases in DXY. Hence, it led to a much greater increase in Bitcoin. These signals produced 567% in 2020 and a staggering 935% in 2017 during the last bull run that made the top cryptocurrency a household name.