Bitcoin price forecast: BTC starts the new week with a correction – how low is it going now?

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​​​​The crypto market got off to a great start in the new year. Until yesterday, the Bitcoin price could rise to almost 24,000 dollars. This corresponds to a growth of around 45 percent in January 2023. The main currency also reached its highest level since August 2022. The overall market also grew strongly at the start of the year with the market capitalization of all currencies reaching the $1 trillion mark again. .

Bitcoin price tests support at $23,000

But at the beginning of the new trading week, the course of Bitcoin corrected significantly. At the time of publication, a strong minus 4 percent was recorded. BTC/USD is now threatening to fall below the $23,000 mark again.

The question now is whether this is a healthy correction in a new bull market, or whether investors just saw a bear market rally in January and prices are about to fall again.

The daily chart shows that Bitcoin has clearly surpassed the highs from September and November 2022 at around $22,800 and $21,500 respectively in the last few weeks. However, the $25,200 mark is another hurdle on the way up to continue the rally.

Unless BTC also clears this resistance formed in August 2022, a further rise to the next important level between $28,000 and $32,000 is possible.

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A Bearish scenario could take BTC below $10,000

However, the current stop of the rally at $23,950 is not yet confirmation of a new bull market. As long as the August 2022 high is not broken, Bitcoin could continue to form a bearish pattern on a double top formation.

However, it is currently far too early to consider this extremely bearish situation for Bitcoin as confirmed. BTC still has a chance to scale above $25,200 in the coming days, which would invalidate this pattern.

And even with another correction, Bitcoin price still has a lot of room to go before the double top can be considered a confirmed pattern. To do this, Bitcoin would have to break through the horizontal support zone of this formation at around $15,500 (annual low of 2022) and confirm it with a retest as a new resistance. The technical price target could take bitcoin to new lows under $10,000.

For this, however, first Bitcoin would record a strong correction of almost 33 percent. That seems a long way off, at least in the short term. Overall, bitcoin bulls still seem to be in a better position, at least for now.

Chart indicator: Bitcoin remains overbought on the daily chart

Important chart indicators can also provide clues as to whether a major correction is likely for Bitcoin.

Analysts often use the Relative Strength Index, which evaluates whether an asset is overbought or oversold. Today’s correction saw bitcoin fall sharply down from the overbought zone to around 30 with RSI near 84 on the hourly chart. This means that Bitcoin is almost in the oversold area again, which could speak for a short-term price increase.

On the other hand, Bitcoin is still in overbought territory on the daily chart. However, due to the fall in price, the RSI has fallen from 89 to 72 and is almost back in the neutral zone, which is referred to as a value between 30 and 70.

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There is no Golden Cross for Bitcoin Bull Run yet

Another relevant chart signal is the Golden Cross, which often confirms a reversal trend from a bear to a bull market. The shorter period moving average crosses the longer period moving average from the bottom to the top.

In the chart shown on the daily candles, the green line would have to cross the red line from top to bottom. However, this event has not happened yet, so there is still no confirmation of a new bull market for the Bitcoin price.

In addition, the bands of eight moving average price lines on the weekly chart, the EMA ribbons, have not yet been broken by Bitcoin. This should also make Bitcoin buyers cautious. Because in the bull market of 2021, BTC/USD was always above these bands.

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Interest rate decision on Wednesday: How will the Bitcoin price react?

Next Wednesday could already be brand new for the additional Bitcoin trend. On February 1, the US Federal Reserve will present the future course of US interest rate policy.

After inflation has fallen significantly recently, investors expect the Fed to depart from its dovish stance in 2022 and raise interest rates by a maximum of 0.25 percent. This number is also the analysts’ forecast.

The central bank last decided to raise interest rates by 0.5 percent in December, after repeatedly setting 0.75 points. As inflation has recently been lower than it has been in a year and is well below the highest values ​​since the summer of 2022, the Fed is now expected to take an even more dovish stance.

A 0.25 percent rate hike could further boost the price of Bitcoin. If the central bank even decides to pause interest rates or lower interest rates, beneficiaries may benefit and prices continue to rise. However, with higher rate adjustments, markets are not pricing in a larger correction.

The greed in the crypto market is back

Currently, the crypto market is already greedy again, as shown by the Crypto Fear and Greed Index, which is currently at 61 out of 100. But the hype may be premature, as the chart signals mentioned show and the upcoming Fed meeting. Therefore, investors looking to buy Bitcoin now should be cautious and not enter the market too aggressively.

The current market situation needs to be analyzed precisely when new long positions are added with leverage on crypto exchanges. Analysts advise short-entry investors to slowly build a position in Bitcoin, using dollar cost averaging to arrive at an average price with regular purchases that can absorb price outliers.

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