The mood on the crypto market has turned from bearish to bullish in a short period of time. The well-known indicator of the Fear and Saint Bitcoin Index recently increased to 65 and thus achieved the “greed” status. But recently, however, after the crash of the crypto exchange FTX, the market was dominated by fear.
The euphoria due to the price increases is strong in the first few weeks of the year. Prices rose as strongly as the bull market in 2021.
Bitcoin price rises 40 percent
The price of Bitcoin has risen almost 40 percent since January 1, 2023. Bitcoin not only regained the $20,000 mark, but managed to reach just under $23,400 last Saturday. This increases the euphoria among investors that Bitcoin has seen the bottom of the bear market and the market may even be at the beginning of the next bull run.
There is a certain FOMO among buyers, the fear of missing out. This can be seen not only in the increased interest in buying Bitcoin on crypto exchanges, but also in social networks, where many of the crypto influencers are once again spreading great euphoria. But is this new hype justified or is it perhaps just a big bear trap and another correction will quickly put the market sobering?
Kryptoszene.de uses the Bitcoin chart and important technical indicators to analyze what now speaks for and against the fact that BTC has taken off.
Bitcoin price as strong as it was in October 2021
Of course, the momentum of the Bitcoin course can be seen clearly bullish. Of the first 24 daily candles this year so far, only five are red, indicating a price decline, and 19 are green, marking the price rise. In addition, the green candles were much more prominent. The biggest daily loss since the start of the year was 2 percent so far. In contrast, BTC/USD posted five daily candles with gains of more than 2 percent.
The weekly and monthly charts mostly speak a clearly bullish language. Bitcoin has yet to see a red weekly candle this year and the monthly candle is up almost 40 percent. Growth was even stronger in October 2021 when the market reached the final stage of the bull run.
Bitcoin indicator gives a buy signal
The fact that the price of Bitcoin on the daily chart clearly broke through EMA ribbons is still bullish. These average price lines have been changing regularly in price over the past year. However, the EMA ribbons haven’t yet been bullish. However, typical of a bull market, BTC regularly uses the ribbons as a support zone to continue its rise.
Another bullish technical signal is the Hash Ribbon Indicator. The indicator tries to identify periods when bitcoin miners are in distress and may capitalize. The assumption is that such periods can happen when the price of $BTC is at great rates so it could be a good opportunity to buy the dip.
Currently, this indicator shows a “buy” signal. In the history of Bitcoin, the hash ribbons have been able to predict good entry times for Bitcoin reasonably reliably. For example, in November 2020 there was a buy signal and the big bull run continued, taking BTC to $69,000. However, the Buy indicator also sounded the alarm in August 2022 and it was wrong. Another correction later. However, the black swan event when FTX fell was of course unpredictable for the indicator.
Bitcoin price breaks key resistance
The fact that the Bitcoin chart shows that the high price from the beginning of November and the middle of September is probably now broken as well. However, the next important resistance is already waiting for BTC. Because in August 2022 the price had risen to more than 25,000 dollars. This high also needs to be breached to provide another confirmatory signal of a sustainable trend reversal.
However, despite these many bullish signals for the price of Bitoin, which could really indicate the beginning of a new bull, there are some bearish signals on the other side that still do not finally confirm the trend reversal.
There is no Golden Cross for Bitcoin yet
For example, the previously mentioned EMA ribbons on the monthly chart still show bearish signals. Because Bitcoin has currently failed to weigh the lowest band of these moving averages of price. Rather, a bearish retracement right now looks like continued resistance for Bitcoin. Because just as Bitcoin reached the lowest band at $23,400, the first correction set in and at the time of publication, BTC/USD is trading below $23,000 again.
In addition, the price of Bitcoin does not yet have a so-called golden cross, in which a bullishly moving average price line crosses from bottom to top for a shorter period of time. This Golden Cross was last seen in May 2020 and September 2021. After that, the Bitcoin price could rise significantly.
The two lines are currently converging, but the Golden Cross could be a long way off if the Bitcoin price does not continue to rally.
Bitcoin is overbought according to the indicator
The Relative Strength Index on the daily chart also gives a bearish signal. This is currently at 85 so it is clearly in the overbought zone. According to this index, an asset is already overbought at a value of 70 or more.
However, the RSI could also show a bullish divergence for the price of Bitcoin and thus announce another upward trend. Because the RSI is currently less overbought than it was ten days ago, even though the price is now higher. This could indicate that the bulls have some strength left to continue the rally at least for a while longer. However, sooner or later a correction is overdue according to the RSI.
The fact that Bitcoin’s correction is more modest compared to previous bear markets can also make you cautious as to whether the bear market has come to an end. The price reduction in the last two bear markets was 87 and 84 percent, respectively.
However, the correction from $69,000 to about $15,500 was “only” a drop of about 78 percent. If Bitcoin follows its history, there could be further downside. However, unlike the other chart indicators mentioned, this historical comparison should not be given too much importance.
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