Bitcoin (BTC) is pulling out of trouble? Crypto analysis of January 10, 2023

After recording a drop of -10% last week, Bitcoin has bounced back, reaching $47,000. Let’s take a look at the future prospects for the price of BTC.

Bitcoin (BTC) Situation

After reaching a new peak of $45,900 in the early days of the year, the Bitcoin price underwent a rapid decline, close to 10%. It fell from $45,100 to $40,600 in just two hours. Although this drop brought Bitcoin below its previous peak of $45,000, causing concern among cryptocurrency market investors, the medium and long-term trend for Bitcoin still appears to be bullish.

After making a new low, Bitcoin experienced a rise. This was stimulated by renewed interest from buyers. This period was marked by a price consolidation in the form of a symmetrical triangle, which was broken upward, theoretically suggesting the continuation of the bullish trend. A scenario that has indeed been confirmed. Indeed, Bitcoin has not only recovered its recent losses, but it has also surpassed them.

This morning, the BTC price is trading around $47,000. It remains above its 50-day and 200-day moving averages, reinforcing the idea that Bitcoin is still in a medium-term bullish trend. On the side of oscillators, they continue to stay above the median threshold, reflecting bullish momentum. However, a bearish divergence of these with the BTC price suggests a period of consolidation or decline to come.

The current technical analysis was conducted in collaboration with Elie FT, an investor and trader passionate about the cryptocurrency market. He is now a trainer at Family Trading, a community of thousands of proprietary traders active since 2017. Here you will find Live sessions, educational content, and mutual aid around financial markets in a professional and warm atmosphere.

Focus on Derivatives (BTCUSDT)

During the fall of Bitcoin below $45,000, its open interest decreased by about 20%. This represents the removal of nearly $1.7 billion worth of positions (long and/or short) on Bitcoin contracts. This drop, accompanied by approximately $35 million of buyer liquidations, reflects increased volatility and downward pressure on the cryptocurrency market.

However, after a brief consolidation of Bitcoin, the main cryptocurrency experienced an increase in open interest. Indeed, from $43,500, more than $850 million were added to Bitcoin. Given the bullish trend that BTC has taken, it can be inferred that the majority of these positions were buyers. This claim is further reinforced by the fact that significant short position liquidations did not have a notable impact on the open interest.

Currently, open interest shows a slight decrease, which could indicate a lack of conviction on the part of traders or profit-taking. This trend suggests a period of reevaluation or adjustment of positions in the market.

The BTC/USD liquidation heatmap indicates that Bitcoin has passed through a high liquidity zone located between $44,500 and $46,360. So far, demand seems to outweigh supply. This supports the hypothesis that the upward movement is probably not over. However, a correction to test the interest of this zone is not out of the question.

It is important to note that the levels of $43,000 and $42,000 appear to remain significant liquidation zones. Additionally, with BTC having stagnated around $47,000, a subtle liquidation zone has formed above this price. As the market approaches these levels, this could trigger a large number of orders and consequently increase the volatility of the cryptocurrency. These zones are therefore potentially attractive for investors.

Hypotheses for the Bitcoin (BTC) Price

If the Bitcoin price manages to hold above $45,000, we could anticipate a rise to the $48,000 threshold. The next resistance to consider, if the bullish movement continues, would be around $50,000 or even $52,000. At this stage, this would represent an increase close to +10%.

If the Bitcoin price fails to hold above $45,000, we could envision a return to $43,500. The next level to consider, if the downward movement continues, would be around $42,000 or even $40,000. At this stage, this would represent a drop close to -14%.

Conclusion

Bitcoin kicks off the year 2024 with significant volatility, due in part to the excitement surrounding the SEC’s highly anticipated decision on spot Bitcoin ETFs. On this matter, the question arises: should we sell the news? What is certain is that it will be crucial to closely observe the price reaction to the different key levels to confirm or invalidate the current hypotheses. It is also important to remain vigilant about potential “fake outs” and market “squeezes” in each scenario. Finally, let us remember that these analyses are based solely on technical criteria and that cryptocurrency prices can otherwise move rapidly depending on other more fundamental factors.