With Bitcoin on the rise, investors are saying goodbye to the cryptocurrency winter

With Bitcoin on the rise, investors are saying goodbye to the cryptocurrency winter
Bitcoin on the rise.  Image: ShutterStock
Bitcoin on the rise. Image: ShutterStock

Bitcoin rose more than 20% in the first few weeks of 2023, giving investors hope that cryptocurrencies’ painful winter is coming to an end. With Bitcoin rising above $21,000 this Saturday (14), after reaching a bottom of $16,000 in December 2022, investors began to say goodbye to the bear market and are slowly starting to believe in the beginning of the bull run.

At the end of 2022, with major players in the industry declaring bankruptcy and a string of bad news ravaging the industry, it seemed that the winter of cryptocurrencies would linger for quite some time to come, and with the economy headed for recession, there was no light on the end of the tunnel.

However, Bitcoin started 2023 on a high and crossed a major trendline last Sunday. During the week, The $19,500 resistance was broken on Friday, then bitcoin jumped to $20,000 and finally $21,300 in the early hours of Saturday morning.

Bitcoin is therefore on its fourteenth day successive increase, a big debut in a few months. But most importantly, Bitcoin reached almost $21,500 overnighta token level that has not been visited since early November.

Bitcoin came back from the dead?

While fears of further declines have given way to celebration, it is hard to resist the feeling that the sustainability of the current recovery will be tested once again.

Despite this, Glassnode noted that Bitcoin’s price and activity on the blockchain have seen little volatility since the start of the year — a period like others that historically preceded it. “explosive movements”.

According to explained in a video from the on-chain analytics company, Bitcoin has been trading in a range of around $550 since December. That’s a trading range of just 3.4% for almost an entire month.

According to the company, during the few times in history when volatility has dipped below current levels, Bitcoin has experienced massive spikes in volatility — in both directions.

Bitcoin recovery.  Data: Glassnode
Bitcoin recovery. Data: Glassnode

As shown in the chart above, both Bitcoin and Ethereum fell by more than 50% in November 2018 after a period of steady trading. Similarly, a similar sluggish period was quickly followed by a market recovery from April 2019, from $4,000 to $14,000 in three months.

Now, in 2023, Glassnode noted that the “new address impulse” turned positive for the first time since May 2021 after the collapse of the FTX.

Company believes this could show a trend reversal, similar to what was seen in early 2019, but it could still fail and fall.

Running of the bulls or trap?

Bitcoin’s current rising price appears to be more of a relief, brought on by the weakening of inflation, hopes for a “merciful US central bank” and, of course, the failure to confirm analyst worst-case scenarios, such as a possible collapse of Binance. faced with massive withdrawals, the end of the stablecoin Tether or the fear of the end of DCG, which manages the largest bitcoin fund on the market.

The positive news for the market this week was the US inflation data, which showed a decline in prices over the past month, leading to speculation that the Federal Reserve will soon stop raising rates and may even be forced to lower them sooner than expected.

That pushed stocks and risky assets higher, but the momentum really hit cryptocurrencies hard from Friday night (13th) to Saturday morning (14th).

The price of cryptocurrencies comes down to supply and demand, and as such the supply is not increasing, so demand is crucial.

As the FTX stock market crashed and the crypto winter intensified, many investors pulled out of the market or went short. But the price drop brought in more investors, who took the opportunity to buy in the fall, resulting in increased demand.

In the last 24 hours, the cryptocurrency market has seen an increase of more than 7% and the total market capitalization has almost reached the 1 trillion mark.

Bitcoin pulled up other cryptocurrencies, especially Solana, which saw a 70% rally. Overall, the top 20 cryptocurrencies in the world are trending.

Of course we don’t have a crystal ball, but Bitcoin is very likely to undergo a strong correction from this current bullish move.. But fundamental data shows that the price is moving under a lot of resistance.

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Source: Live Coins