Will 2023 be the year of the Bitcoin bull run? Here’s what you should pay attention to.
The crypto king, Bitcoin, has been on an extended bear market since early November 2021. Many experienced investors have benefited from the sale, while other neophyte and inexperienced traders have paid for their ignorance in a very painful way.
Over the last thirteen months, we have seen a decline of over fifty thousand (52,000) pips from this cryptocurrency alone. But is the decline over?
Gaining a Technical Perspective
From the technical perspective, we can see certain factors that point to a possible reversal signal, although there are still factors of uncertainty that will demand that we stand aside and watch price action play out for maximum confirmation if the expected bull run occurs.
As of January 2023, the Crypto King made an impulse move to the upside, taking prices from $16,496 to $21,646 in the first eighteen days of the month. Before this move, we can clearly see a break of the 2021 trendline from the weekly timeframe and a break of the November 2022 monthly high of $21,473, which was the last lower high before price bottomed, although price failed to stay above the high as at the time of writing.
Going further, we could see resistance at the $21,200 supply zone and a possible decline in price for efficient price delivery. This decline could go as low as the $18,000 level before the upward move continues. Many might be quick to assume the start of a bull run, but from the technical perspective, there’s no clear structure break that would indicate that the bulls can sustain their move.
As of the time of writing, the RSI is in an overbought state, which indicates a possible decline before any expected bull run. Crypto investors may want to stay on the sidelines until there are clear indications from the technicals that the bull run has begun.
Fundamental Drivers
Let’s look at some fundamental drivers of this cryptocurrency and certain economic factors that could define the next direction for the crypto king. These factors should be combined with technical knowledge in order to arrive at a well-informed decision.
Bitcoin, being a cryptocurrency priced in dollars, has a direct correlation to the greenback. That means invariably, the performance of King Dollar could impact the leading cryptocurrency, whether directly or indirectly.
The 0.1% decline in the December US Consumer Price Index (CPI) data released on January 12, 2023, helped in the recovery of Bitcoin, Ethereum, and by extension, other cryptocurrencies. The data led to a decline in the strength of the dollar index and a rally in risky assets. This also helped to create a recovery from the effect of the collapse of the FTX exchange, which was one reason for the decline in the price of Bitcoin in late 2022.
The Producer Price Index (PPI) is another key factor that defines the direction of Bitcoin.
Why price indices are very important is because the market always reacts to inflation expectations. As of the time of this writing, the PPI data released on January 18, 2023, shows a decline in the PPI data reading for the month of December. This indicates a potential decline in the strength of the dollar and an expected rise in the price of cryptocurrencies.
The monetary policies implemented by central banks have a huge effect on the prices of cryptocurrencies, especially when pegged to the dollar index. Paying attention to this factor is key to staying ahead in the crypto space.
In addition to this article, there will be one that educates you on key facts that drive the Bitcoin market.
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