BTC price analysis 17 Jan: Dead cat bounce or sustained recovery?
Bitcoin (BTC) could remain stuck in a tight range in the short term.
Bitcoin’s price has stopped its descent but is struggling to start a rally. However, several analysts believe that this could soon change and bitcoin may make a dash higher. Gavin Smith, CEO of the cryptocurrency hedge fund Panxora, believes the catalyst will be “stubbornly high inflation numbers coupled with a continuation of negative real interest rates”.
Another positive projection was made by Guido Buehler, CEO of the Swiss bank Seba, who said to CNBC that institutional buying could boost bitcoin’s price to between $50,000 and $75,000 in 2022.
The on-chain analytics firm Glassnode’s miner net position change indicator showed that miners have been accumulating bitcoin since November 2021. The hoarding picked up as miners accumulated more than 5,000 bitcoin a day for five consecutive days until 11 January, the fastest pace since May 2021.
Fidelity Digital Assets, in its report titled ‘Research Round-Up: 2021 Trends and their Potential Future Impact’, also pointed towards the miners’ behaviour. The report said: “Bitcoin miners have the most financial incentive to make the best guess as to the adoption and value of bitcoin. We think their recent actions lend to the thesis that the current bitcoin cycle is far from over and that these miners are making investments for the long haul and not a quick profit, therefore strengthening the resiliency and reliability of the bitcoin network.”
However, some investors do not share the bullish view for bitcoin. A recent poll by JPMorgan Chase of its clients found that only 9% of respondents expect bitcoin to break above its all-time high and reach $80,000 this year.
While most analysts are positive on bitcoin in the long term, will bitcoin go up in the short term? Read our BTC price analysis to find out.
Bitcoin price technical analysis: weekly chart
BTC’s price bounced off the $40,757.25 to $39,565.25 support zone last week, indicating that bulls are defending this zone aggressively. The BTC/USD pair recovered 2.93% to finish the week at $43,105.05.
The moving averages have completed a bearish crossover and the relative strength index (RSI) is in negative territory, indicating that bears have the upper hand.
If the price turns down from the current level or the 20-week exponential moving average (EMA), the bears will attempt to resume the downtrend by pulling the pair below the support zone. If they succeed, the pair could decline toward the next major support at $28,639.70.
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The first sign of strength will be a break and close above the 20-week EMA. Such a move will suggest that the selling pressure could be reducing. The bullish momentum could pick up on a break and close above $52,122.15.
The bitcoin price analysis shows that bulls are attempting a rebound but are facing selling at higher levels.
Bitcoin price technical analysis: daily chart
BTC’s price bounced off $39,701.20 on 10 January and reached the 20-day EMA on 13 January but the bulls could not clear this overhead hurdle. This suggests that traders are attempting to defend this resistance.
However, a minor positive has been that bulls have not ceded much ground. This indicates that short-term traders are not dumping their positions, as they expect the relief rally to continue.
If bulls drive and sustain the price above the 20-day EMA, the pair could rally to the 50-day simple moving average (SMA), which could act as a resistance. The buyers will have to clear this barrier to indicate the start of a new up-move.
Contrary to this assumption, if the price turns down from the current level and breaks below $39,565.20, the downtrend may resume.
Bitcoin: buy or sell at current levels?
The bitcoin price analysis suggests that bears are posing a strong challenge at the 20-day EMA but bulls have not given up yet. If bulls overcome the resistance, the pair could rally to the 50-day SMA. This positive view will be negated on a break and close below $39,565.20.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.