Bitcoin Teases New 2023 Highs Amid Market Volatility, Fueling Debate About Continuation Of Bull Run
Summary:
Despite new 2023 highs, Bitcoin (BTC) struggled to break out of its range this week, raising questions about the continuation of the bull run. Traders argue patience may bring more significant price moves due to on-chain data, supply shocks, and "reset" derivatives markets. During the debut of U.S. Bitcoin exchange-traded funds (ETFs), BTC price went up nearly $3,000, then experienced a more drastic drop. Even though market conditions are volatile, prominent traders and social media commentators remain optimistic about the upward trend, although concerns are emerging about possible long-term supply imbalances as U.S. institutions gain unrestricted Bitcoin exposure.
This week Bitcoin (BTC) tantalizingly teased new highs for the year 2023, yet could not surpass its static range, leaving many questioning if the bull run trend is facing its end. The ongoing challenge for BTC's price continues to be hurdling the $50,000 ceiling amidst escalating fluctuations in the market. Looking at the situation optimistically, many traders believe that with a bit of tenacity, they may yet witness significant jumps in price.
Several factors are fuelling this hopeful conjecture for the next leap in Bitcoin's bull run, including on-chain information, upcoming supply shocks, as well as the realignment of the derivatives market. An in-depth look at these elements reveals that numerous individuals are adamantly positive about the foreseeable trajectory of BTC/USD.
As the first U.S. spot Bitcoin exchange-traded funds (ETFs) debuted, BTC/USD witnessed a nearly $3,000 rise, only for it to plummet more sharply. The much-anticipated surge in Bitcoin was, unfortunately, short-lived as the asset lacked sufficient momentum to overcome the selling pressure when approaching the $50,000 line not seen since December 2021.
However, according to trusted trader and social media influencer Alan Tardigrade, Bitcoin has successfully maintained its bullish structure, despite the Jan. 11 daily candle close. Expounding upon this on X (previously Twitter), Tardigrade highlighted that BTC/USD is lodged within a "bull flag" formation inside a broader uptrend—a typical consolidation mechanism.
Another tell-tale sign of an emerging bull market is Bitcoin's market cap dominance. For both Tardigrade and trader Matthew Hyland, it's quite evident. Referring to on-chain metrics, they found that Bitcoin is surrendering some of its crypto market cap power to substantial altcoins, a cycle characteristically indicative of the initiation of prior bull markets.
As per insights from statistical resource CoinGlass, the derivatives markets that are instrumental in lasting BTC price gains currently stand neutral compared to previous weeks. Even despite Bitcoin's uphill progress, there seems to have been a comprehensive "reset" of funding rates across various exchanges. The world's largest exchange, Binance, maintained neutral Bitcoin funding at the time of writing on Jan. 12, paralleling OKX and Bybit.
Open interest, although still high, has now slipped below the December highs when BTC/USD first entered its existing trading range. Historically, a price crash has often followed these elevated interest periods, eliminating a large number of positions. However, Glassnode, the on-chain analytics firm, noted the increasing dominance of the CME Group in overall open interest, pointing out institutional investors' burgeoning presence in the derivatives sphere.
With U.S. institutions newly granted unlimited access to Bitcoin exposure, a few voices are raising concerns about a possible resultant long-term imbalance in supply. The fear is that Bitcoin could face a severe supply "squeeze" with its finite availability and proportion of coins irretrievably lost, should major players demand large allotments for their portfolios. Some worry that this could result in a distressingly illiquid market. Daniel Roberts, CEO and founder of Bitcoin miner Iris Energy, is one such voice raising this concern. However, other renowned names in the Bitcoin industry, including Blockstream CEO Adam Back, seemingly remain unaffected by these fears.
Published At
1/12/2024 12:13:50 PM
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