Sentiment split between Bull Trap or Bottom as Bitcoin nears 23K

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A recent rise in the price of cryptocurrencies like Bitcoin and Ethereum has sparked a distantly familiar debate: whether a market rebound might be imminent or whether recent trends are just a prelude to more pain.

Ever since Bitcoin hit an all-time high of around $69,000 in November 2021, digital assets have been hampered by higher interest rates and a series of collapses from top companies like Three Arrows Capital (3AC) and FTX, to name a few.

While Bitcoin is down nearly 67% from its peak, digital assets and other investments like stocks have had a positive start to the year. The price of Bitcoin has risen 38% so far this month to $22,858, its highest price since last August. Ethereum, meanwhile, also saw the value of ETH surge around 38% to $1,645, according to CoinGecko.

Cryptocurrency prices started rising earlier this month ahead of an economic report that showed inflation had cooled in December. The reading also raised hopes that the Federal Reserve is raising interest rates less aggressively than it did last year to rein in soaring prices.

But be weary, say the prudent. Many crypto commentators think the recent price rally is too good to be true and are calling the rally a bullish trap, predicting that the breakout will collapse and burn traders who mistook it for the start of a new uptrend. .

Others following the rally are also skeptical. A Twitter poll conducted by a popular Bitcoin page reached a consensus among over 18,000 participants that the rally was indeed a bull trap on January 15.

Most recently, il Capo Of Crypto, a prominent self-proclaimed crypto influencer and analyst, endorsed the bearish take, saying the rally looks clearly manipulated and this is the biggest bull trap they have ever seen.

I’ve been checking the charts the whole time, avoiding the Twitter noise. The way the up move is happening, the way the htf resistances are being tested…it seems clearly manipulated, no real demand.

Again, the biggest bull trap I have ever seen. But they won’t trap me.

he Capo Of Crypto (@CryptoCapo_) January 21, 2023

The sentiment among cautious crypto enthusiasts was picked up on Reddit, where one user pushed back on observations supporting a market bottom made in a news article.

Hard to believe that only about a week ago everyone and their analyst solemnly and confidently proclaimed that [Bitcoin at] 12k was unavoidable and unavoidable, the user said.

And, of course, there’s Jim Cramer. MSNBC host Mad Money tweeted on Wednesday that the recent bounce is manipulation and further proof that digital assets are a fictional market.

the superior manipulation of the crypto shows you that it really is a fictional market….

Jim Cramer (@jimcramer) January 18, 2023

The mixed accuracy of Cramers’ long-term comments has become a matter of ridicule, sparking numerous memes and the popularity of accounts like Cramer’s Inverse ETF, a fictional exchange-traded fund that recommends the opposite of Cramers’ advice.

In response to Cramers’ assertion on Wednesday, several accounts took the hosts’ pessimism as a positive sign, such as Dan Held, Head of Growth Marketing at Crypto Exchange Kraken, who replied: Bottom is in!

Other influential accounts on Twitter were genuinely bullish, such as PlanB, which said a new bull market in digital assets has begun as the recent Bitcoin pump takes hold. Some members of the community took the opportunity to emphasize those who believe that digital assets will suffer more losses.

The price hike has also left a few people on Wall Street scratching their heads.

A research report released Friday by JP Morgan analysts could not explain the crypto price surge with confidence, but acknowledged that market conditions for riskier assets have become more favorable, citing the recent release. inflation reports.

We don’t have a good answer on crypto’s January rally so far, but we think it’s emblematic of the underlying belief that many still have in cryptocurrencies, he said. . Crypto bulls and whales seem to have been reinvigorated.

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