Bitcoin’s bullish sentiment fades with a two-day drop

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The world’s largest cryptocurrency, Bitcoin, has had a phenomenal start to 2023 after a major crash last year. After posting its biggest winning streak with 15 consecutive days of gains, Bitcoin has finally changed course.

It is for the second day in a row that the price of BTC ended in negative. At press time, Bitcoin is trading at a price of $22,635 and a market capitalization of $446 billion.

If we see any consistency here, the crypto market has largely followed the action on Wall Street. On Tuesday, January 24, the US indices ended flat, suggesting a close contest between the bears and the bulls. Additionally, macro factors continue to weigh in and much will depend on the Fed meeting next month.

Tony Sycamore, market analyst at IG Australia Pty, also noted that disappointments over Microsoft’s future predictions have trickled down to the crypto space being highly correlated to tech stocks. Speaking to Bloomberg, Sycamore added:

“With risky assets, it was almost like trying to hold a balloon underwater so far this year. The market now has doubts about how far to push them.”

The biggest question left here is where will Bitcoin move from here – $25,000 or $21,000? Other market analysts believe Bitcoin and the broader market appear to be in overbought conditions.

Can Bitcoin Maintain Momentum?

We have seen that the recent rise in Bitcoin prices this month occurred against the backdrop of strong whale buying activity. But with the recent price surge, the profitability of short-term holders has skyrocketed to 98% and so there is every chance of profiting in the short term.

It will be interesting to see if BTC can support $21,000 on the downside or fall further from here. Glassnode on-chain data provider reports:

The recent #Bitcoin price surge has resulted in a first break above all three cost bases for the first time since the bear market of 2018/19 and the Covid crisis of March 2020. An extended duration above these key psychological levels would be considered constructive.

Courtesy of Glassnode

Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain technology and cryptocurrency. He is continually in a learning process and motivates himself by sharing his acquired knowledge. In his spare time, he reads thrillers and occasionally explores his cooking skills.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.

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