In December 2022, which was notable for its low volatility and little movement in price on the cryptocurrency market, Bitcoin and other well-known cryptocurrencies came to a disappointing finish. But with Bitcoin surging beyond $20,000, things seem promising for the first quarter of 2023.
Even though we are only in the second month of the year, we have already witnessed a significant increase in the value of Bitcoin and other cryptocurrencies. Is it possible that we are witnessing a market turnaround, which would likely signal the beginning of a bull run?
Several economic indicators, such as the Consumer Price Index (CPI), Producer Price Index (PPI), and Personal Consumer Expenditures (CPE), have recently produced better-than-expected outcomes. Despite this, the technology sector continues to see significant layoffs. Market watchers are also intently observing the Federal Reserve’s decision as they have raised interest rates by 25 basis points at the FOMC meeting held on February 2nd.
Fear and greed index
The fear and greed index has not been at this level since April of 2022; it is currently at its greatest point. The indicator demonstrates without a doubt that 2023 will be the year that cryptocurrencies make a comeback, although not to new all-time highs.
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Bears were completely taken aback when Bitcoin (BTC) broke through the $20,000 resistance level in the middle of January. Who would have imagined that the double bottom pattern propels Bitcoin’s price as high as $24,000. As a result, it filled in the gaps for November 2022, which was when the FTX collapsed and sent a massive panic from people globally.
As we move closer to levels of resistance, market traders are advised to lock in their profits. If you are an investor, the best strategy is to buy when the price is around a support level, such as the 200-day exponential moving average; alternatively, you can dollar cost average (DCA).
Let us assume that the bottom is in for Bitcoin, by using the fibonacci retracement from the November 8 highs to the November 21 lows, there are two levels to watch closely: the 50% ($42,000) and the 61.8% ($48,500) golden pocket. Could it be a launchpad to these price levels or a massive resistance? Only time will tell and it is best to remain cautiously optimistic.
As we observe a resurgence in the crypto market, we must approach positive data with cautious optimism. While there are certainly positive signs and growth potential, it is crucial to keep in mind the volatility and unpredictability of the market and make informed investment decisions.
While it can be exciting to see the market turn around, yet it is important to remember that past performance is not a guarantee of future success. Do your own thorough research, understand the risks involved, and diversify investments to minimize potential losses. Only invest what you can afford to lose and always have a well thought-out plan in place.
Rickie Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.