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03.02.2023 12:52 PM
Bitcoin updates price highs less aggressively: what this means and should we expect a correction?

The cryptocurrency market and Bitcoin are entering a local phase of volatility. The ratio of short and long positions gradually reaches parity, which provokes an impulse price movement in different directions.

The results of the Fed meeting had a favorable but short-term effect on Bitcoin quotes. The asset reached the $24.2k level, but the upward movement is given to the cryptocurrency with great efforts, while sellers strengthen their positions.

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It is also important to note that growing trading volumes do not guarantee an increase in buying activity and update of price highs. Over the past 30 days, total BTC trading volumes across all crypto exchanges have increased by 66%. However, this indicator is still below the August–October levels, when the asset consolidated around $19k.

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This suggests that Bitcoin is just beginning to form the base necessary for a long and strong upward movement. The asset continues to move upward, but the price highs are updated less aggressively. At the same time, the reaction of sellers to the bulls' move is becoming more and more threatening.

Given this, there is every reason to believe that bears will finally seize the initiative in the nearest future. Strong labor market statistics may become one of the triggers for BTC sales. Federal Reserve Chairman Jerome Powell said that rising unemployment might force the regulator to stop raising the rates.

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However, the labor market has remained strong for the past six months and gives the Fed the opportunity to raise rates without significant consequences. There are no prerequisites for a sharp deterioration in the situation on the labor market, therefore positive reporting may provoke sales in the BTC market.

Bitcoin and SPX

Bitcoin price has actively risen from $17k along with stock indices. The strength index relative to the SPX and NASDAQ has accompanied Bitcoin throughout all of its local price highs updates, but the strength ratio has begun to decline over the past week.

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While stock indices were rising, Bitcoin began to slow down and stopped dealing with bearish volumes. The cryptocurrency's upward movement over the past two days was triggered by the positive reaction of funds to the Fed's decisions.

Do not forget that the leading banks in the U.S. suggest a correction in the SPX index and the entire stock market. If the decline in indices begins in the near future, BTC will lose the last lifeline that kept it from correcting.

BTC/USD Analysis

Bitcoin is approaching the weekend in a difficult situation due to falling bullish volumes and increasingly aggressive attempts by sellers to seize the initiative. Following the results of yesterday's trading day, the asset once again broke through the $24k level, but failed to gain a foothold higher.

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This suggests that the cryptocurrency is less and less aggressively updating price highs and is struggling to hold positions. The state of the BTC daily chart by the results of February 2 demonstrates the falling power of the bulls.

Also, in the area from January 14 to February 2, we see the formation of a series of ascending lows. They were formed at $24.2k, $23.8k, $23.3k and $21.6k. The combination of these levels forms cascades, which are the main targets for collecting liquidity before further upward movement.

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Technical indicators on the 1D indicate a further decline in cryptocurrency quotes. Most likely, sellers will win back the growth due to the Fed meeting. This means BTC/USD quotes will retest the $22.9k–$23.4k area in the near term.

Results

With a high degree of probability, Bitcoin will continue its downward movement on falling buying volumes. The stock market will push the cryptocurrency to a further fall, as the fear and greed index there reached 73.

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Given this, we will see more active sellers in the near future. In addition to the $22.9k–$23.4k area, the bears' main targets will be $23.3k, $21.8k and $21.3k. In the medium term, Bitcoin will continue to realize its potential up to $25k–$28k.

Artem Petrenko,
الخبير التحليلي لدى شركة إنستافوركس
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