Bitcoin ended the previous trading week with the largest bullish candle in the past two months. Over the weekend, the situation did not change dramatically, but buyers tried to build on the bullish success. However, no significant results were achieved, and the price spent the weekend in consolidation near the $23k level.

There is no doubt that the current events are the result of the completion of the main stage of the consolidation cycle. Bitcoin is systematically making bullish breakouts of difficult resistance zones, leveling the bearish sentiment in the market.

The bull trend is still strong

Santiment experts believe that the cryptocurrency's current upward movement was made possible by a successful period of redistribution of BTC coins. Analysts also report that a large group of addresses with balances of 1,000–10,000 BTC played a significant role in the rally.

Big capital accumulated more than 64,000 BTC in a month and a half of consolidation, which is equivalent to $1.46 billion. At the same time, we have repeatedly mentioned that smaller addresses also actively participated in the accumulation. As a result, we see that the period of redistribution and absorption of BTC coins by long-term investors is coming to an end.

At the same time, it is important to note that the current trading activity, which remains in the region of $25 billion per day, is still not enough. According to the latest statistics, about 75% of all existing BTC remain stored on cold wallets.

This reduces Bitcoin's bullish potential, but at the same time, points to the cryptocurrency's fundamental value, as more than 14 million BTCs are safe and cannot affect the market. That said, there is no doubt that more institutional investors will return to the market as the cryptocurrency price recovers.

A key signal for the upcoming rally will be Grayscale's performance. Given the recent FTX-related events and the still high volatility of the crypto market, "whales" prefer to acquire BTC through investments in familiar instruments—stocks.

Given these facts, we can conclude that the closer the market is to the next bullish rally, the greater the growth of Grayscale shares we will see. Another important factor that indicates the end of the bear market is the macro pattern of the BTC price recovery movement.

The current price movement of Bitcoin is fully consistent with similar situations in 2012 and 2016. As of January 23, the cryptocurrency fully follows the route from the local bottom to the gradual formation of a new value record.

BTC/USD Analysis

Noting the fundamental factors behind the growth of the cryptocurrency, it is important to highlight the SPX index, which ended the trading week on a high note. The asset has formed a bullish engulfing pattern and may continue its upward movement this week.

The correlation between SPX and BTC remains, but lately we have seen the crypto asset exhibit more independent behavior. Given this, we can assume that the relationship between Bitcoin and the stock index may decline soon.

As for the technical picture, Bitcoin made an unsuccessful retest of the $23.4k level over the weekend. At the same time, the asset has finally completed the formation of the "cup and handle" pattern, which indicates the continuation of the upward movement.

The ultimate potential for a cup and handle pattern is $28k. However, the next few days will show how much market sentiment will change, and if euphoria occurs, the pattern may go through local price drops.

Institutions are entering the market again and dormant market makers are becoming more active, so you should be prepared for increased volatility and an increase in the number of market manipulations.

Results

Bitcoin is still heavily overbought, but this does not affect the bullish potential of the cryptocurrency. At the same time, the asset will most likely continue to grow by the end of the current week due to the celebration of Chinese New Year, and therefore local euphoria will reign in Asian markets.

Given this, Bitcoin will have time to test the $23.5k level and may move further towards $24k. However, the reporting period will start next week, including the Fed meeting. By that time, market sentiment will finally get bogged down in greed, and we should expect a local correction to the levels of $20k–$21k.