The beginning of 2023 is forming an interesting pattern for the biggest digital currency in the world. After months of losses, bitcoin managed to find its footing in the 16,000 USD range. That saw it push through the New Year celebrations and begin the January of this year in arguably the best position it was in many weeks if not all the way to the latest drop in value that took place during November 2022. Because of this, there is more and more evidence that big and small holders of BTC are accumulating tokens and presumably waiting for the moment to cash in on a price rise.
Right now, the same bull targets are more than evident but the issue of further movement of the market remains a mystery. Additionally, there is further uncertainty related to the macro factors, especially the biggest impacts on the global economy and its future trajectory. However, for many traders and investors who began to get accustomed to the hard and long crypto winter, the present signs of hope are both welcomed and desperately needed.
19,000 USD Range
On-chain data shows that the price of BTC briefly passed the 17,000 USD mark in the past day or so. The latest new and increased level of volatility comes as the US prepares to share its latest batch of data on the economy. But, even the expectation of this data allowed the BTC token to reach a price level that it has not seen since December 20, 2022. So, all eyes are now on the Consumer Price Index or CPI that will come out in the US next week.
All of this is suggesting to traders that the relief rally is nearby no matter what and that the BTC will manage to break out of its 16,000 USD range with a lot more force and in a prolonged period of time. That would be a great boon to the digital currency community as a whole. Altcoins would rally in that case as well, starting with the ethereum token, which is also presently locked into a narrow range that saw rare positive movements in the last couple of months. But, even with the US data showing all the green flags for that rally, there are a number of issues that lie in wait for the cryptocurrency market and the entire global economy as well.
At the end of 2022, China decided to suddenly drop its zero-tolerance policy for COVID-19. The result is an expansion of cases of the coronavirus and its big impact on the way the country is functioning. This is a problem in particular among its elderly population, which is sparsely vaccinated, and those who did get the shot likely have little to no immunity to it. illness. The expansion of the virus will almost certainly bring about a drastic slowdown in the domestic economy of China. That, in turn, will have an impact on the world and on the digital currency market. What is more, it is possible that a slowdown in the Chinese economy could impact the cryptocurrency market in a substantial manner. A slowdown could lead to a decrease in demand for cryptocurrencies as investors become more risk-averse and less likely to invest in volatile assets.
China is also home to a significant amount of cryptocurrency mining activity, despite its ongoing legal and regulatory squeeze on this industry. Because of that, a slowdown in the economy could lead to a decrease in mining activity, potentially decreasing the overall supply of cryptocurrencies. Additionally, a slowdown could lead to a decrease in investment in cryptocurrency-related businesses, potentially slowing the development of new projects and technologies. This means that the Chinese economy will almost certainly limit the amount of oxygen for any relief rally.
Ebb and Flow of the War in Ukraine
Just as important as the state of the Chinese economy is the ongoing war between Russia and Ukraine. While the initial country-wide invasion of Ukraine did fail, the fighting still continues in a very brutal and destructive manner. With it, the economy of Europe suffers as well, with energy prices going to record levels month after month.
January so far saw a range of rumors and uncorroborated news that the war will escalate soon and the fear of that happening is palatable. Analysts believe that no substantial global recovery from the ongoing energy crisis is possible with the war taking place. Similar to esposts, social media, and other interconnected ventures, digital currencies are also a part of the same global networks of cause and effect on a geopolitical stage. This factor limits the relief rally potential as well.
Relief Rally Importance
The relief rally in the bitcoin market could be short-lived and not that huge. However, it is still a solid way to start the new year. More precisely, a relief rally in the bitcoin market could lead to increased demand for cryptocurrencies as investors become more optimistic and are more likely to invest in them. Ever since the summer of 2022, that confidence in the markets and appeal for investors has been historically low. This increased demand could potentially drive up the price of other cryptocurrencies – all of the top-rated networks would see an almost immediate boost in their prices as well.
This is the phenomenon when the entire crypto market goes green and prices shoot up. An additional benefit is that a relief rally could also lead to increased media attention, raising awareness of cryptocurrencies and potentially leading to more people becoming interested in them. The spillover from this would help the struggling NFT markets. sure. Lastly, increased interest from institutions such as banks and investment firms is also possible, potentially leading to more institutional adoption of cryptocurrencies. Together, all of this could also lead to increased investment in cryptocurrency-related businesses and projects, potentially resulting in more development activity in the digital currency space. Ultimately, the last factor would be the best payoff from the same potential January rally.