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bitcoin (BTC) starts a new week off on a promising footing with BTC price action near 1-month highs – can it last?

In another year of bullish momentum, BTC/USD is currently surfing at levels not seen since mid-December, with the weekly close prompting optimism.

The move comes ahead of a remarkable macro week for crypto markets, with the December 2022 Consumer Price Index (CPI) print expected from the United States.

Jerome Powell, Chairman of the Federal Reserve, will also deliver a speech on the economy, with inflation on everyone’s radar.

In the crypto sphere, the FTX contagion continues, with Digital Currency Group (DCG) at odds with institutional clients over its handling of subsidiary Genesis Trading’s solvency issues.

Meanwhile, under the hood, Bitcoin is still showing signs of recovery from the FTX turmoil, with miners among those taking a break.

Cointelegraph examines these factors and more at the start of the second trading week of January.

Bitcoin Price Surpasses $17,000

Bitcoin managed to climb higher on January 1. Weekly close of the 9th, reaching levels not seen on the chart since December 21st. 16.

Data from Cointelegraph Markets Pro and TradingView shows local highs at $17,250 on Bitstamp.

BTC/USD 1-day candle chart (Bitstamp). Source: Trading View

Although it only added several hundred dollars, the move on BTC/USD did not go unnoticed given the extremely compressed trading range in place for many previous weeks.

Nonetheless, in the face of a potential continuation, traders were unwilling to alter their conservative longer-term outlook.

“Forward and up to my target of $17,300-$17,500,” Crypto Tony told Twitter followers in a post. to update day:

“I took profit here on my long scalp, and it stays in my short as long as we’re below 17,500 at the 4-hour close.”

Michaël van de Poppe, founder and CEO of trading firm Eight, also left the door open for a modest further upside, but warned the start of the week would present hurdles.

“I always watch a case like this on Bitcoin,” he said. confirmed accompanied by an explanatory table:

“I think we will continue to rally next week, but we will probably have a decline due to Gemini or a correction on Monday first.”

BTC/USD annotated chart. Source: Michael van de Poppe/Twitter

Meanwhile, the Venturefounder, a contributing analyst at on-chain analytics platform CryptoQuant, reminded investors to zoom out.

“Bitcoin has been stuck between $16,000 and $18,500 for 2 months now,” he said. recognized:

Watch this range very very carefully, a break in either direction can bring 20% ​​volatility, could happen soon. A definite break of $16,000 could see $13,000, make support $18.5,000 we can see $22.5,000.

BTC/USD annotated chart. Source: Venturefounder/Twitter

CPI countdown returns as risk asset traders eye volatility

All eyes, including the Federal Reserve, are on inflation Data this week with the December Consumer Price Index (CPI) print due out.

CPI, which will host the markets on January 1. 12, is a key part of Fed policy, and traders and analysts are well aware that the signals it provides can lead to changes in its position.

Recently, the CPI has been declinesuggesting that the Fed’s existing interest rate hikes have had a positive impact on inflation.

If this continues or even declines more than expected, hopes that the Fed will scale back rate hikes more quickly — or even reverse them altogether — will rise.

This, in turn, provides a window for risky assets, including crypto, to gain as Fed policy easing boosts risk appetite.

“Huge volatility is expected. Huge cash position and light position size for me,” Ted Zhang, trader and research analyst at Revere Asset Management, Told Followers on Twitter, describing the CPI event as a “huge week”.

Others noted the unusual timing of the CPI calendar, with the data coming two days after a speech on the economy by Fed Chairman Jerome Powell.

“Unfortunately or fortunately the speech is tuesday while cpi is thursday so any falconing will be canceled after the cpi numbers thursday!” answer readadding that market reactions to Powell’s speech may well amount to “noise.”

According to the CME group FedWatch Toolthe odds of a 25bp rate hike this month currently stand at 75% versus a 25% chance of a big 50bp move.

Fed Target Rate Probability Chart. Source: CME Group/Twitter

In the long term, skeptics, including “Big Short” investor Michael Burry, argue that inflation will return, forcing the Fed to raise rates again.

“CPI inflation is unlikely to fall as low as 2%, let alone turn negative,” Peter Schiff wrote in an article. reply in Burry last week:

But I agree with you that the Fed will return to QE and the official inflation rate will hit a new high. The unofficial real rate will hit a new all-time high.

DCG publicly confronts the music

As the fallout from the FTX saga continues, it’s institutional investing giant Digital Currency Group (DCG) coming this month.

Exposure to FTX has increased the pressure on some DCG affiliates in an increasingly complex story that has even raised questions about the future of Bitcoin’s largest institutional investment vehicle.

The Grayscale Bitcoin Trust (GBTC) currently manages over $10 billion in BTC assets. its share price, according to to Coinglass data, is trading at an implicit 44% discount to the spot price of Bitcoin.

As Cointelegraph reported, the Gemini exchange had some of his frozen assets in the DCG Genesis Trading company after it halted withdrawals in light of FTX. Its co-founder, Cameron Winklevoss, has publicly appealed to DCG CEO Barry Silbert for answers.

Jan. The 8th, he wrote in an open letter to Silbert, marking a deadline for the situation to be resolved, but over time Silbert himself disputed this.

“DCG provided Genesis and your advisers with a proposal on December 29 and received no response,” he said. claims as part of a Twitter response to Winklevoss on January 1. 2.

Should events take an unpredictable turn, the implications for Bitcoin markets could become more serious, with DCG’s prominence as an investment entity making the debacle particularly visible.

To describe Recent events, Checkmate, principal on-chain analyst at Glassnode, said DCG continues to “explode in slow motion”.

“And the Bitcoin price is essentially a stablecoin,” he added.

“2023 is all about DCG at this point,” said Invest and Prosper newsletter author Justin Herberger. the forecasts:

“If they somehow crash it’s gonna get ugly. This could be our last step up to 85% drawdown on Bitcoin ATH.

GBTC premium vs. asset portfolio vs. BTC/USD chart. Source: Coinglass

Miners break harsh sell streak

Bitcoin miners have been on the radar for most of 2022, but the drop in BTC prices that followed the FTX implosion has worsened an already precarious situation.

Miners began to part with their stored Bitcoin in order to remain financially viable, and quickly notified on-chain metrics of a mining “capitalisation” already in progress.

As Cointelegraph reported, however, neither the scale of the sale nor its duration seemed critical, and recently, the situation has stabilized.

“The heavy selling pressure from Bitcoin miners that has dogged the market for the past 4 months has finally subsided for now,” William Clemente, founder of crypto research firm Reflexivity, said. summary alongside data from on-chain analytics firm Glassnode over the weekend.

This data showed the 30-day net position change for Bitcoin miners, which is actually starting to increase from the previous month.

Bitcoin miner net position change chart. Source: William Clemente/Twitter

Separating Glassnode Data supported observation, with miners’ BTC reserves reaching their highest level in a month on January 1. 8.

Bitcoin miner balance chart. Source: Glassnode/Twitter

Looking at Bitcoin’s hash rate — the estimated processing power dedicated to mining — Jan Wuestenfeld, an analyst at crypto research and advisory firm Quantum Economics, was equally optimistic about the status quo.

“It’s crazy how the hashrate, although miners are under great pressure, only slightly corrected in the last two months of 2022 and is even increasing now given the 30-day moving average,” said- he declared. Note.

Last week, Bitcoin’s network difficulty adjusted lower by around 3.6%, given a drop in competition among active miners. According to to BTC.com’s latest forecast, however, the next adjustment will erase those losses to add 9% to the difficulty level, marking a new all-time high.

Overview of the fundamentals of the Bitcoin network (screenshot). Source: BTC.com

‘Extreme Fear’ Meets 18-Month Crypto Volume Lows

Crypto market sentiment is more uncertain than ever when it comes to the short-term outlook, according to the Crypto Fear and Greed Index.

Related: Macro Data Point to Intensifying Pain for Crypto Investors in 2023

Over the weekend, the index, which compiles a sentiment score from a basket of weighted triggers, fell back to the top of its most bearish range, “extreme fear”.

A first for 2023, “extreme scare” is nonetheless familiar to long-time market participants, who saw sentiment endure its longest stay in the index’s lowest zone last year.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

At the same time, the interaction with crypto appears to be noticeably lacking at current price levels.

Data from research firm Santiment has capture lowest crypto trading volume since mid-2020.

“Altcoin volume is particularly low,” reads a note in an accompanying chart.

Annotated chart of the output value bands spent by Bitcoin. Source: CryptoBitcoinChris/Twitter

CryptoQuant Separate Numbers reported Per popular social media commentator CryptoBitcoin, Chris nevertheless noted that whale selling has also been declining since December, which could create a trend and “have a positive effect on market sentiment.”

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.