17.01.202317:27 Forex Analysis & Reviews: Why has Bitcoin already increased by 28% since the start of January?

The price of the biggest digital token in the world has climbed by nearly 28% since the beginning of January, which is a good way to start the year 2023. Last week, the price of one bitcoin surpassed $21,000 for the first time since November 7. It is currently challenging the level of $21,300 and is showing no signs of slowing down. Although this is still a long way from Bitcoin's all-time high of $68,990 set in November 2021, it provides market participants some cause for confidence.

Significant scandals and bankruptcies in the cryptocurrency sector occurred last year, including the collapse of the FTX, and there was a significant market correction brought on by the central bank's activities. It is clear that a variety of variables, including the high likelihood that the Federal Reserve System will lower interest rates this year, as well as purchases by major players who have been impatiently awaiting the end of the crypto winter, are responsible for bitcoin's recent surge.

The most recent data revealed that global and American inflation is progressively declining, and economic indications point to only a modest downturn in economic growth. The Federal Reserve may abandon or at least soften its plan of raising rates at its meeting in February of this year as a result, giving markets hope.

The consumer price index in the United States fell by 0.1% every month in December, according to new statistics released last week.

Investors monitor changes in employment and wage statistics as well as the PMI indices for the service industry, in addition to inflation. When compared to last year, all of these indications showed promise, and when combined with the propensity for inflation to decline, this increased demand for riskier assets and impacted bitcoin, which is currently near its lows.

The Fed increased borrowing rates seven times in 2022, which led to a sharp peak in risky assets like stocks, particularly those of technology businesses. The base rate on bank funds raised in December to a range between 4.25 to 4.50%, the highest level since 2007. The demand for risky assets like bitcoin is also fueled by this forecast, which is predicted to peak at roughly 5.0%.

For the time being, the Fed is expected to maintain high-interest rates. Some market participants, however, are hopeful that central banks would start to slow down or stop raising interest rates altogether. According to some experts, the Fed may decrease interest rates as soon as this year. This is because the possibility of a recession also influences the choices made by central banks. A worldwide recession is more likely than not to occur in 2023, according to approximately two-thirds of the senior economists questioned by the World Economic Bank, according to research released by the conference's organizer in Davos on Monday.

The greater the demand for bitcoin and other cryptocurrencies, the smaller the likelihood of it happening and the slower the rates will increase.

Regarding Bitcoin's current technical situation, the crossing of the side channel's upper barrier and the consolidation above provide a somewhat optimistic outlook for the start of the year. The $21,300 level is the immediate target for the bulls. By focusing on it, a new bullish trend can be created with a potential gain of $21,840. The $22,525 region will be the farthest objective, where significant profit-taking and a rollback of bitcoin may take place. In the case of further pressure on the trading instrument, defending the $20,300 level will take priority because a breach by sellers would be detrimental to the asset. This will put pressure back on bitcoin and create a direct path to $18,360 and $19,280. The first cryptocurrency ever created and $17,460 will "drop" when these thresholds break.

The breakdown of the nearest resistance at $1,600 is what ether buyers are concentrating on. This is going to be sufficient to establish a foothold at the current highs and keep the bullish trend going. Additionally, this will have a huge impact on the market and halt the bearish wave. The balance will be returned to the ether if the price fixes over $1,600, with a potential increase to a maximum of $1,690. The $1,780 region will be a further aim. The $1,410 level, which was just formed, will come into play when the trading instrument is once again under pressure and the $1,500 support is broken. If it succeeds, the trading instrument will rise to a minimum of $1,320. It will be very difficult for bitcoin owners below $1,260.