Bitcoin’s price recovery in 2023 has seen little institutional buying, raising doubts that BTC will rise above $25,000.

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Based on a mix of bullish technical and macro indicators, it looks likely to extend its current price recovery to $25,000 by March.

Bitcoin price is breaking out of the descending channel range
First, the potential for Bitcoin to reach $25,000 is by breaking out of the existing descending channel range.

That said, the price of BTC broke out of the range late last week with an increase in trading volume. The cryptocurrency’s upward move pushed the price above its resistance base, which includes the psychological price of $20,000 and its 20-week exponential moving average (20-week EMA; green wave) near $19,500, as shown below.

BTC/USD 1 Week Candlestick Chart (Coinbase). Source: TradingView.com
A break of three resistance levels on strong volumes shows traders’ conviction for an extended price rally. If that happens, Bitcoin’s next upside target would appear at its 200-week EMA (yellow wave) around $25,000 — a 20% upside from current price levels.

The dollar forms the ‘cross of death’
Bitcoin’s bullish technical outlook comes against the backdrop of a relatively weak US dollar, which weakened on expectations that the Federal Reserve will hold off on raising interest rates as inflation eases.

Since March 2020, the two assets have moved opposite to each other. As of January 16, the daily correlation coefficient between Bitcoin and the US Dollar Index (DXY), a barometer of the greenback’s strength against its most rival currencies, was -0.83, according to TradingView.

BTC/USD and DXY Correlation Coefficient. Source: TradingView
The traditional tech setup sees more losses for the dollar.

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Called a “death cross,” this setup occurs when an asset’s 50-period moving average crosses below its 200-period moving average. For the dollar, the death cross shows its weak momentum, which means that its short-term trend is not achieving its long-term direction.

Daily DXY price chart. Source: TradingView
“I expect further declines in the medium to long term,” independent market analyst crypto Ed said of the dollar:

“Asset risk will return more than that.” Or rather: I expect BTC to break its bearish cycle as the big run in DXY is over.”
Not a long-term rally in Bitcoin prices
Bitcoin is up 30% so far in 2023 above $20,000, but data from the chain shows that the buying trend is not supported by institutional investors.

Related: Bitcoin Gains 300% Year Before Last Halving – Will 2023 Be Different?

For example, according to CryptoQuant’s index of fund holdings, the coin’s price rally in recent months has seen the total amount of bitcoin held by digital assets such as trusts, exchange-traded funds and other funds fall. .

Bitcoin funds. Source: CryptoQuant
Also, according to a comparison between CryptoQuant’s token transfer indicators and fund flow ratio, the unusual transactions did not occur on the chain, but on the crypto exchange.

BTC/USD vs Token Transferred (Orange) and Fund Flow Ratio (Blue). Source: CryptoQuant
The Token Transferred metric shows the number of coins transferred in a given time frame, while the Fund Flow Ratio represents the ratio of coin transfers involving an exchange to total coin transfers across the network.

“Generally downstream, institutional investors prefer to buy quietly through OTC,” market analyst MAC_D noted:

“This trade was only actively traded on the exchange and there were no unusual transactions on the chain. […] Current institutional investors remain calm, they are watching. “Over-the-counter trading is likely to be brisk when a complete reversal of the uptrend is expected.”
This article does not contain investment advice or recommendations. Every investment or trading move involves risk, and readers should do their own research when making a decision.

Source: CoinTelegraph

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