Bitcoin Kicks Off 2023 on Positive Note, Surges Above $23K
Bitcoin (BTC) kicked off the year 2023 on a positive note, with investors hoping for a reversal in the monetary tightening that spooked market players last year. The price of Bitcoin is currently trading at $23,044 at the time of writing, a fractional gain during the last 24 hours. Digital assets saw a surge on Wednesday night, surpassing $23,700, the highest it had been since early August.
Despite the recent pullback of 1.5% in the past 24 hours to $22,600, Bitcoin is still up almost 50% from its 21 November lows. The trader suggested that if the support level of $19,000 breaks down, Bitcoin could drop even lower than its 2022 low of $15,500.
On-chain data suggests that the recent rally has been accompanied by a sudden increase in the percentage of supply in profit, rising from 55% to over 67%. This sudden increase in 14 days is one of the strongest swings in profitability compared to previous bear markets. After 6.5 months, Long-term Bitcoin holders (LTHs) have seen the cost basis of their holdings at the current price of $22,600, surpassing what they had originally paid. The average LTH is now slightly more than its breakeven point.
Miners have used the recent price spike to boost their balance sheets. Since January 8, miners have received less than 5,600 BTC compared to what they have spent. However, the selling pressure from Bitcoin short-term holders (STHs) is less bullish, as the recent surge has pushed this metric above 97.5% in profit for the first time since its November 2021 all-time high, massively increasing the likelihood of selling pressure from STHs.
Market participants are expressing optimism that central banks may soon begin to reduce the frequency of interest rate increases, or even lower rates, as U.S. inflation appears to be cooling off. Recently, some bank officials have suggested that the Federal Reserve should lower the rate of its quarterly rate hikes due to worries that economic growth will slow down, although it is believed that the Fed will keep high interest rates for the foreseeable future.
It is too early to make a final judgement on whether the next bull market is imminent or whether the bulls are heading into a trap. However, the current trend indicates that the bottom could be in, with supply held by long-term holders continuing to increase, which can be taken as a signal of strength and conviction.
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