Bitcoin (BTC) blasts past $22,000 with a 9% price explosion – Is it a bull trap or the bottom in?

  • BTC’s price soared today, with investors already priced in on genesis’ bankruptcy filing news.
  • According to recent IntoTheBlock data, the previous bottom formations leading to a strong bullish run have often coincided with the huge surge in the number of addresses holding the leading digital asset for over 12 months.

BTC’s price is up today, with other crypto prices following the same trend, making traders hope that the year-to-date peak proves that the leading digital asset has hit its bottom. BTC’s price continued to surge despite news that crypto lender genesis has filed for bankruptcy. Hence, the continued rise in BTC’s price proves investors had long concluded that genesis’ bankruptcy filing was inevitable.

Analysts predict that BTC would no longer trade below $21,000 as the US dollar index (DXY) continues to cool down, and the equities market continues its rally from last week. Furthermore, the US Fed’s dovish stance on inflation following the positive consumer price index (CPI) data is another reason BTC would continue trading above $21,000.

A less aggressive interest rate raise

According to analysts, the latest CPI report, which was positive, was the main reason for the BTC price rally. The report from the bureau of labor statistics (BLS) indicated a 0.1 percent decline in overall inflation for all consumers. This decrease in inflation is the highest in the last three years.

Meanwhile, equities traders are also hoping that the fed would still be less aggressive with its interest rate hikes due to the positive CPI data at its next market committee meeting. The good news is that US Fed Governor, Chris Waller, gave a clue on what to expect regarding interest rates. In a recent statement, Waller remarked that “current data indicates little turbulence ahead. Hence, I believe there would only be a 25-basis point increase when the FOMC meets on Feb. 1.”

The CME FedWatch tool also aligns with Waller’s comments as traders predict that there is a 97 percent chance that the fed will increase by 25 bps as against the 50 bps in previous months. Similarly, the positive numbers recorded by the Nasdaq, the Dow Jones, and S&P 500 caused the stock market to open higher on Friday.

As previously reported, Bitcoin and the US equities continue to have closely correlated price action. Hence, it is no surprise that this has remained so during today’s rally.

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A key metric

Meanwhile, data from an on-chain analytics firm, IntoTheBlock, shows a key metric indicating that BTC has hit bottom. According to the firm, the previous bottom formations leading to a strong bullish run have often coincided with the huge surge in the number of addresses holding the leading digital asset for over 12 months.

Also, Glassnode, another on-chain analytics firm, noted that several important indicators show that BTC has reached a bottom. According to Glassnode, increasing a network’s on-chain activities often results in a sustainable market recovery. The firm explained that an indication of strong growth is when there is a crossover between the 30-day simple moving average (SMA) and the 365-day SMA over a minimum of 60 days.

Glassnode added that the recent considerable rise in miners’ revenue fees indicates that BTC has hit bottom.

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A sustained rise in block space congestion indicates the occurrence of fee pressure, and it’s happening already as the 90-day SMA of miner fee revenue has crossed over the 365-day SMA.

According to our data, BTC currently trades at $22,693 and is up 8.6 percent in the last 24 hours.

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About Author

Paul is a cryptocurrency enthusiast from Canada, and since 2021 he has been writing about cryptocurrency for online news portals. He writes mostly news-related articles. Stay tuned to his posts to stay up to date with the crypto world.

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