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Best January since 2013? 5 things to know in Bitcoin this week

Multi-month BTC price highs keep trickling in, but Fed volatility looms as the FOMC coincides with the Bitcoin monthly candle close.



Multi-month BTC price highs keep trickling in, but Fed volatility looms as the FOMC coincides with the Bitcoin monthly candle close.

Bitcoin (BTC) starts a key week with a familiar cocktail of price spikes mixed with fear that the bear market will return.

After sealing its highest weekly close in almost six months, BTC/USD remains over 40% up year-to-date with the monthly close just 48 hours away — can the gains hold?

Against all odds, Bitcoin has rallied beyond expectations this month, making January 2023 so far its best in a decade.

Throughout, concerns have called for an imminent comedown and even new macro BTC price lows as a state of disbelief swept the market.

That grim turnaround has yet to come to fruition, however, and the coming days could thus turn out to be a crucial period when it comes to Bitcoin’s long-term trend.

The catalysts are hardly in short supply — the United States Federal Reserve will decide on its next rate hike this week, with Chair Jerome Powell also giving much anticipated commentary on the economy and policy.

The European Central Bank (ECB) will make the same decision a day later.

Add to that the psychological pressure of the monthly close and it is easy to see how the coming week could be one of the more volatile in Bitcoin’s recent history.

Buckle up as Cointelegraph takes a look at five key issues to consider when it comes to BTC price action.

Bitcoin price eyes $24K with FOMC volatility predicted

Bitcoin continues to defy naysayers and shorters alike by spiking ever higher on lower timeframes.

The weekend proved no different to others in January, with BTC/USD hitting $23,950 overnight into Jan. 30 — a new five-and-a-half-month high.

The weekly close achieved the same feat, Bitcoin nonetheless failing to tackle the $24,000 mark for a final flourish.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

At the time of writing, $23,700 formed a focal point, data from Cointelegraph Markets Pro and TradingView showed, with U.S. markets yet to begin trading.

Nonetheless, at current prices, Bitcoin remains up a striking 43.1% in January, making it the best month of January since 2013 — Bitcoin’s first well-known bull market year.

BTC/USD monthly returns chart (screenshot). Source: Coinglass

Market analysts are meanwhile keen to see what will happen around the Fed rate hike decision on Feb. 1. A classic source of volatility, the event could impact the monthly candle significantly, only for BTC price action to change tack altogether soon afterward.

“Perhaps with a little assistance from FOMC volatility? Not a prediction, but certainly a trade setup I'd be very interested in,” popular trader Crypto Chase commented on a chart predicting a retracement followed by further upside for BTC/USD.

BTC/USD annotated chart. Source: Crypto Chase/ Twitter

That roadmap took Bitcoin over $25,000, itself a key target for traders — even those who remain wary of a mass capitulation event extinguishing January’s extraordinary performance.

Among them is Crypto Tony, who notes the proximity of $25,000 to Bitcoin’s 200-week exponential moving average (EMA).

“The 200 Weekly EMA sits right above us at 25,000 which as you know is my target on BTC / Bitcoin,” he told Twitter followers on Jan. 29.

“Now flipping the 200 EMA and range high into support is massive for the bulls, but we have yet to do this and people are already euphoric. Think about that.”

An accompanying chart still laid out a potential path downhill toward $15,000.

As Cointelegraph reported at the weekend, Il Capo of Crypto, the trader now famous for his misgivings about the recovery, remains short BTC.

Continuing, on-chain analytics resource Material Indicators defined $24,000 as an important zone for bulls to flip to support, along with the 50-day and 200-day simple moving averages (SMAs).

“If bulls break $24k expecting upside illiquidity to get exploited up to the range of technical resistance ahead of the Feb 1 FED EoY terminal rate projection. What JPow says will move markets,” part of commentary on bid and ask levels on the Binance order book read this weekend.

Material Indicators referenced Fed Chair Powell’s forthcoming words, also noting that bid liquidity had been shifted higher, causing spot price to edge closer to that key area.

BTC/USD order book chart (Binance). Source: Material Indicators/ Twitter

Macro hinges on Fed rate hike, Powell

The coming week is set to be dominated by the Federal Reserve’s interest rate hike and accompanying comments from Chair Jerome Powell.

In a familiar but still nerve-racking sequence of events for Bitcoin traders, the Federal Open Market Committee (FOMC) will meet on Feb. 1.

The result this time around may offer few surprises, with expectations practically unanimous in predicting a 25-basis-point hike. Nonetheless, the scope for volatility around the unveiling remains.

“The first two days of Feb are going to be volatile (much fun),” trader and commentator Pentoshi tweeted in part of comments last week, also noting that the FOMC would be followed by a similar decision from the European Central Bank a day later.

According to CME Group’s FedWatch Tool, there is currently 98.4% consensus that the Fed will hike by 25 basis points.

This will be a further reduction compared to other recent moves, and the smallest upward adjustment since March 2022.

Fed target rate probabilities chart. Source: CME Group

“Wouldn't be surprised if markets pumped all week ahead of the FOMC announcements,” popular social media commentator Satoshi Flipper continued.

“We already know it's 25 BP. So what is there even remaining for J Powell to give guidance about? Another 25 or 50 BP remaining for the year? My point is regarding rates: the worst is now behind us.”

Should speculators be right in assuming that the Fed will now trend towards halting rate hikes altogether, this would notionally offer long-term breathing space to risk assets across the board, including crypto.

As Cointelegraph continues to report, however, many are worried that the coming year will be anything but plain sailing when it comes to a Fed policy transition. That may only come about, one theory states, when policymakers have no choice but to stop the economic ship from sinking.

Another, from former BitMEX CEO Arthur Hayes, calls for extensive risk asset damage before the Fed is forced to change course, including a $15,000 BTC price.

Continuing the longer-term warnings, Alasdair MacLeod, head of research at Goldmoney, referenced geopolitical tensions surrounding the Russia-Ukraine conflict as a key future risk asset downside trigger.

“No one is thinking through the effect on markets of the resumption of the Ukraine conflict,” he argued, precising a Goldmoney article on Jan. 29.

MacLeod predicted that energy prices would be “sure to spike higher,” along with U.S. inflation estimates.

“Bond yields will rise, equities will fall,” he added.

Index generates first "definitive buy signal" in 4 years

While few pundits are willing to go on record calling an end to the latest Bitcoin bear market, one on-chain metric is potentially leading the way.

The Profit and Loss (PnL) Index from on-chain analytics platform CryptoQuant has issued a “definitive buy signal” for BTC — the first since early 2019.

The PnL Index aims to provide normalized cycle top and bottom signals using combined data from three other on-chain metrics. When its value rises above its one-year moving average, it is taken as a long-term buying opportunity.

This has now occurred with January’s move up in BTC/USD, and while CryptoQuant acknowledges that the situation may flip bearish again, the implications are clear.

“Although it is still possible for the index to fall back below, the CryptoQuant PnL Index has issued a definitive buy signal for BTC, which occurs when the index (dark purple line) climbs above its 365-day moving average (light purple line),” it wrote in a blog post alongside an explanatory chart.

“Historically, the index crossover has signaled the beginning of bull markets.”
Bitcoin PnL Index (screenshot). Source: CryptoQuant

CryptoQuant is not alone in eyeing rare recoveries in on-chain data, some of which were even absent throughout Bitcoin’s trip to all-time highs following the March 2020 COVID-19 crash.

Among them is Bitcoin’s relative strength index (RSI), which has now bounced from its lowest levels ever.

As noted by PlanB, creator of the Stock-to-Flow family of Bitcoin price forecasting models, the last such rebound from macro lows in RSI likewise occurred at the end of Bitcoin's last bear market in early 2019.

Bitcoin RSI chart. Source: PlanB/ Twitter

BTC hodlers stay disciplined

Contrary to expectations, mass profit-taking by the average Bitcoin hodler has yet to kick in.

On-chain data from Glassnode confirms this, with the BTC supply continuing to age despite the recent price gains.

Coins dormant in wallets for five years or more, as a percentage of the overall supply, hit new all-time highs of 27.85% this weekend.

Bitcoin % supply last active 5+ years ago chart. Source: Glassnode/ Twitter

The amount of hodled or lost coins — “large and old stashes” of BTC traditionally dormant — has also reached its highest level in five years.

Bitcoin active supply chart. Source: Glassnode/ Twitter
Bitcoin hodled or lost coins chart. Source: Glassnode/ Twitter

On lower timeframes, meanwhile, the amount of the supply last active in the past 24 hours in fact hit one-month lows on Jan. 29.

Despite this, a feeling of “greed” is rapidly entering into the market psyche, especially among recent investors, data below from CryptoQuant warns.

Sentiment "greediest" since $69,000

What began as disbelief as Bitcoin rose is rapidly becoming a textbook case of market exuberance, non-technical data shows.]

Related: Bitcoin will hit $200K before $70K ‘bear market’ next cycle — Forecast

According to the Crypto Fear & Greed Index, the classic crypto market sentiment indicator, the mood among Bitcoin and altcoin investors is now predominantly one of “greed.”

The Index, which divides sentiment into five categories to identify potential blow-off tops and irrational market bottoms, currently measures 55/100 on its normalized scale.

While still far from its extremes, that score marks the Index’s first trip into “greed” territory since March 2022 and its highest since Bitcoin's November 2021 all-time highs.

On Jan. 1, 2023, it measured 26/100 — less than half its latest reading.

Nonetheless, sentiment, as measured by Fear & Greed, has now erased losses from both FTX and the Terra LUNA meltdown.

Crypto Fear & Greed Index (screenshot). Source:

In a cautious reaction, CryptoQuant contributor warned that sentiment among those only recently entering the market is now echoing the atmosphere of early 2021, when BTC/USD was making new all-time highs on an almost daily basis.

“Sentiment from Bitcoin short-term on-chain participants (short-term SOPR) has reached the greediest level since January 2021,” a blog post read, referencing the spent output profit ratio (SOPR) metric.

“While SOPR trending above 1 indicates a bullish trend, the indicator is way above 1 right now and overly stretched. Without increase in stablecoin reserves on spot exchanges, the bull fuel could run out quickly.”

Among its other uses, SOPR offers insight into when Bitcoin investors may be more inclined to sell after entering profit.

BTC/USD annotated chart (screenshot). Source: CryptoQuant

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

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Lower mortgage rates fueling existing home sales

To understand why we had such a beat in sales, you only need to go back to Nov. 9, when mortgage rates started to fall from 7.37% to 5.99%.



Existing home sales had a huge beat of estimates on Tuesday. This wasn’t shocking for people who follow how I track housing data. To understand why we had such a beat in sales, you only need to go back to Nov. 9, when mortgage rates started to fall from 7.37% to 5.99%.

During November, December and January, purchase application data trended positive, meaning we had many weeks of better-looking data. The weekly growth in purchase application data during those months stabilized housing sales to a historically low level.

For many years I have talked about how rare it is that existing home sales trend below 4 million. That is why the historic collapse in demand in 2022 was one for the record books. We understood why sales collapsed during COVID-19. However, that was primarily due to behavior changes, which meant sales were poised to return higher once behavior returned to normal.

In 2022, it was all about affordability as mortgage rates had a historical rise. Many people just didn’t want to sell their homes and move with a much higher total cost for housing, while first-time homebuyers had to deal with affordability issues.

Even though mortgage rates were falling in November and December, positive purchase application data takes 30-90 days to hit the sales data. So, as sales collapsed from 6.5 million to 4 million in the monthly sales data, it set a low bar for sales to grow. This is something I talked about yesterday on CNBC, to take this home sale in context to what happened before it. 

Because housing data and all economics are so violent lately, we created the weekly Housing Market Tracker, which is designed to look forward, not backward.

From NAR: Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).

As we can see in the chart above, the bounce is very noticeable, but this is different than the COVID-19 lows and massive rebound in sales. Mortgage rates spiked from 5.99% to 7.10% this year, and that produced one month of negative forward-looking purchase application data, which takes about 30-90 days to hit the sales data.

So this report is too old and slow, but if you follow the tracker, you’re not slow. This is the wild housing action I have talked about for some time and why the Housing Market Tracker becomes helpful in understanding this data.

The last two weeks have had positive purchase application data as mortgage rates fell from 7.10% down to 6.55%; tomorrow, we will see if we can make a third positive week. One thing to remember about purchase application data since Nov. 9, 2022 is that it’s had a lot more positive data than harmful data. 

However, the one-month decline in purchase application data did bring us back to levels last seen in 1995 recently. So, the bar is so low we can trip over.

One of the reasons I took off the savagely unhealthy housing market label was that the days on the market are now above 30 days. I am not endorsing, nor will I ever, a housing market that has days on the market at teenager levels. A teenager level means one of two bad things are happening:

1. We have a massive credit boom in housing which will blow up in time because demand is booming, similar to the run-up in the housing bubble years.

2. We simply don’t have enough products for homebuyers, creating forced bidding in a low-inventory environment. 

Guess which one we had post 2020? Look at the purchase application data above — we never had a credit boom. Look at the Inventory data below. Even with the collapse in home sales and the first real rebound, total active listings are still below 1 million.

From NAR: Total housing inventory registered at the end of February was 980,000 units, identical to January & up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February ’22. #NAREHS

However, with that said, the one data line that I love, love, love, the days on the market, is over 30 days again, and no longer a teenager like last year, when the housing market was savagely unhealthy.

From NAR: First-time buyers were responsible for 27% of sales in January; Individual investors purchased 18% of homes; All-cash sales accounted for 28% of transactions; Distressed sales represented 2% of sales; Properties typically remained on the market for 34 days.

Today’s existing home sales report was good: we saw a bounce in sales, as to be expected, and the days on the market are still over 30 days. When the Federal Reserve talks about a housing reset, they’re saying they did not like the bidding wars they saw last year, so the fact that price growth looks nothing like it was a year ago is a good thing.

Also, the days on market are on a level they might feel more comfortable in. And, in this report, we saw no signs of forced selling. I’ve always believed we would never see the forced selling we saw from 2005-2008, which was the worst part of the housing bubble crash years. The Federal Reserve also believes this to be the case because of the better credit standards we have in place since 2010. 

Case in point, the MBA‘s recent forbearance data shows that instead of forbearance skyrocketing higher, it’s collapsed. Remember, if you see a forbearance crash bro, hug them, they need it.

Today’s existing home sales report is backward looking as purchase application data did take a hit this year when mortgage rates spiked up to 7.10%. We all can agree now that even with a massive collapse in sales, the inventory data didn’t explode higher like many have predicted for over a decade now.

I have stressed that to understand the housing market, you need to understand how credit channels work post-2010. The 2005 bankruptcy reform laws and 2010 QM laws changed the landscape for housing economics in a way that even today I don’t believe people understand.

However, the housing market took its biggest shot ever in terms of affordability in 2022 and so far in 2023, and the American homeowner didn’t panic once. Even though this data is old, it shows the solid footing homeowners in America have, and how badly wrong the extremely bearish people in this country were about the state of the financial condition of the American homeowner.

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SVB contagion: Australia purportedly asks banks to report on crypto

Australia’s prudential regulator has purportedly told banks to improve reporting on crypto assets and provide daily updates.



Australia’s prudential regulator has purportedly told banks to improve reporting on crypto assets and provide daily updates.

Australia’s prudential regulator has purportedly asked local banks to report on cryptocurrency transactions amid the ongoing contagion of Silicon Valley Bank’s (SVB) collapse.

The Australian Prudential Regulation Authority (APRA) has started requesting banks to declare their exposures to startups and crypto-related companies, the Australian Financial Review reported on March 21.

The regulator has ordered banks to improve their reporting on crypto assets and provide daily updates to the APRA, the Financial Review notes, citing three people familiar with the matter. The agency is aiming to obtain more information and insight into banking exposures into crypto as well as associated risks, the sources said.

The new measures are apparently part of the APRA’s increased supervision of the banking sector in the aftermath of recent massive collapses in the global banking system. On March 19, UBS Group agreed to buy its ailing competitor Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The takeover became one of the latest failures in the banking industry following the collapses of SVB and Silvergate.

Barrenjoey analyst Jonathan Mott reportedly told clients in a note that the situation “remains stable” for Australian banks but warned confidence could be quickly disrupted, putting pressure on bank margins.

Related: Silvergate, SBV collapse ‘definitely good’ for Bitcoin, Trezor exec says

“Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong,” Mott said, adding:

“But this is a crisis of confidence and credit spreads and cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks are facing, while credit quality will continue to deteriorate.”

The news comes soon after the Australian Banking Association launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. The inquiry followed an analysis of the rising inflation suggesting that more than 186 banks in the United States are at risk of a similar shutdown if depositors decide to withdraw all funds.

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Delta Move Is Bad News For Southwest, United Airlines Passengers

Passengers won’t be happy about this, but there’s nothing they can do about it.



Passengers won't be happy about this, but there's nothing they can do about it.

Airfare prices move up and down based on two major things -- passenger demand and the cost of actually flying the plane. In recent months, with covid rules and mask mandates a thing of the past, demand has been very heavy.

Domestic air travel traffic for 2022 rose 10.9% compared to the prior year. The nation's air traffic in 2022 was at 79.6% of the full-year 2019 level. December 2022 domestic traffic was up 2.6% over the year-earlier period and was at 79.9% of December 2019 traffic, according to The International Air Transport Association (IATA).

“The industry left 2022 in far stronger shape than it entered, as most governments lifted COVID-19 travel restrictions during the year and people took advantage of the restoration of their freedom to travel. This momentum is expected to continue in the New Year,” said IATA Director General Willie Walsh.

And, while that's not a full recovery to 2019 levels, overall capacity has also not recovered. Total airline seats available actually sits "around 18% below the 2019 level," according to a report from industry analyst OAG.

So, basically, the drop in passengers equals the drop in capacity meaning that planes are flying full. That's one half of the equation that keeps airfare prices high and the second one looks bad for anyone planning to fly in the coming years.

Image source: Getty Images.

Airlines Face One Key Rising Cost

While airlines face some variable costs like fuel, they also must account for fixed costs when setting airfares. Personnel are a major piece of that and the pandemic has accelerated a pilot shortage. That has given the unions that represent pilots the upper hand when it comes to making deals with the airlines.

The first domino in that process fell when Delta Airlines (DAL) - Get Free Report pilots agreed to a contract in early March that gave them an immediate 18% increase with a total of a 34% raise over the four-year term of the deal.

"The Delta contract is now the industry standard, and we expect United to also offer their pilots a similar contract," investment analyst Helane Becker of Cowen wrote in a March 10 commentary, Travel Weekly reported.

US airfare prices have been climbing. They were 8.3% above pre-pandemic levels in February, according to Consumer Price Index, but they're actually below historical highs.

Southwest and United Airlines Pilots Are Next

Airlines have very little negotiating power when it comes to pilots. You can't fly a plane without pilots and the overall shortage of qualified people to fill those roles means that, within reason, United (UAL) - Get Free Report and Southwest Airlines  (LUV) - Get Free Report, both of which are negotiating new deals with their pilot unions, more or less have to equal (or improve on) the Delta deal.

The actual specifics don't matter much to consumers, but the takeaway is that the cost of hiring pilots is about to go up in a very meaningful way at both United and Southwest. That will create a situation where all major U.S. airlines have a higher cost basis going forward.

Lower fuel prices could offset that somewhat, but raises are not going to be unique to pilots. Southwest also has to make a deal with its flight attendants and, although they don't have the same leverage as the pilots, they have taken a hard line.   

The union, which represents Southwest’s 18,000 flight attendants, has been working without a contract for four years. It shared a statement on its Facebook page detailing its position Feb. 20.

"TWU Local 556 believes strongly in making this airline successful and is working to ensure this company we love isn’t run into the ground by leadership more concerned about shareholders than about workers and customers. Management’s methodology of choosing profits at the expense of the operation and its workforce has to change, because the flying public is also tired of the empty apologies that flight attendants have endured for years."

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