Daily Report – Bitcoin and Market Update (January 21 2023)

HTF 1W:

The weekly chart looks increasingly promising, as a follow-through to the upside may soon be confirmed.

Now, BTC is trading above $23000 and looks willing to accelerate further.

This is the very nature of trends and momentum. The intrinsic thrust of money moving in one direction makes such powerful breakouts persist with that trajectory.

While there is no guarantee that the future will behave in the same way or that similar patterns will exactly break like in the past, it might be worth thinking that Bitcoin had started every new bull market similarly to the one observed at the moment.

Still, the BPRO HTF Trailer reveals significant resistance at $23500. Once the bulls reclaim the level, the bull run will get an additional validation on the weekly time frame, which is a rare occurrence.

HTF 1D:

The daily BTCUSD chart reveals a powerful breakout over the 200-day trend.

There has also been the first uptick in the long-term mean, which suggests that Bitcoin is starting to incline on average.

Price action wise, a technical resistance at $21500-22800 has been broken to the upside with little effort, following a short-term consolidation between 20.5k USD and 21.5k USD.

It appears that Bitcoin does not have much opposing force in the chart until it reaches the $25000 area, which marked the swing highs of August 2022, from the technical standpoint.

This is the first instance of a bullish and ascending trend in Bitcoin in over a year.

HTF 12H:

The middaily chart unveils the strong presence of the bullish forces, almost effortlessly elevating the prices.

The CTF Trailer trend indicator of the BirbicatorPRO has remained on the bullish side ever since the bull signal triggered at $16900.

Because trends tend to persist in the direction of the breakout, they can be compared to speeding trucks which will not slow down until a foot is kept on the gas pedal. There is an apparent emergence of a bullish trend, and it’s implied to continue until the opposing forces spotted at significant resistance levels do not compromise or weaken the movement.

Besides, the Level Lines define the following support levels of interest:

21547
18871
18268
16522

These levels may often work on a level-to-level basis. It means that when the price travels through the first level, it may further gravitate toward the underlying Level Line, and so on.

MTF 4H:

The MTF outlook suggests a confirmed upward breakout per the 4-hour candlestick graph.

A significant marubozu type of candlestick at the breakout reveals virtually complete domination of the bulls over the bears.

Locally, there are some minor upper candle shadows, which suggest there is a little opposing force in the $23500 territory. Hence, BTC can move and consolidate between $22000 and $23500 for a short period before the pattern unfolds with greater volatility.

Ultimately, the HTF Trailer reveals the sharp bullish trend is intact as long as it trades above $21792.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

Definition reminder: “Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap. Assuming that the latest coin movement is the result of a purchase, NUPL indicates the total amount of profit/loss in all the coins represented as a ratio. It could be interpreted as the ratio of investors who are in profit. Values over ‘0’ indicate investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This phase indicates the increasing reason to take profit which leads to an increase in sell pressure.

As of now, the NUPL ratio is valued at 0.13 and suggests that there is a net unrealised profit for some traders, following bottoming out at -0.31 on November 9th 2022 during the FTX collapse. Such black swan events often offer extreme buying opportunities.

Fear And Greed Index

At 53 points on the scale, the fear and greed index has shifted to a “neutral” mode.

As mentioned in the latest report, “Traders will often suffer from loss aversion, fear of missing out, representativeness bias, misinterpretation bias, regret bias, recency bias, hindsight bias and other types of behavioral errors, resulting in positive feedback loops, empowering the vertical rallies to continue into so-called “fat tails”. Such trends are exceptionally long-lasting series of price moves in the same directions, which are too consistent to call it an accident. This is the nature of trends in financial markets. They rarely ever arrive, yet once in a while and exceptionally strong ascend or descend will appear, and will continue to persist in the direction of the breakout. Now, the fear seems more attributed to the regret of missing out, and cognitive dissonance, as those who have missed the move up will try to bargain and discount the information, compartmentalising it in a more comforting way.”

The neutrality in the sentiment can be associated with traders starting to realize, that they might have missed out on the market bottom, making them rush in the market for purchases.

Combined with a mining difficulty increase and average production costs of Bitcoin above $24400, the miners are slightly underwater, which adds a bit more discomfort and potential selling forces in the near-term future. However, because of the trend direction shift, more miners may hold on to their business knowing of potential trend continuation and promising setup for profits.

Hope it helps.

God bless.