Daily Report – Bitcoin and Market Update (January 4 2023)
The daily chart displays Bitcoin’s technical weakness, which trades below 17.6-18.2k USD.
There is a positive uptick on the 200MA, which displays a different angle of movement. The 200-day trend is starting to flatten out, which in turn implies the technical shift of the trend may be happening. If the average flattens out and BTC breaks above the 20k USD threshold, it may confirm a cycle trough.
However, on average, BTC would need to overcome the bearish seasonal pattern shaped in the January-February period.
Otherwise, BTCUSD may unfold to the downside, below $15500, with every following day adding more supply pressures in the market.
The medium-term outlook suggests that Bitcoin has just formed a failed breakout pattern on top of the current movement.
The primary resistance (the 12H CTF Trailer) at 16877 USD has retained its technical strength, as the fakeout was followed by the downside break locally. This reinforces the concept of a failed pattern, and those tend to perform better in the opposite direction than the initial attempt.
As a result, unless the $17000 is reclaimed soon, the bulls may have to run to cover for their losses, accelerating the further sell-off. If so, the next BTC target could be around $16490, or $16100 – per the BPRO Level Lines.
Bitcoin Average Mining Costs
The Bitcoin production costs have increased to approx. $19500. Meanwhile, the price of Bitcoin is at ~ 16800 USD, presently.
Therefore, today has shown that the miners are suffering slighly more than yesterday, as the disparity and unprofitability gap increases for them.
It’s possibly putting a lot of smaller miners in an uncomfortable position where they may need to sell off their business holdings to cover for the operating losses.
FEAR & GREED INDEX
On the sentiment note, the barometer confirms “fear” at 29 points on the scale. There seems to be an overall consensus about the market uncertainty and a form of balance, for what regards Longs vs. Shorts over the last hours.
The more extreme the fear gets, the more likely a contrarian position will be proven right and profitable.
However, there’s no guarantee that Bitcoin may not decline below the 2022 support of $15500. If it does so, the unprecedented capitulation event may occur, which will trigger the traders’ selling, accelerating the miners’ selling, which in turn forces the retail traders to sell off even more and faster, etc. It would call for a self-fulfilling deadly spiral, as investors suffer from representativeness bias and recency error.
This could additionally be reinforced by a bearish seasonal pattern emerging in the January-February period.
Caution is advised.
Hope it helps.