Daily Report – Bitcoin and Market Update (January 9 2023)

HTF 1W:

The weekly chart reveals BTC is trading below its critical level of resistance at $17500.

If the local breakout succeeds and the weekly bar closes above the level, further upside implications may emerge.

At 0.49, the 7-week correlation coefficient vs. $SPX confirms an increasing strength of the relationship between the prices of Bitcoin and large-cap stocks.

Currently, BTC is at a 30% discount vs. the 200-week mean, representing the long-term trend. Historically, it’s heavily deviated to the downside, below its “fair” price defined by the 200-week price.

It also needs to rise by approximately 13% to catch up with the 200-day mean.

HTF 12H:

The middaily chart reveals a bullish BPRO trend alert, marking increased chances of a new upward trend emerging.

The BPRO CTF Trailer signal suggests that the bulls are back in control over the market prices, more likely than not.

Furthermore, the BPRO CTF Trend system defines a Stop level of invalidation at $16934. As long as BTC trades over this level, the bulls are to dominate and decide about the short-term directions.

4H:

BTC is at the short-term resistance and boundary defined by the BPRO Momentum Bands.

At 17300 USD, BTC reveals short-term exhaustion, as the local bars seem to have loner upper tails, proving temporary distribution processes. As a result, Bitcoin may return to the breakout level at $16875.

The HTF Trailer (12H CTF) suggests that the bulls are in charge as long as Bitcoin remains above the breakout level and closes above it. Even if there is a local slip below the level, but prices come back above 16900 USD, the bulls will still maintain control, technically.

FEAR & GREED INDEX

At 25 points on the sentiment scale, BTC remains in the “extreme fear” environment. Even though there has been a slight incline of the prices, traders may experience the greatest amount of cognitive dissonance and undermine the significance of local breakouts, this way, as it conflicts with their prior beliefs.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

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.”

At -0.15, the NUPL ratio suggests that an average market participant is still underwater. Historically, the deeply negative NUPL ratio values marked the cycle troughs and proved great contrarian investment opportunities. This time, it should be no different.

Bitcoin Average Mining Costs

Per MacroMicro: “Through observing consumption of electricity and daily issuance of bitcoin, provided by Cambridge University, we can find out the average mining costs of bitcoin. When mining costs are lower than bitcoin’s market value, more miners will join. When mining costs are higher than miner’s revenue, number of miners will decrease.”

At the current production costs at $19200, the miners remain unprofitable, accounting for the mining difficulty and the electricity costs. It encourages more selling in the market, as some of the miners may need to close their business and sell off holdings to cover for outstanding expenses.

For the bulls, it would be best if the miners are back in the profitability zone, and above $19200.

Hope it helps.

God bless