Daily Report – Bitcoin and Market Update (January 16 2023)

HTF 1W:

The weekly BTCUSD outlook implies a directional shift for BTCUSD after a sharp markup over the 17500 USD level of critical resistance.

The implications of a long-term chart shift are significant and more impactful to the primary trend directions than for any lower time frame changes.

Breaking above 21000 USD, Bitcoin has shown a lot of technical strength, even though it’s knocking on November’s high resistance now.

The 200-week average aligns well with the 50-week trend, and both unveil a powerful technical confluence, suggesting that the 24600-26000 USD area should work as resistance.

On a self-fulfilling basis, Bitcoin prices will often gravitate toward such anchors, as they are considered “fair” price points of reference to decide whether the asset is cheap or expensive from the price chart perspective.

The 7-week correlation coefficient has surged above the 0.9 area, confirming solid directional alignment between the $SPX and the $BTC prices. It suggests that Bitcoin has better odds of traveling in the same direction as large-cap stocks.

Then, the last weekly bar can be considered a good candidate, when put in historical context, to initiate a new bull market starting into the 2023 awakening and through the 2024 halving.

HTF 1D:

Following the bullish price crossover over the 200-day mean, Bitcoin has sparked up strongly with enough of % distance to consider the breakout valid.

It’s now approximately 35% up from the lows and has gained a lot of bullish momentum recently.

Because the greatest amount of cognitive dissonance is experienced during the early stages of a reversal, the current Bitcoin rally may extend further to the upside as more traders suffer from loss aversion and will hold on to their losing short-selling bets, feeding their misrepresentation errors.

HTF 12H:

Meanwhile, the 12H chart displays a local supply cluster at 21-21.2k USD, which has been stopping BTC from bursting higher so far.

However, the bulls are now in control as BTCUSD moves above the HTF Stop level of 20227 USD, defined by the BPRO trend indicator.

As long as the support is held on a closing basis, the bulls should persist higher and toward the mentioned 24-26k USD resistance region.

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

20964
19473
18268
16542

These levels 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 gives a deeper insight into the vertical rally of Bitcoin over the last several days.

Following a sharp markup phase, BTC has now started to consolidate at the previous area of weakness seen in November 2022. The 21-21.5k USD area may work as resistance initially, as the buyers meet the opposing force at the price barrier due to asks order clustering. Once the sellers are cleared, the price may drive up higher.

Since the HTF Trailer is set in the bullish direction, the upside is more likely.

The critical stop is at $20227, which is adjusted to the ATR volatility conditions.

Bitcoin Average Mining Costs

The average production costs of Bitcoin are now at $18600s, while the price of Bitcoin is at 21000 USD. This proves that the miners are back above the break-even level, on average.

As long as the miners are profitable, it reinforces the existing ascend in prices, as there is lower risk of miners capitulation. It brings more ease to the network and ensures more price stability for BTC, preventing Bitcoin traders from a deadly spiral, unless a black swan event arrives.

FEAR & GREED INDEX

At 45 points on the scale, there is still some fear left in the market sentiment, according to the index.

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.

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 0.06, the NUPL ratio is back in the unrealized profit territory, for the first time in a longer while. While it does not mean the market is bullish all of a sudden, it means it is much less bearish and showing less “depression” state of emergency in the market. Hence, it may further reinforce the local ascends in the Bitcoin prices.

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