FX.co ★ BTC may show rally amid high activity of big players

Bitcoin and the whole cryptocurrency market opened the new trading week on a positive note. In the last 24 hours, the asset gained 4%, whereas in recent days, it added 6%. The daily trade volume is rising along with the activity of big players. On the daily chart, we see a local uptrend, which has reached the upper limit of the current channel, where the downtrend line is located.

There is no doubt that in the following days, bitcoin will test the level of $38.7K. At the moment of writing the article, BTC was trading at $38.5K. Surging trading activity of institutional traders is the main driver of the BTC rise.

Investments of large companies

Big companies became very active when BTC dropped below $35K. This points to a possible formation of a local bottom at $32K. The third largest whale bought 203 BTC, whereas during the last week, it purchased over 10K coins. MicroStrategy also bought 660 BTC in January. The total number of coins bought by the company totals 125K, whereas the average price is $30.2K.

Meanwhile, Jerome Powell failed to give clear forecasts for higher interest rates. It is most likely that the regulator will raise the benchmark rate gradually during 2022-2023. The end of the stimulus program did not surprise market participants. It means that BTC traders have already priced in the current Fed's stance. Since the next meeting will take place only in several months, the inflation rate is likely to go on increasing, thus forcing institutional traders to invest in BTC.

That is why I expect a bullish trend. I suppose that in the next few weeks, the crypto asset may consolidate above $40K. This level should be considered a key one. Its break will indicate the end of the mid-term downtrend and will provide a signal to open long positions. For the last two weeks, the market was in a consolidation phase. Soon, we may see a peak of the accumulation process.

In the best-case scenario, BTC may consolidate above $40K to continue climbing to $42.7K-$46.7K. In this range, the price may drop. Meanwhile, technical indicators are providing bullish signals. The MACD indicator formed a local bullish intersection, whereas the RSI index and stochastic resumed moving towards the upper boundary of the bullish zone.

Although buyers are very active, there is a reason to believe that the downtrend line, where the 0.786 Fibonacci level is located, will remain untouched. Bears took the wait-and-see approach, but their positions are still strong and they may show significant resistance at the level of $40K. In case of an unsuccessful or false break of $40k, the price may hit the next bottom. The one-year low of $28.7K may act as the final point of a downtrend. Even if a double bottom is formed following a three-month correction, the asset is likely to resume climbing to $75K-$80K.