The long period of consolidation has finally ended, and it is safe to say that Bitcoin has resumed its recovery movement. The cryptocurrency continued to move upward on January 1 and has been showing growth for 12 consecutive days since then.
As of January 12, Bitcoin managed to overcome the $18k level for the first time since mid-December. There is no talk of a full-fledged consolidation yet, but a certain positive dynamics can be traced. The BTC price movement is taking place slowly, as the market has not yet fully recovered after massive collapses over the past two months.
In addition, there is pressure from miners who sell all mined BTC coins to cover current costs. Glassnode analysts concluded that if the price of the cryptocurrency gains a foothold above the $18.8k level, then the pressure on the market will significantly decrease due to the excess of the average asset cost.
Santiment experts announce the activation of large investors and the resumption of the accumulation process. As of January 12, whales hold more than 23% of the total BTC supply, and this percentage continues to grow. The process of purchasing large investors began from the first day of 2023, which directly affected the price movement of the cryptocurrency.
Inflation and SPX
One of the key factors in the upward movement of Bitcoin is the S&P 500 index. The asset also continues its upward movement on growing buying volumes, and as of January 12, SPX has come close to the $4,000 resistance level.
However, the increased correlation between BTC and SPX can play a trick on the cryptocurrency. Today, January 12, indicators of the dynamics of the consumer price index will be announced. The inflation rate is expected to decrease from 7.1% to 6.5%. Volatility in the market is already starting to grow, and therefore negative news can seriously affect the price movement.
A slowdown in the rate of inflation would mean a continuation and possibly a tightening of the Fed's monetary policy. Considering the rising rate of inflation, the December recession will be a negative and unexpected signal for the markets.
BTC/USD Analysis
In the second half of January 11, Bitcoin made a bullish breakout of the $18k level. The upward movement of SPX added strength to the momentum of the cryptocurrency and allowed it to get close to the $18k level. Despite the end of the trading day in the U.S. markets, Bitcoin continued its upward movement and as of 08:00 UTC, it retested the $18.4k level.
Near the $18.4k mark, buyers faced growing bearish volumes, which forced them to retreat to the local $18.1k support zone. At the current stage, the key task of Bitcoin is to fully consolidate above $18k and maintain the current rate of accumulation.
As of writing, the situation is developing identically to the events of mid-December. The price impulsively breaks through the $18k level on increased volumes, after which it faces growing resistance near the $18.4k indicator. However, the current situation differs from the events of mid-December by growing trading volumes and buyers' activity.
However, the chances of a false breakout of $18k remain, as the release of inflation reports is unpredictable. On top of that, Bitcoin continues its bull run for the 12th day in a row, and it is clear that the cryptocurrency is locally overbought.
Results
The bullish movement on the cryptocurrency continues and largely relies on a similar situation in the stock market. The key task of Bitcoin is to consolidate above $18k and locally consolidate to form a strong foothold for further movement to $18.4k.
Among the key bullish targets at the moment is the $18.4k–$18.5k area, where one of the largest bearish candles formed on November 22. It is unlikely that the asset will conquer the level at the first attempt, so we should expect a local correction.
If the outcome is positive, the asset will fall to the $17.9k–$18k area, spend several days in consolidation and continue its upward movement. With a deeper correction, we should expect the price of Bitcoin to fall to the levels of $17.4k–$17.6k.
