Bitcoin has made a near 40% recovery in 2023, indicating aggressive buying by the bulls. The rally received a further boost last week after data showed that the United States producer prices in December dropped 0.5%, the most since April 2020.

This increases expectations that inflation may have peaked and the US Fed may slow down its blistering pace of rate hikes. The CME FedWatch Tool shows that market participants expect a 25 basis points rate hike in the next meeting on February 1.

We mentioned in our previous analysis that Bitcoin’s first support zone is between $20,500 and $20,000 and if this holds, the rally could reach $22,800 and that is what happened. The BTC/USD pair turned up from $20,370.01 on January 18 and soared to $23,375.60 on January 21.

The upsloping moving averages signal that bulls remain in command but the relative strength index in the deeply overbought territory warns of a possible pullback in the near term. If the price turns down from the current level but bounces off the 20-day exponential moving average (EMA), it will suggest that the sentiment has turned bullish and traders are viewing the dips as a buying opportunity.

That could increase the possibility of a rally to $25,000. This level may act as a significant hurdle to the bulls, resulting in a meaningful correction. On the downside, a break and close below the 20-day EMA could indicate weakening momentum. The bears will then try to pull the pair down to $20,000 and later to $18,385.

Lastly please check out the advancement’s happening in the cryptocurrency world.

Enjoy the issue!