The cryptocurrency market as a whole has rallied over double digits in the past month, recovering from the meltdown induced by the FTX bankruptcy. As cryptocurrency prices rose, there was a significant increase in the supply of stablecoins on the market.
According to analyst Ekta Mourya, on-chain metrics signaled a revival in Bitcoin after the prolonged bear market of 2022.
However, the recent shift in trader sentiment and data from derivatives exchanges signals the likelihood of a pullback in Bitcoin and altcoins in February.
According to her, the rise in Bitcoin price to the $23,000 level occurred despite the lack of support from much of the retail market. Mourya points out that this is usually considered an indicator of greed among traders who believe that the price could still go up even if there is not much noise around the asset.
The Fed is in charge
Furthermore, she highlights that the increase in profit taking in Bitcoin ended up in an immediate correction in Bitcoin price and the $23,000 level appears to be a key resistance level for the asset on its journey to the $30,000 target. .
“It remains to be seen where the Bitcoin price will go when enough profit takers sell their holdings above $23,000,” he said.
According to her, a sustained recovery would require an influx of new capital into Bitcoin on exchanges and a reduction in profit taking by large portfolio investors. She highlights that currently, the average trading returns for traders who purchased BTC 30 days ago is 10.6%.
“Historically, pullbacks have typically occurred when 30-day profits for traders have risen above 15%. So, as long as that number remains below 15%, there is room for Bitcoin to continue to rise,” he said.
She ends by saying that currently the price of cryptocurrencies can move either way and suggests that the prices of cryptoassets will continue to be shaped, at least in the short term, by the decisions of the FED and the performance of the American economy.