Bitcoin fails to win over skeptical traders
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD reached a new local high of $17,504 on Bitstamp.
The pair nearly peaked from December 16, showing rare bullish momentum on the back of some of the lowest volatility ever during the holiday season.
Traders and analysts are expecting an erratic reaction to macro data from the US. The Consumer Price Index (CPI) reading, due for release on January 12, is expected to support the narrative that inflation is waning, providing a potential opportunity for risk assets.
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However, many voices urged caution, with signs of underlying price support still lacking.
Comments from Jerome Powell, Chairman of the Federal Reserve, disappointed markets the day before, and he avoided mentioning future policy or the state of the economy itself.
Popular trader Johnny summed it up on Twitter: “The real break or dump will come on Thursday when the CPI data is released.”
A subsequent post warned of a “revolutionary tweet as BTC sits below higher time frame resistance at $17,600,” with Johnny previously urging followers not to “feel the need for FOMO especially this week.”
He said, “The CPI this week could see prices return to what they were last week.”
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The conservative approach seemed to be symptomatic of a broader sense of apathy among market participants today, with few believing that Bitcoin could achieve a sustainable rally.
The past weeks have seen constant predictions of lower prices, with some popular traders focusing on $12,000, $10,000 or even lower.
Asked Philip Swift, co-founder of trading platform Decentrader, “Are we heading for ‘infidelity’?
The bearish stance has remained firmly in place when it comes to Il Capo of Crypto, who brushed off the recent recovery across cryptocurrencies to insist that “there hasn’t been a single bullish confirmation yet.”
“Just look. It’s there, right in front of your eyes.” he commented alongside a 3-day BTC/USD chart.
“Bitcoin and most of the market are testing broken supports as resistances. We’ve seen this over and over again.”
Annotated BTC/USD chart. Source: Il Capo of Crypto / Twitter
Altcoin volume ‘extremely worrying’
It was equally dubious to speculate on altcoins, with ether (ETH) outperforming bitcoin as the rally began.
Related: BTC Price Highs in 3 Weeks Meet US CPI – 5 Things to Know in Bitcoin This Week
The ETH/USD pair was trading up nearly 17% against the mid-December lows of $1,150 on January 10.
ETH/USD 1 day candlestick chart (Binance). Source: TradingView
Given the dominance of trading volume, Maartunn, a contributor to cross-chain analytics platform CryptoQuant, feared the worst.
“In my 6-year crypto experience, I noticed something important. Healthy and sustainable price movements start with the rise of Bitcoin, with Ethereum/altcoins following,” he wrote in a blog post.
“Usually when traders get bored with BTC, they start trading altcoins which, in general, are on the risk curve. This makes them very fragile and easy to squeeze.”
The accompanying chart showed the altcoin’s volume dominance above 50% of the total, potentially serving as the writing on the wall for the bulls.
“Today, the dominance of altcoins is again above 50%. It is clear that it should not be as heavy as these examples. But be aware: when altcoins continue to dominate, there is a potential risk of further downside.”
