Bitcoin began the week climbing to its highest level in 2023. Against all odds, the largest cryptocurrency on the market reclaimed the $25,000 level for the first time since August 2022, only to be rejected hours after reaching the milestone.
What looked like a full-throttle run to $27,000 has turned into fear. Coinglass data shows that investors experienced Fear of Missing Out (FOMO) liquidations in the last 24 hours, with $69 million liquidated in Bitcoin alone.
Can Bitcoin Continue Its Bull Run And Reach New Yearly Highs?
With the Federal Reserve’s (Fed) efforts to control the pace of inflation not entirely successful, its policies could lead to another 50 basis points (bps) interest rate hikes and an extended period of the hawkish policy, which would hurt the crypto market.
This could freeze Bitcoin’s uptrend price action and form a range at the $23,500 support line or a significant drop down to the $19,000 support for a retest of the level.
Bitcoin is consolidating at the $23,500 level, representing a 2.5% drop in price over the past 24 hours. However, Bitcoin has remained in the green over the last seven days, with a gain of 9.2% after the recent spike to $25,000.
The billionaire and Co-founder of the Gemini exchange Cameron Winklevoss, addressed the recent Bitcoin price performance and the spike to $25,000, well above the levels last seen when FTX collapsed.
For Winklevoss, this signals that the crypto industry has moved beyond the painful chapter of the 2022 bear market and that the crypto space will “not be defined by it.”
What Has Caused the Spike In The BTC Price?
The recently increased Securities Exchange Commission (SEC) regulatory actions towards the crypto industry and the exchanges providing services in the U.S. jurisdiction caused capital to flee from the stablecoins into the top cryptocurrencies in the market.
According to Bitazu Capital Co-founder Mohit Sorout, Bitcoin has triggered the Dollar Cost Average (DCA) indicator, which measures the performance of Bitcoin when investing on a dollar-cost averaging basis. Sorout states that this indicator has only flashed three times in the BTC market’s history.
Each time this indicator signal flashed, the price of Bitcoin displayed massive rallies. In 2015, the price of Bitcoin jumped 7400%, in 2019 to 160%, and the last time this indicator flashed, the price of Bitcoin reached its new all-time high of $69,000 with a 640% rally. February 16 marked the 4th time this indicator signaled a possible start of a newly formed bull market.
Some investors attribute the recent rally to a “short squeeze” and the fact that investors are regaining confidence in the crypto industry and the opportunities to make profits amid the current macroeconomic conditions.
Bitcoin is trading at $23,800 at press time, testing the $23,500 support line; if it holds, the price action can retest the resistance level at $25,000. Despite the challenges the crypto industry has been experiencing, investors seem optimistic and hungry to gain exposure to risk assets.
Featured Image from Unsplash, chart from TradingView.