Is Bitcoin price about to retest $20K?

After its solid start to the year, Bitcoin (BTC) has finally exhausted its upward momentum. Since Jan. 21, BTC/USD has moved in a sideways channel constrained within the price range of $22,300 and $24,500.

As market participants eagerly await next week's Consumer Price Index (CPI) data release, many are split on Bitcoin's future trajectory. Some say BTC is heading for a correction, while others say this is just the beginning movements of the next BTC bull run.

Cointelegraph looks at Bitcoin and considers the factors at play in moving the markets to provide five things to know about Bitcoin this week:

1) BTC disappoints with its most recent weekly close

BTC/USD has managed to retain the majority of its spectacular January gains of almost 40%. At the same time, signs of a retracement are in the cards.

While comparatively strong at just under $23,000, the weekly close still failed to beat the previous one and represented a rejection at a key resistance level from mid-2022.

BTC/USD annotated chart. Source: TradingView

2) Federal Reserve officials to speak as market eyes CPI

This week in the macroeconomy looks decidedly calm compared to the start of February, with less data and more commentary set to define the mood.

As Cointelegraph reported, not everyone believes that the U.S. will pull off the soft landing when it comes to lowering inflation and will instead experience a recession.

Analysts have acknowledged that while recession was not currently an apt description of the U.S. economy, conditions could still worsen going forward, referencing three such cases in past years.

3) Miner relief contrasts with BTC sales

Turning to Bitcoin, network fundamentals currently offer some stability amid a turbulent environment.

According to current estimates from BTC.com, Bitcoin mining difficulty levels are stable and currently holding at their all-time highs, with only a modest negative readjustment forecast in six days' time.

This could end up becoming positive depending on Bitcoin's price action, and a look at hash rate data suggests that miners remain in fierce competition.

Source: Glassnode

4) NVT suggests volatility

Some on-chain data is still surging ahead despite the slowdown in BTC price gains.

Of interest this week is Bitcoin's network-value-to-transaction (NVT) signal, which is now at levels not seen in nearly two years.

NVT signal measures the value of BTC transferred on-chain against the whole Bitcoin market cap. It is an adaption of the NVT ratio indicator but uses a 90-day moving average of transaction volume instead of raw data.

NVT at multi-year highs may be cause for concern — network valuation is relatively high compared to value transferred, a scenario which may prove "unsustainable," in the words of its creator, Willy Woo.

5) Small Bitcoin wallets show trader optimism

Since BTC/USD crossed the $20,000 mark on Jan. 13, another 620,000 wallets with a maximum of 0.1 BTC have reappeared.

According to analysts, this event marks the moment when "FOMO returned" to the market, with the subsequent growth in wallet numbers reaching their highest since Nov. 19, 2022.

A look at the Crypto Fear & Greed Index confirms this sentiment with "greed" still the primary description of market sentiment.

Conclusion

A mixture of technical analysis, on-chain analytics and macroeconomic news have made it difficult to discern exactly where BTC is heading. It's likely that next week's CPI report will provide the final say.

Get the full story by reading the complete article on Cointelegraph.

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Regards,

Russell DeCorte
Director
Markets Pro