Bitcoin has once again surpassed the $43,500 mark, reaching its expected initial target. For now, it has encountered selling pressure at $43,880. The slowdown of GBTC outflows and investors’ diminishing expectations of deeper lows have contributed to this recovery, especially as the Federal Reserve meeting approaches. What is the market outlook for the coming days? How will crypto start February?
Why Are Cryptocurrencies Rising?
Cryptocurrencies cumulative value (BTC and all altcoins’ total market value) has been trading within a rising parallel channel since December. Following this channel, the prices finally reached a peak of $1.81 trillion on January 11. Altcoins have seen double-digit gains for weeks, and during this period, BTC reached the $49,000 mark.
Subsequent profit-taking led to the cumulative value falling out of the channel on January 18, dropping below the horizontal support level of $1.61 trillion. We had already warned of a potential breakdown below the channel and a drop to $38,500 before this happened. Indeed, what followed was a descent to this low.
TOTALCAP finally bounced back after reaching the horizontal support area of $1.52 trillion, confirming the region as support and returning to the $1.61 trillion resistance level. We will see new peaks if closes remain above this region, or it could turn into support in the opposite scenario. This was the technical reason behind the rise of cryptocurrencies.
If the region is confirmed as resistance and the price breaks down, we could see a decline that would cause destruction in altcoins down to $1.37 trillion.
Why Is Bitcoin Rising?
In the first section, we mentioned that BTC also experienced a similar scenario, albeit with a delay. After confirming the channel support as resistance, the price dropped below the $41,000 support area. However, the region was quickly reclaimed, and the recent drop remained a deviation. This supported the general price increase.
BTC has since shown an increase and could nearly reach the support trend line of the channel at $44,600. If BTC breaks out, it could rise to $50,000 with a 15% increase up to the channel’s resistance trend line. In the opposite scenario, the target could be a drop to $41,000.
Strengthening ETF inflows and asset management companies increasing their marketing efforts for Bitcoin support the optimistic scenario.
