Bitcoin price has finally shown signs of life, albeit on the downside, a direction that could dominate the charts in 2023. During the holiday season, the cryptocurrency was stuck at a single level, but it could be by the end of 2022
At the time of writing, Bitcoin is trading at $16,600 with a 1% loss in the last 24 hours. At higher time frames, the cryptocurrency records similar losses. In the crypto market, red is the predominant color as significant assets follow BTC to the downside.
Bitcoin price tied for spike in volatility
The drop in trading volume due to the holiday season has caused the Bitcoin price to move sideways. This status quo will change in early January, when market participants start trading actively again.
However, the bulls may have trouble pushing the price above local resistance around $17,500 and $19,200, two levels that used to act as critical support. Historically, the first month of the year has been among the worst performers.
Since 2013, Bitcoin price has traded in the red for 60% of its monthly performance in January. According to a pseudonymous analystthis period has ended in unfavorable price action for the benchmark cryptocurrency.
In addition to negative performance, Bitcoin price often experiences sudden changes in value. During this month, the cryptocurrency sees a spike in volatility that historically favors the selling side. The analyst said while sharing the chart below:
We can also see how the percentage change is quite large on average in January. Both up and down. Will January bring some volatility to the market again? (…). Please note that this data is not a reliable indicator of future returns. Use in confluence.
Will Bitcoin Bounce After the Storm?
On a positive note, February is one of Bitcoin’s best performing assets. Last year, Bitcoin price rose from a new all-time high from around $30,000 to $60,000. As shown in the chart above, February has brought double-digit gains for BTC since 2021.
So while BTC could experience a negative first month in 2023, February and March could turn more favorable. This potential future performance coincides with some positive developments in the macroeconomic landscape, including a decline in inflation and a near-term rate hike by the US Federal Reserve (Fed).
However, these terms may apply for a limited time. NewsBTC reported that the traditional market would determine much of what happens to the Bitcoin price and the crypto market.
If stocks can recover from their current levels and start 2023 on a high, the benchmark crypto could follow suit. According to a report from Coinbase, BTC’s long-term bullish position remains strong:
(…) the value proposition for bitcoin has only strengthened this year as sovereign currencies around the world show signs of stress and central banks continue to struggle with policy credibility.