Bitcoin price rally above $21K prompts analysts to explore where BTC price could go next

After Bitcoin (BTC) hit a yearly high of $21,095 on January 13, where is it headed next?

Bitcoin is currently witnessing a resurgence in bullish momentum after the positively perceived Consumer Price Index (CPI) report was followed by a strong rally across the crypto market.

The recent rally in Bitcoin is creating increased volume levels and higher social engagement about whether the price is in an outbreak of fakeout mode.

Is the Bitcoin Bear Market Over?

While the market is technically still in a bear market compared to last week, investor sentiment is improving. According to the Fear and Greed Index, a crypto-specific metric that measures sentiment using five weighted sources, investor sentiment about the market hit a monthly high.

The Bitcoin price is now above the psychologically important $21,000 level, and many analysts and traders are giving their thoughts on where the BTC price might go next.

Let’s explore some of these perspectives.

Bitcoin trading volumes remain a concern

Bitcoin price has yet to recover from pre-FTX levels, but reached above $21,095 on January 13 for the first time since November 8, 2022. Despite the strength of the recent rally, some analysts believe BTC price must hold over 21,000 dollars. support before the current bullish trend can be sustained.

According to Glassnode analysis:

“A renewed bullish trend that started on January 1 took bitcoin to the $18.6-$18.9k level, but a move to $19k is needed to claim a new trading channel around $19-$21k. Resistance is expected around these levels as bitcoin is facing a medium-term downtrend. If the price fails to break above the trendline, we expect a pullback towards the $16-$17k range.”

The lack of trading volume around $18,000 shows the weakness of the current activity on the chain and centralized exchange (CEX). The biggest volumes and overall activity seem to surround the $16,000 level, suggesting a more solid floor than today’s price range. With less volume around levels higher than $21,000, Bitcoin’s rally may be limited to $21,095.

Is it just a bear market rally?

Bitcoin continues to face headwinds, including massive exchange layoffs in a tightening macroeconomic environment, Gemini and Genesis legal issues, and the potential creation of a US House crypto-focused subcommittee.

Additionally, Bitcoin’s Relative Strength Index (RSI) currently shows BTC as overbought. According to RSI analysis, a strong downtrend can form as the price corrects.

The macro markets are also at major resistance levels. The US Dollar Index (DXY) is key support, meaning risk assets like Bitcoin could start to sell off if the index rebounds. Bitcoin remains correlated to stocks, and the SPX mini futures index is also showing signs of a pullback.

TraderSZ explains below:

With Bitcoin investors taking profits as suggested by TraderSZ, it may be difficult for BTC to reach higher levels.

Historical analysis points to a new Bitcoin bottom

Bitcoin is currently below its 200-week moving average, and according to independent market analyst Rekt Capital, the Bitcoin price may have already reached a macro bottom according to historical data. Historically, the “Death Cross” level shows a bottom of $23,500.

While traders and technical analysts are not known to accurately predict how long a bull or bear market might last, independent market analyst HornHair cited historical data from 2015 to estimate how long it will take for Bitcoin to reach a new all-time high.

The bull market from 2015 to 2017 lasted 1,064 days, matching the bull market from 2018 to 2021 which lasted the same number of days. If traders match the bear market that followed between 2017 and 2018 and 2021 with the current market, it will take 1001 days for Bitcoin to reach a new all-time high.

Despite the current conditions and the strength of the current price breakout, Bitcoin has proven many technical analysts wrong in the past. Risk-averse traders may consider keeping an eye on increased trading volume at higher prices as an indicator of whether Bitcoin is finally back in a bull market.

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.