Bitcoin Struggling Around $23,000 As New-Year Rally Loses Steam

Garantio Finance

Over the weekend, the price of Bitcoin dropped below the $23,000 mark, as investors were still digesting the US nonfarm payrolls data.

This week, the focus is on the speeches that will be delivered by some policymakers of the Federal Reserve.

Bitcoin’s drop

Early Monday morning, there was a drop in the price of Bitcoin to as low as $22,655, which is the lowest it has been since January 31st.

This was after the leading crypto had broken through the $24,000 mark on Thursday. It had climbed by 1% at the end of the day to trade at $23,001.58.

Bitcoin has declined 0.4% for the month, but the currency is still 39.1% higher for 2023. Meanwhile, ether saw its price drop on Monday to a low of $1,610.21.

It had last climbed higher by 1.7% to trade at a value of $1,646.12. Market analysts said that Bitcoin had lost momentum in light of the strong US employment data.

This is because the markets were forced to price in at least two more hikes by the US Federal Reserve before the end of the tightening cycle in light of the stronger than expected data.

The data

The analysts said that the top crypto had managed to survive in a week that had been laden with economic data and important events and had continued to maintain its price at $23,000.

However, the analysts said that the markets may have now run out of reasons for buying the coin and this week might see profit-taking sell orders.

The Labor Department’s report on Friday showed that the month of January had recorded a gain of 517,000 in nonfarm US payrolls, far higher than the predicted 187,000.

The unemployment rate in the country also dropped to a low of 53 years. After the data’s release, there was a rise in the US dollar index and the Treasury yields, which tend to move inversely to the crypto space.

This was a blow to markets that were expecting the Fed to start cutting rates soon and expectations have now shifted towards more tightening and rates would be higher for longer.

This does not bode well for risk-on assets, such as crypto.

Crypto pullback

A number of analysts and investors believe that there is a bullish trend in the crypto market and Bitcoin had already hit bottom in December at $17,000.

But, they also believe that the crypto will hit pause once more before it takes off on a more significant bull run.

Analysts said that the crypto was trading at the deepest overbought conditions seen in 2 years, which means it is time for it to hit pause.

Nonetheless, there are others who believe that risk assets like cryptocurrency will continue to face challenges due to the macro environment.

Last year, crypto had the highest correlation with stock and it is likely that the trend will continue this year as well.

In their respective speeches, Fed members are expected to suppress the optimistic rate outlook of the market.

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