Bitcoin (BTC) has kicked off 2023 with a blast attaining several key support levels that investors will be hoping can build the base for the maiden cryptocurrency to rally further. The bullish momentum has come with investors capitalizing on the positive macroeconomic news to pump more capital into the asset.
In this line, Bitcoin has witnessed an inflow of over $73 billion within seven days amid sustained buying pressure. By the time of publishing on January 15, Bitcoin controlled a market cap of $399.1 billion, representing an increase of about 22% from $326.1 billion registered on January 8.
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Indeed, the value of Bitcoin is benefiting from the increased capital inflow, with the asset trading at $20.886, having rallied over 22% in seven days. On the weekly chart, BTC peaked above $21,000 on January 14. Notably, Bitcoin’s momentum has translated to one of the extended winning streaks for the asset in almost two years.
CPI data triggers Bitcoin capital inflow
Bitcoin’s sustained capital inflows highlight the boost in crypto markets after the United States’ latest consumer price index (CPI) for December, which hit 6.5% on an annual basis.
The reporting has been interpreted as a sign that the Federal Reserve is winning the battle to slow down inflation. This factor translates to the possibility of risky assets like Bitcoin not facing further effects of a stiff monetary-policy tightening pressure.
With Bitcoin having witnessed bullish momentum recently and reversing the general effects of the FTX crash, investors are still wondering where the asset’s price could head next. Indeed, the main point of concern is whether the bear market is over or not.
Can Bitcoin sustain recent gains?
Investors still need to observe caution, considering Bitcoin is still facing bearish sentiments that could reverse the current gains. For example, cryptocurrency entities are yet to recover from the effects of the macroeconomic environment, announcing a series of layoffs alongside the possibility of the U.S. forming a House sub-committee on cryptocurrencies.
Furthermore, based on the general market mood tracked by the Fear and Greed Index, the crypto sector appears to be moving towards optimism. The index aligns with the ‘neutral’ sentiment barely a day after languishing in the ‘fear’ zone.
At the same time, crypto trading expert and analyst Michaël van de Poppe pointed out that Bitcoin is still facing key events likely to impact the current rally. In a YouTube video posted on January 13, he said investors should look out for data that affect general economic health, such as retail sales.
He further warned that despite the inflation data slowing down, the Fed can still hike rates if the overall economic health is low, an element that could affect the buying power.
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