Bitcoin (BTC) heads into the first monthly close of 2024 with a round trip to its yearly starting point — what’s next?
In a key week for United States macroeconomic policy, BTC price action continues to hover around $42,000.
This sets the stage for a new volatility chapter to come — the past month has seen highs of $49,000, which were followed by snap losses of 20%.
Now, Bitcoin bulls are preparing to contend with the Federal Reserve and U.S. political moves in what could yet spark further upheaval for crypto markets.
This is while the dust settles on the launch of the first U.S. spot Bitcoin exchange-traded funds (ETFs) — a topic of debate in their own right.
Under the hood, meanwhile, Bitcoin network fundamentals are preparing to shake off the impact of the comedown from $49,000 and revert to the upside — difficulty, for example, is forecast to increase by 4% in the coming days.
Cointelegraph looks at the major talking points impacting Bitcoin and crypto market performance into February and beyond.
Bitcoin comes full circle to end January
In contrast to others before it, the weekend produced actionable signals for traders, with BTC/USD hitting $42,800 on Bitstamp, data from Cointelegraph Markets Pro and TradingView shows.
This marked its highest since Jan. 18, and so far, Bitcoin is holding higher into the week’s first Asia trading session.
The latest BTC price action forms part of a relief bounce that entered last week after a reversal at $38,500. This was accompanied by misgivings among traders, some of which remain — Bitcoin, they warn, could easily fetch lower lows in future.
Analyzing the current status quo, however, popular trader Skew saw grounds for cautious optimism on lower timeframes. In a summary on X (formerly Twitter), he flagged the area at $42,000 as the one to watch.
“From this perspective it doesn’t look so bad tbh, however 1H/4H trend establishment will be important confluence with this mid range level,” he wrote, referring to the daily chart.
Skew added that he was looking for positive signs on Bitcoin’s relative strength index (RSI) on hourly timeframes, specifically recovering and holding above the 50 midpoint.
The weekly close meanwhile managed just over $42,000, giving BTC/USD around 1.1% upside versus the prior close.
For Skew, the entirety of the past two months, together with their swing high and subsequent low, constituted an enduring range.
“Technically still same weekly range & two failed swings (no expansion), which ended up being liquidity grabs,” he commented.
Progress was nonetheless promising for fellow trader and analyst Rekt Capital after BTC/USD risked a breakdown from this weekly range.
As the new Weekly Close approaches, it looks like Bitcoin is almost set to rescue its Weekly range$BTC #Crypto #Bitcoin pic.twitter.com/ayJzi5G5tW
— Rekt Capital (@rektcapital) January 28, 2024
Fed rates decision tops rocky macro week
Despite renewed turmoil on Chinese markets and problems for property giant Evergrande, the topic on everyone’s lips this week comes in the form of the U.S. decisions on both interest rates and other aspects of economic policy.
The former is the task of the Fed, and will be revealed at the Federal Open Market Committee (FOMC) meeting on Jan. 31.
Inflation has broadly conformed to the Fed’s hopes, cooling with macro data prints over successive months with few outliers.
Markets have long assumed that this month’s FOMC meeting will yield few surprises, instead favoring the start of interest rate cuts at the next meeting in March.
Per data from CME Group’s FedWatch Tool, the odds of rates staying at their current levels after Jan. 31 are nearly 98%.
“Buckle up for an action packed week ahead,” trading resource The Kobeissi Letter summarized in its weekly rundown of key macro data releases.
Key Events This Week:
1. JOLTs Job Data – Tuesday
2. CB Consumer Confidence – Tuesday
3. Fed Interest Rate Decision – Wednesday
4. ISM Manufacturing PMI data – Thursday
5. January Jobs Report – Friday
6. ~20% of S&P 500 companies report earnings
Buckle up for an action…
— The Kobeissi Letter (@KobeissiLetter) January 28, 2024
As Cointelegraph reported, the coming days will be about more than just inflation. How the government handles other issues — notably regional bank stability — is also on the radar.
Earlier, Arthur Hayes, former CEO of crypto exchange BitMEX, even predicted a retreat to $30,000 for Bitcoin should banking turbulence return to the U.S. in the coming months. What Treasury Secretary Janet Yellen decides this week, he argued, would be key.
Mining difficulty set to resume all-time…
Read More: BTC price at yearly open into FOMC — 5 things to know in Bitcoin this week