A Great Week For Bitcoin

Bitcoin is green on the year, there hasn’t been a major hack, and SBF is on trial…is this heaven?

Nope, but it is 2023, which has already been so much better than the entire second half of 2022.

Bitcoin specifically is booming, with prices up 28% this year, once again breaching $21,000.

Back in Black

As we said, Bitcoin is on one of those runs right now, and people are basking in seeing green again. But is this a real rally, or is it a bull trap ready to trick us and send us back to the mud?Well, this rally has some promising signs that make us think it could be sustainable:

• Whales have not been moving Bitcoin onto exchanges, signaling they don’t plan to sell anytime soon

• Inflation is cooling, and the market believes interest rates are close to peaking

• Crypto’s global market cap climbed above its 200-day moving average for the first time since August 2021, when it rallied 82% to a new all-time high

• Bitcoin options have flipped bullish

• Trading volume for decentralized exchanges is way up

• For now, it appears that the forced selling is finished

That doesn’t mean we’re out of the woods just yet:

• The Genesis/Gemini/DCG situation still has to be worked out

• We don’t know exactly what the Fed will do with interest rates

• The Mt. Gox reimbursement will likely happen this year, which would result in a massive amount of BTC hitting the markets

• Spot and derivative trading volume for the major centralized exchanges aren’t doing too hot

• Ethereum’s gas fees are still low, indicating that on-chain volume hasn’t fully returned

• The Bitcoin and Ethereum fear and greed indexes are starting to reach “greed” territory, which is typically a sell indicator

• Lastly, unlike the beginning of previous “bull cycles,” one can argue that there’s really no big bullish narrative currently brewing – at least from a retail investor perspective

Still, at the end of the day, and despite the recent momentum, nobody knows for sure if Bitcoin and crypto will continue their ascent. Like most things in crypto, it is a nuanced topic.

According to Glassdoor, the Realized Price (the average BTC purchase price for all holders) is $19,700. Before this week, the 2022-23 bear market spent 179 days below the Realized Price, making it the second longest duration across the last four bear cycles.

Now that we are above that level, the next big question arises: Can the price hold, or do investors begin to take profits?

We suggest taking a “wait and see” approach before taking too large of a position.