Bitcoin continues to move without a clear direction in the first week of 2023. Following the rejection of a critical resistance zone, the cryptocurrency returned to its range and could be preparing for a new support test.

Meanwhile, altcoins are flourishing, with many posting gains over long periods of time. As of this writing, Bitcoin (BTC) is trading at $16,700 with sideways movement in the last 24 hours. In the previous seven days, BTC records a similar price action.

The BTC price is moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview

BTC in the short term, what is driving the price action?

Bitcoin is reacting to macroeconomic developments and the short-term monetary policy of the US Federal Reserve (Fed). As NewsBTC reported yesterday, investors are hesitant to trade in either direction due to the uncertainty surrounding global markets.

The situation is likely to persist through January. The US released new economic data today, but with “mixed” results, according to a pseudonymous analyst:

Economic data a bit mixed. More jobs than expected, but lower hourly earnings, which is the second most important number, I would say. The matter of where the market will digest this is the most telling factor in my opinion.

The unemployment rate in the United States printed 3.5% for December 2022, well below what was expected by the market. The Fed uses this metric to measure the effectiveness of its monetary policy.

The higher the unemployment, the more they can control inflation, but the US labor market has been resilient and has remained strong despite the intentions of the Federal Reserve. In that sense, Bitcoin and risky assets reacted with small losses.

The lower-than-expected unemployment results give room for the Fed to continue tightening. However, the risk of an economic downturn increases as the financial institution pushes to reduce inflation.

Will Bitcoin make it during a recession?

In a recessionary economic scenario, Bloomberg Intelligence Senior Macro Strategy, Mike McGlone, believe Bitcoin will prosper. The analyst is bullish on BTC in the long term, but shared some reservations about its immediate future.

McGlone expects Bitcoin to revisit critical support around $10,000 to $12,000 in an economic downturn. This massive accident will affect the nascent industry and serve as the final catalyst for another rally. The analyst said:

The growing potential for a severe global economic slowdown may be a major crypto performance driver in 20222. Our bias is that Bitcoin is more likely to come out ahead in most scenarios (…).

Source: Mike McGlone via Twitter

If this scenario continues, the cryptocurrency could start trading as gold and a store of value asset, similar to its performance from 2020 to 2021. Right now, BTC is trading as a risky asset, but the status quo is set for a change. change as the global market economy enters a critical stage.

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