Growth is over: what threatens the lull in the cryptocurrency market

The unprecedented growth of the cryptocurrency at the beginning of 2023 gave investors confidence in a permanent uptrend. However, the events of the third week of January slowed down the growth of quotations.

bitcoin

Over the past week from January 13 to 20, the Bitcoin rate rose by 5.96%, from $19,931 to $21,118. Almost all of the growth occurred on Saturday, January 14, when the cryptocurrency added more than 5%. The weekly high was shown on January 18 and amounted to $21,646, but BTC could not hold on to it.

A source: tradingview.com

So what led to the slowdown in the growth of the world’s first cryptocurrency by capitalization in the third week of January?

It seems that the main motive is the fears of market participants about the onset of a recession in the US. They are backed up by statements from some members of the Fed. For example, James Bullard, president of the St. Louis Fed, and his Cleveland colleague Loretta Mester converge
in opinionthat inflation in the country is slowing down. However, the Fed’s targets have not been achieved and we should expect an increase in the key rate to 5-5.25%. Recall that since November this figure has been 3.75-4%.

There are a number of other reasons why Bitcoin is slowing down. There is still a lack of liquidity in the markets, which is connected with the macroeconomic situation. Well, if so, how can something grow if there is simply no corresponding amount of money? A similar view was expressed by Bloomberg Senior Strategist Mike McGlone. True, he has no doubt that BTC will grow in the future.

Some experts put forward absolutely incredible hypotheses that do not have any evidence. For example, Fox News TV presenter Tucker Carlson attributed Bitcoin’s rise in early 2023 to billions of dollars of purchases by the US government itself. In January, the US Federal Aviation Administration (FAA) reported a hacker attack. Carlson linked the growth of BTC with this event simply: they say that attackers always demand payment in cryptocurrency.

The hacking of the Bitzlato cryptocurrency platform also turned out to be a negative factor. The company did not say exactly how many assets were withdrawn, making it clear that we are talking about a small part of the funds. However, this made an unpleasant impression on the crypto market: on the day of the release of the news on January 18, BTC fell by more than 2%.

And finally, from the point of view of technical analysis, the rise of the first cryptocurrency stopped near the resistance level. In the first weeks of January, Bitcoin won back the losses it had suffered since November 2022, when the FTX exchange crashed. A very strong resistance level has been formed in this area, above which BTC has not yet been able to gain a foothold. The nearest support level is the January 18, 2023 low of $20,358.

A source: tradingview.com

The index of fear and greed for cryptocurrencies has left the fear zone. Now it is 51 and reflects the neutral sentiment in the market. Actually, this can be observed in the price of BTC: there is no sharp collapse, however, growth has stopped.

Ethereum

For the week, the growth of Ethereum turned out to be slightly more than that of Bitcoin and amounted to about 6.4%. At the same time, the trend was similar: rapid growth on January 14 by 6.82%, and then a decrease in dynamics, which resulted in a small rollback.

A source: tradingview.com

There were no revolutionary news that determined the dynamics of Ethereum during the week. However, many companies and analysts are still skeptical about the transition of the platform from PoW to PoS. For example, specialists from the international payments giant Visa said they have no doubts about the environmental effectiveness of the changes, but they are of two minds about decentralization. On the one hand, Visa recognizes that the entry threshold for staking is lower. On the other hand, large players will still be involved in management.

The technical picture for ethereum is as follows: it did not reach the resistance level of $1,676.8, stopping at the round figure of $1,600, where the consolidation began. Still, further growth should be expected after overcoming $1,676.8. Immediate support: $1,501.4.

A source: tradingview.com

Shiba Inu

The week of January 13-20 was positive for Shiba Inu investors. Quotes of the meme cryptocurrency over this period of time increased by 13%. At the same time, at the moment on January 18, growth reached more than 28%.

A source: tradingview.com

In fact, there have been a lot of fundamental positives for Shiba Inu lately. For example, the platform has joined forces with the Bugatti Group by releasing the NFT collection. The venture was a great success: everything was sold out within four minutes.

Shiba Inu’s main driving force was the team’s announcement of an imminent
startup beta versions of Shibarium’s own blockchain. According to the developers, the blockchain is designed to solve many problems: reduce commissions, improve the functioning of the ecosystem, and increase the speed of transactions. It is still too early to talk about this – it needs to be tested in practice.

Also, investors were enthusiastic about the fact that the Korean exchange Upbit on January 18 informed about the start of trading Shiba Inu for South Korean won. This led to a sharp jump in the price of the token, which was observed on January 18th.

From a technical perspective, Shiba Inu has been in an uptrend since early 2023. Since December 31, the token has gained over 40%. The current resistance level is the high of January 18, $0.00001294, the nearest support level is $0.00001010.

A source: tradingview.com

Conclusion

Over the week, most tokens still showed growth. However, it turned out to be noticeably more modest than in the first days of 2023. What is happening may indicate the gradual disappearance of increased interest among crypto-investors and the transition of the market to a flat (a period of time during which the price at the auction does not rise or fall).