Bitcoin Taps $48K- Traders Discuss Overheated Stats and a Possible Chinese New Year Dump

Events Jan 17, 2023 0 96 Add to Reading List

The price of bitcoin soared to new heights after Tesla informed the public that it added $1.5 billion to the company’s balance sheet. Bitcoin touched an all-time high (ATH) reaching $48,216 per unit and has retreated in value a hair since then. While crypto enthusiasts are bullish, a few supporters and analysts believe the crypto asset might be overbought, and bitcoin prices may see a drop as we cross over into the Chinese New Year.

The Crypto Economy’s Trillion-Dollar Market Cap Continues to Swell

Bitcoin (BTC) has seen significant gains during the last 24 hours as the cryptocurrency touched an ATH at $48,216 per coin. During the last hour, the crypto asset is exchanging hands for prices between $46,500 to $47,100 per unit with $39 billion in global trade volume.

Out of the $1.32 trillion market cap amongst all 8,416 cryptocurrencies and 33,534 markets, BTC has a dominance rating of 62.9% today. BTC has gained 27% this week, 18% during the last month, 188% for the 90-day span, and 360% against the USD for 12 months. Ten years ago today, the price of bitcoin reached $1 and yesterday was the largest daily candle in history.

At 4:02 a.m. (EST) on Tuesday, markets.Bitcoin.com data shows that ethereum (ETH) tapped the $1,800 range. Currently, ETH is swapping for $1,748 per unit and captures roughly $13.2 billion in global trade volume.

Polkadot (DOT) is trading for $22.99 per coin and has displaced cardano (ADA) after the two currencies have been battling for the fourth largest market cap. Cardano (ADA) is swapping for $0.68 at the time of publication with $21 billion worth of volume.

Coin Metrics’ State of the Network: Ethereum Onchain Transfers Top Bitcoin’s Transfer Value

The Coin Metrics team and analyst Nate Maddrey explained on Tuesday that the top two leading crypto assets (ETH & BTC) have seen increased onchain metrics.

“BTC and ETH onchain metrics were in the green across the board this past week,” Maddrey detailed in the firm’s 89th newsletter. “BTC market cap grew by 12.9% week-over-week, while ETH market cap grew by 19.6%. BTC and ETH realized cap also grew by 3.3% and 12.8% respectively, as both continue to set new all-time highs,” Maddrey added.

The Coin Metrics’ analyst continued:

ETH’s onchain transfer value has topped BTC’s. ETH’s adjusted transfer value reached over $19B on February 4th, its highest level ever. The following chart shows the 7-day average ETH transfer value, adjusted to remove self-sends and other noisy behavior.

Tesla Moved the Needle

The cryptocurrency analyst Simon Peters explained on Tuesday that people should expect a giant shift into the crypto economy following Tesla’s recent purchase. “Yesterday’s move by Tesla to invest in bitcoin and start accepting it as payment for its own products really moved the needle,” Peters said.

“Already there is talk of copycat moves from Apple and Google, linking it to their own payment systems. The shift to digital consumption is growing. We expect to see others follow in Tesla’s footsteps, with bitcoin payments increasingly making sense for businesses that conduct nearly all their sales online,” the Etoro analyst added.

Is Bitcoin Overheated? Technical Indicators Say Yes

On Twitter, analysts and crypto supporters are questioning whether or not bitcoin (BTC) is overheating at this point. Linas Beliūnas asked his Twitter followers: “Is bitcoin severely overbought? These indicators suggest it is,” he added. Beliūnas shared an image stemming from the data site Marketmilk that shows a number of technical indicators.

Marketmilk statistics on Feb. 9, 2021.

Marketmilk stats show that indicators like Bollinger Bands, Relative Strength Index (RSI), Stochastic Oscillator, and other signals suggest BTC is “overbought.”

Tradingveiw’s network summary of technicals, however, is different as the summary says BTC is a “buy,” moving averages point to a “strong buy,” and oscillators are reading “neutral.”

Tradingview statistics on Feb. 9, 2021.

The Chinese New Year Transition

Some crypto enthusiasts think there’s a great possibility of a Chinese New Year dip ahead for bitcoin (BTC) as value drops have traditionally been consistent during every Chinese New Year transition. On February 5, 2021, the cryptocurrency supporter Tyler Reynolds told his 17,000 followers that a correction may happen soon.

On February 1, 2019, Phoon Mei Hui published a report called the “‘Chinese New Year Effect’ in BTC Market.” The author says, however, that the Chinese New Year dump may not be a reality. “We’ve seen some potentially interesting relationships (though not proven causal) between BTC price movement and trading activities during Chinese New Year,” Mei Hui wrote at the time. “Are the signs compelling? Maybe not,” she added.

“If I had to guess, defi just broke it’s parabola and we’ll drop at least 40% from these levels,” Reynolds tweeted. “ETH and BTC won’t drop 40%. If it did break (still unclear), I would expect a fairly sharp pick up (<2 mo) just like we saw in Oct/Nov. This is healthy and we have been overdue,” he added. Responding to Reynolds’ tweet a number of people brought up the Chinese New Year dumps.

“I have my guns loaded to buy this upcoming dip which I also believe is overdue,” Coingecko founder Bobby Ong wrote to his Twitter followers this week. “Chinese New Year dip, I’m all ready for you. Buy orders at 30% from ATH peak has been set. Let’s see if a correction comes this weekend.”

Last year’s Chinese New Year was the “Year of the Rat,” and this year is the “Year of the Ox” or Metal Bull. However, just because this pattern has been consistent over the last few years it may not come to fruition. For instance, traditionally during the end of the year in the U.S., there’s a lot of sell-off before January 1 because of tax implications. Instead, cryptocurrencies like BTC and ETH touched new all-time price highs and continued to jump forward into 2021.