Bitcoin (BTC) price and the wider crypto market corrected at the start of this week, giving back a small portion of the gains accrued in January, but it’s safe to say that the more experienced traders expected some sort of technical correction.
What was unexpected was the SEC’s Feb. 9 enforcement against Kraken exchange and the regulator’s announcement that staking-as-service programs are unregulated securities. The crypto market sold-off on the news and given Kraken’s decision to close up 100% of its staking services, traders are concerned that Coinbase will eventually be forced to do the same.
The real question is, does this week’s price action reflect a change in the trend of bullish momentum seen throughout January, or is the “staking services are unregistered securities” news a simple blip that traders will disregard in the coming weeks?
According to analysts at analytics firm Delphi Digital, crypto is set up for a “roller coaster ride in 2023.” Analysts Kevin Kelly and Jason Pagoulatos explained the start of the year price action as being fueled by “recent increases in global liquidity” which are favorable to risk assets, but both agree that macroeconomic headwinds will continue to negatively impact markets until at least the third quarter of 2023.
Beyond the negative news of this week and its impact on crypto prices, there are a handful of metrics that provide some insight into how the rest of the year could be for the crypto market.
DXY comes back to life
The US Dollar index has rebounded from its recent lows, a point highlighted by Cointelegraph newsletter author Big Smokey.
In a recent post, Big Smokey said:
“December’s below expectation CPI print and the upcoming February FOMC and interest rate hike clearly provided the necessary investor sentiment boost to push prices through what had been a sticky zone for months.
But, as shown below, BTC’s inverse correlation with the U.S. dollar index (DXY) says it all. Recently, DXY has been losing ground, pulling back from a September 2022 high at 114 to the current 101. As is custom, as DXY pulled back, BTC price amped up.”
Taking a look at DXY this week, one will note that DXY rebounded off its Jan. 30 low at 101 and reached a 5 week high near 104. Like clockwork, BTC topped out at $24,200 and began to rollover as DXY surged.
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