Decentral Block Post

Bitcoin (BTC) swapped bullish gains for chop into Jan. 31 as the end of the month saw nervous price action.

$46 million of longs liquidated

Data from Cointelegraph Markets Pro and TradingView tracked a less confident BTC/USD as it briefly wicked to just above $22,500 on Bitstamp overnight.

A rebound saw the pair flip $23,000 to short-term resistance, and was still trading below that level at the time of writing.

The stakes remained high for traders, long and short, with the monthly close just hours away. This was followed by interest rate decisions from the United States Federal Reserve on Feb. 1, along with the European Central Bank a day later.

With volatility likely lying in wait, liquidations mounted despite Bitcoin maintaining a fairly narrow trading range.

Despite a challenging year for crypto, 82% of millionaire clients had looked into investing in digital assets such as Bitcoin (BTC) in 2022, according to a recent poll conducted by financial advisory firm deVere Group. 

The poll results, released on Jan. 30, found that eight out of 10 of the firm's high net worth (HNW) clients surveyed with between $1.2 million and $6.1 million of investable assets sought advice on crypto from financial advisers in the last 12 months.

Nigel Green, the CEO and founder of deVere Group said that despite the surveyed group being "typically more conservative," he believes the interest stems from Bitcoin's core values of being "digital, global, borderless, decentralised and tamper-proof."

Previous years’ studies from the firm have shown a trend increasing interest in crypto investments from wealthy investors.

A 2020 study from deVere found that 73% of the 700 surveyed HNW individuals either already own or are looking to invest in cryptocurrencies before the end of 2022, while the firm's 2019 study found that 68% of global HNW individuals were already invested or planning to invest in crypto by the end of 2022.

Traders tend to lighten up positions before important events because they hate uncertainty. The United States Federal Reserve’s policy decision is on Feb. 1, where the central bank is expected to hike rates by 25 basis points.

Market observers will keenly watch for any hints about how high the rates could go. That could be one of the reasons for the profit-booking in Bitcoin (BTC) and select altcoins on Jan. 30. 

Bitcoin’s sharp recovery in January could also be signaling the start of a new bull market, according to certain on-chain metrics. The Profit and Loss Index from on-chain analytics platform CryptoQuant has given its first buy signal since 2019.

Blockware Solutions head analyst Joe Burnett believes that Bitcoin will not break above its all-time high of $69,000 until the next Bitcoin halving which is scheduled to occur in March 2024. Burnett anticipates Bitcoin’s next bull market top to be between $150,000 to $350,000, which isa massive increase from the current levels.

What are the important support levels to watch out for in Bitcoin and the altcoins? Let’s study the charts to find out.

Bitcoin mining stocks usually follow BTC’s price because it directly influences the company's earnings. These stocks were beaten down heavily in the last quarter of 2022, especially in the month of December. The downturn after FTX's collapse worsened with the bankruptcy filings of the largest U.S.-based Bitcoin mining company, Core Scientific.

During this time, other mining stocks, like Marathon Digital Holdings (MARA) in the chart below, exhibited a weak correlation with Bitcoin’s price, suggesting that December’s downturn was probably overblown.

The negative trend reversed at the start of 2023 as most mining stocks posted impressive gains. The Hashrate Index mining stock index, which tracks the average price of publicly listed mining and hardware manufacturing companies, increased by 62.5% year-to-date. The positive price spike also restored the strong correlation between BTC price and mining stocks.

However, the mining industry remains under stress, with low-profit levels expected for prolonged periods. Since Q2 2022, mining companies have funded operations selling BTC from reserves, selling newly mined BTC, raising debt and issuing new shares. Unless Bitcoin’s price consolidates above $25,000, the industry will likely witness a few takeover attempts or further treasury sales to pay off debt.

Some mining companies are operating at a loss

Currently, the top mining companies' price-to-earnings (PE) ratio is negative, suggesting that they're operating at a net loss, making their stock prices vulnerable to steep downturns.