Bitcoin (BTC) price made a quick pop above $43,100 in the U.S. trading session but uncertainty is still the dominant sentiment among traders on Jan. 11 and bulls and bears are split on whether this week’s drop to $39,650 was BTC’s bottom.
Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin has traded tightly around the $42,000 level as the global financial markets digested U.S. Federal Reserve Chair Jerome Powell’s statements on the upcoming fiscal policy changes.
BTC/USDT 1-day chart. Source: TradingView
Powell indicated that the central bank is prepared to “raise interest rates more over time” if inflation continues to persist at high levels, but analysts were quick to note further comments, suggesting that a low-interest environment could persist for some time.
It’s possible that traders may have interpreted these comments positively and while it is not possible to connect Powell’s comments to direct price movements, BTC did manage a quick surge above $43,000.
“It is really time for us to move away from those emergency pandemic settings to a more normal level. It’s a long road to normal from where we are.”
Here’s a look at the ongoing debate on whether the crypto market is positioned to head higher in the coming days.
Bulls call the bottom
The crypto market is well known for its volatility and history of extensive drawdowns after new all-time highs have been established, a characteristic highlighted by pseudonymous Twitter user ChrisBTCbull.
Cryptocurrency drawdown percentage from 2021 highs. Source: Twitter
This across-the-board drawdown saw BTC fall by nearly 40%, while Dogecoin (DOGE) is down 79% from its highs, but according to bullish analysts, recent technical developments suggest that the market has reached a bottom.
According to crypto analyst and Twitter user Will Clemente III, Bitcoin is “entering the Buy Zone on Dormancy Flow” as highlighted on the following Bitcoin entity adjusted dormancy flow chart, which “essentially compares price to spending behavior.”
Bitcoin entity-adjusted dormancy flow. Source: Twitter