Bitcoin (BTC) has seen a little decrease in value over the course of the previous twenty-four hours. The value of the king coin has dropped from $23,839 yesterday to $23,109 today, a drop of 3.3%.
The world’s largest cryptocurrency by market capitalization, Bitcoin, has faced a turbulent period lately. Its price nosedived to $23,000 due to a series of factors, including the strengthening of the US Dollar and a decline in US equities. However, analysts at crypto intelligence tracker Santiment suggest that when BTC breaks out of its correlation with US equities, it could enter a period of recovery.
The Crypto China Narrative
China is a major player in the crypto market, and the recent People’s Bank of China’s (PBoC) liquidity injection into its economy has raised eyebrows in the crypto community. The central bank injected $73 billion into its banking system over the past week, with similar actions taking place in early 2020 during the COVID-19 crisis.
These actions are aimed at stimulating the domestic economy, and they are correlated with Bitcoin’s price bottom. Therefore, they are crucial to the resumption of the cryptocurrency’s bull run. If the Chinese economy continues to recover, there is a high probability that Bitcoin’s price will surge, given its deep ties with China.
BTC’s Recent Price Rally and the Futures Market
Bitcoin’s recent price rally from $16,500 to $25,000 can be attributed to a short squeeze in the futures market and recent macroeconomic improvements. However, while prices increased, data suggests that many interested buyers, including whales, were left on the sidelines.
The recent rally to $25,000 shared many similarities with the 2019 bear market rally, which saw a 330% surge in Bitcoin’s price to highs around $14,000 from the November 2019 low of $3,250. Recently, the king coin rose 60% from its November 2022 low.
On-chain and market indicators relative to the 2019 rally are sending mixed signals on whether or not Bitcoin’s rally will continue. Nevertheless, if BTC can break out of its correlation with US equities, there are strong reasons to believe that it could enter a period of recovery.
Bitcoin’s 200-Day Moving Average
Bitcoin’s price surpassed the 200-day moving average (MA) at $19,600, which could encourage paper traders looking to open a long position. Historically, this metric has acted as a bull-bear pivot line, with breakouts above it being bullish and vice versa.
BTC/USD usually retests the 200-day MA on a breakout, which raises the possibility of a correction toward $19,500. However, this was not the case in 2019, when the price continued rising without a pullback to the 200-day MA.
So until a breakout happens, traders might continue to stay on the sidelines. The funding rates for perpetual swap contracts are currently neutral, suggesting that traders are waiting for confirmation.