Crypto sentiment split as Bitcoin nears 23,000

While Bitcoin is down nearly 67% from its peak, digital assets–and other investments like stocks–have had a positive start to the year

A recent upswing in the price of crypto currencies such as Bitcoin and Ethereum has provoked a familiar debate: whether a market bounce back could be imminent or if the recent trends are just an indication of more pain.

Since Bitcoin achieved an all-time high of nearly $69,000 in November of 2021, digital assets have been hit by higher interest rates and a series of high-profile collapses including firms such as 3AC and FTX.

While the flagship crypto currency is nearly 67% lower from its peak, digital assets, and other investments like stocks, have had a positive start to the year. The price of Bitcoin has advanced 38% so far this month to $22,858 – its highest level since last August. Ethereum has seen the value of ETH rise nearly 38% as well to $1,645, according to CoinGecko.

Earlier this month, prices of crypto currencies started rising in anticipation of an economic report that showed inflation cooled in December. The reading also raised hopes about the US Federal Reserve hiking interest rates less aggressively than they have in the past year to tame soaring costs.

But, many crypto analysts believe the recent rise in prices is too good to be true and are labelling the rally a bull trap, predicting the breakout will come crashing down and burn traders who mistook the rally as the beginning of a new uptrend.

Others following the rally are also sceptical. According to a Twitter poll conducted by a popular Bitcoin page that included more than 18,000 participants, there was a consensus that the rally was indeed a bull trap.

More recently, a prominent influencer and self-proclaimed crypto analyst, ‘il Capo Of Crypto,’ agreed with the bearish take, saying the rally ‘clearly looks manipulated’ and is the ‘biggest bull trap’ they’ve ever seen.

The sentiment was echoed on Reddit, where one user pushed back against observations supporting a market bottom made in a news article.

Hard to believe that it was only a week or so ago that everyone and their analyst was solemnly and confidently proclaiming that (Bitcoin at) 12k was inevitable and unavoidable, the user stated.