As 2023 unfolds, Bitcoin and most major altcoins are extending their slow but steady advance, closely tracking stock markets’ performance. On Thursday, the king of cryptocurrencies jumped above the $18,000 mark for the first time since mid-December and is on track to expand its eight-day gaining streak, which is the largest since July 2021. Much of this positivity is attributed to emerging signs that inflationary pressures are subsiding, potentially enabling the Fed to execute a soft landing.

Cryptos fare well in 2023

After a bruising year, the beaten down crypto prices are exhibiting signs of recovery, with Bitcoin being more than 10% up in the year. Digital coins have been capitalizing on the improving macroeconomic conditions for risk-sensitive assets as both the latest US employment and CPI reports endorsed the prospect of a more accommodative Fed and a lower terminal rate. However, cryptocurrencies are not out of the woods just yet as risks of an impending global recession have not abated, while the prolonged flat trajectory coupled with the subdued trading activity in derivative markets are typical signs of a bear market.

Mixed news on the FTX front

This bear market cycle exposed several flaws and failures in cryptocurrency projects and business models, with the latest blow-up of the second largest crypto exchange in the world, FTX, still rattling the market. On Wednesday, FTX’s lawyers announced that the firm managed to recover approximately $5 billion of liquid assets, including cash and digital coins. Even though this recovery could partially restore the sector’s credibility and provide a sigh of relief to the firm’s customers and debtors, the liquidation of those assets could add substantial downside pressure on crypto prices.

Is Bitcoin a commodity?

In FTX’s trial, the US Commodity Futures Trading Commission (CFTC) stated that digital assets like Bitcoin , Ethereum, and Tether are considered commodities because they meet the definition of the term as defined by the US regulations. Commodity prices are mostly driven by demand and supply factors since they do not entail intrinsic value, while they are also mostly denominated in dollars. In the foreseeable future, the Fed is widely expected to slow down its tightening pace, potentially leading to a reversal of the dollar’s spectacular rally. Could cryptocurrencies benefit from that development?

Up until now, it seems that Bitcoin has not experienced gains on the back of the greenback's weakness.

Is this the beginning of a rally?

Taking a technical look, we can see that BTCUSD had been rangebound for the past two months after finding its feet at the 2022 low of 15,479. However, in the last couple of sessions, the price managed to escape its sideways pattern and challenge its December resistance of 18,370.

In the positive scenario, should the price close above the December high, further advances could then cease at the 20,450 resistance zone. Higher, the November peak of 21,470 might prove to be a tough barrier for the bulls to overcome.

On the flipside, should Bitcoin reverse lower, initial support could be met at the 50-day simple moving average (SMA), currently at 16,915. A violation of that region could set the stage for the 2022 low of 15,479.