Bitcoin (BTC) starts a key week with a familiar cocktail of price spikes mixed with fear that the bear market will return.

After sealing its highest weekly close in almost six months, BTC/USD remains over 40% up year-to-date, with the monthly close just 48 hours away — can the gains hold?

Against all odds, Bitcoin has rallied beyond expectations this month, making January 2023 its best in a decade.

Throughout, concerns have called for an imminent comedown and even new macro BTC price lows as disbelief swept the market.

That grim turnaround has yet to come to fruition and the coming days could yet turn out to be a crucial period for Bitcoin’s long-term trend.

The catalysts are hardly in short supply. The United States Federal Reserve will decide on its next rate hike this week, with Fed Chairman Jerome Powell giving much-anticipated commentary on the economy and policy.

The European Central Bank (ECB) will make the same decision a day later.

Add to that the psychological pressure of the monthly close, and it is easy to see how the coming week could be more volatile in Bitcoin’s recent history.

Buckle up as Cointelegraph takes a look at five key issues to consider when it comes to BTC price action.

Bitcoin price eyes $24K with FOMC volatility predicted

Bitcoin continues to defy naysayers and shorters alike by spiking ever higher on lower timeframes.

The weekend proved no different to others in January, with BTC/USD hitting $23,950 overnight into Jan. 30 — a new five-and-a-half-month high.

The weekly close achieved the same feat, with Bitcoin failing to tackle the $24,000 mark for a final flourish.

At the time of writing, $23,700 formed a focal point, data from Cointelegraph Markets Pro and TradingView showed, with U.S. markets yet to begin trading.

At current prices, Bitcoin remains up a striking 43.1% in January — the best January since 2013 — Bitcoin’s first well-known bull market year.

Market analysts are keen to see what will happen around the Fed rate hike decision at The Federal Open Market Committee (FOMC) on Feb. 1. A definitive source of volatility, the event could impact the monthly candle significantly, only for BTC price action to change tack immediately.

“Perhaps with a little assistance from FOMC volatility? Not a prediction, but certainly a trade setup I’d be very interested in,” popular trader Crypto Chase commented on a chart predicting a retracement followed by further upside for BTC/USD.

That roadmap took Bitcoin over $25,000, itself a key target for traders — even those who remain wary of a mass capitulation event extinguishing January’s extraordinary performance.

Among them is Crypto Tony, who notes the proximity of $25,000 to Bitcoin’s 200-week exponential moving average (EMA).

“The 200 Weekly EMA sits right above us at 25,000 which as you know is my target on BTC / Bitcoin,” he told Twitter followers on Jan. 29.

“Now flipping the 200 EMA and range high into support is massive for the bulls, but we have yet to do this and people are already euphoric. Think about that.”

An accompanying chart still laid out a potential path downhill toward $15,000.

As Cointelegraph reported at the weekend, Il Capo of Crypto, the trader now famous for his misgivings about the recovery, remains short BTC.

Continuing, on-chain analytics resource Material Indicators defined $24,000 as an important zone for bulls to flip to support, along with the 50-day and 200-day simple moving averages.

“If bulls break $24k expecting upside illiquidity to get exploited up to the range of technical resistance ahead of the Feb 1 Fed EoY terminal rate projection. What JPow says will move markets,” it said, as part of a commentary on the bid and ask levels on the Binance order book read this weekend.

Material Indicators referenced Powell’s forthcoming words at the FOMC, also noting that bid liquidity had shifted higher, causing the spot price to edge closer to that key area.

Macro hinges on Fed rate hike, Powell

The coming week is set to be dominated by the Federal Reserve’s interest rate hike and accompanying comments from Powell.

In a familiar but still nerve-racking sequence of events for Bitcoin traders, the FOMC will meet on Feb. 1.

This time, the result may offer few surprises, with expectations almost unanimous in predicting a 25-basis-point hike. Nonetheless, the scope for volatility around the unveiling remains.

“The first two days of Feb are going to be volatile (much fun),” trader and commentator Pentoshi tweeted last week, also noting that the FOMC would be followed by a similar decision from the European Central Bank a day later.

According to CME Group’s FedWatch Tool, there is currently a 98.4% consensus that the Fed will hike by 25 basis points.

This will be a further reduction compared to other recent moves and the smallest upward adjustment since March 2022.

“Wouldn’t be surprised if markets pumped all week ahead of the FOMC announcements,” popular social media commentator Satoshi Flipper said.

“We already know it’s 25 BP. So what is there even remaining for J Powell to give guidance about? Another 25 or 50 BP remaining for the year? My point is regarding rates: the worst is now behind us.”

Should speculators be right in assuming that the Fed will now trend toward halting rate hikes altogether, this would notionally offer long-term breathing space to risk assets across the board, including crypto.

However, as Cointelegraph reported, many are worried that the coming year will be anything but plain sailing when it comes to a Fed policy transition. That may only transpire when policymakers have no choice but to stop the economic ship from sinking.

Another comment, from former BitMEX CEO Arthur Hayes, calls for extensive risk asset damage before the Fed is forced to change course, including a $15,000 BTC price.

Continuing the longer-term warnings, Alasdair MacLeod, head of research at Goldmoney, referenced geopolitical tensions surrounding the Russia-Ukraine conflict as a key future risk asset downside trigger.

“No one is thinking through the effect on markets of the resumption of the Ukraine conflict,” he argued.

MacLeod predicted that energy prices would be “sure to spike higher,” along with U.S. inflation estimates.

“Bond yields will rise, equities will fall,” he added.

Index generates first “definitive buy signal” in 4 years

While few pundits are willing to go on record calling an end to the latest Bitcoin bear market, one on-chain metric is potentially leading the way.

The Profit and Loss (PnL) Index from on-chain analytics platform CryptoQuant has issued a “definitive buy signal” for BTC — the first since early 2019.

The PnL Index aims to provide normalized cycle top and bottom signals using combined data from three other on-chain metrics. When its value rises above its one-year moving average, it is taken as a long-term buying opportunity.

This has now occurred with January’s move up in BTC/USD, but while CryptoQuant acknowledges that the situation may flip bearish again, the implications are clear.

“Although it is still possible for the index to fall back below, the CryptoQuant PnL Index has issued a definitive buy signal for BTC, which occurs when the index (dark purple line) climbs above its 365-day moving average (light purple line),” it wrote in a blog post alongside an explanatory chart.

“Historically, the index crossover has signaled the beginning of bull markets.”

CryptoQuant is not alone in eyeing rare recoveries in on-chain data, some of which were absent throughout Bitcoin’s trip to all-time highs following the March 2020 COVID-19 market crash.

Among them is Bitcoin’s relative strength index (RSI), which has now bounced from its lowest levels ever.

PlanB, the creator of the stock-to-flow family of Bitcoin price forecasting models, noted that the last rebound from macro lows in RSI occurred at the end of Bitcoin’s previous bear market in early 2019.

BTC hodlers stay disciplined

Contrary to expectations, mass profit-taking by the average Bitcoin hodler has yet to kick in.

On-chain data from Glassnode confirms this, with the BTC supply continuing to age despite the recent price gains.

Coins dormant in wallets for five years or more, as a percentage of the overall supply, hit new all-time highs of 27.85% this weekend.

The amount of hodled or lost coins — “large and old stashes” of BTC traditionally dormant — has also reached its highest level in five years.

Meanwhile, on lower timeframes, the amount of the supply last active in the past 24 hours hit one-month lows on Jan. 29.

Despite this, a feeling of “greed” is rapidly entering the market psyche, especially among recent investors, data below from CryptoQuant warns.

Sentiment “greediest” since $69,000

What began as disbelief became a textbook case of market exuberance as Bitcoin rose rapidly, non-technical data shows.

Related: Bitcoin will hit $200K before $70K ‘bear market’ next cycle — Forecast

According to the Crypto Fear & Greed Index, the classic crypto market sentiment indicator, the mood among Bitcoin and altcoin investors is now predominantly one of “greed.”

The Index, which divides sentiment into five categories to identify potential blow-off tops and irrational market bottoms, currently measures 55/100 on its normalized scale.

While still far from its extremes, that score marks the Index’s first trip into “greed” territory since March 2022 and its highest since Bitcoin’s November 2021 all-time highs.

On Jan. 1, 2023, it measured 26/100 — less than half its latest reading.

Nonetheless, as measured by fear and greed, sentiment has erased losses from the FTX and the Terra LUNA meltdowns.

In a cautious reaction, a CryptoQuant contributor warned that sentiment among those only recently entering the market is now echoing the atmosphere of early 2021 when BTC/USD was making new all-time highs on an almost daily basis.

“Sentiment from Bitcoin short-term on-chain participants (short-term SOPR) has reached the greediest level since January 2021,” a blog post read, referencing the spent output profit ratio (SOPR) metric.

“While SOPR trending above 1 indicates a bullish trend, the indicator is way above 1 right now and overly stretched. Without increase in stablecoin reserves on spot exchanges, the bull fuel could run out quickly.”

Among its other uses, SOPR offers insight into when Bitcoin investors may be more inclined to sell after entering profit.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.