5 things to watch in BTC this week

0
77

Bitcoin (BTC) is starting a new week with a strong uptrend as stocks fall and BTC managed to close above $ 50,000 for the week.

After a mixed performance last week of running multiple tests worth $ 46,000, buyer support kicks in and BTC / USD is within 15% of its all-time high.

Cointelegraph takes a look at what could be in store for traders in the coming days, with five factors likely to affect Bitcoin price movement.

Stocks tumbled as the USD rallied

The tide revolves around last year’s stock miracle, with indices falling left and right, warning that the router is far from over.

Asian stocks fell over 1% on Monday due to significant losses in technology stocks, including crypto industry favorites Tesla and MicroStrategy.

Despite a strong closing price last week, the US was expected to have a nudge ahead of Wall Street’s return. According to analysts at Morgan Stanley, the Nasdaq 100 could even hit its 200-day moving average and be around 800 points below its current level of 12,642.

“You will find a lot of volatility in the markets,” Kim Stafford, head of Asia Pacific for Pacific Investment Management, told Bloomberg.

“We believe confidence will improve, especially when vaccines go online. Hence, we will see an increase in growth around the world. There are many reasons to be confident in the marketplace, but much of it is priced in as well. “

With grim near-term prospects for stock traders, the US dollar is adding to its existing strong performance.

The US dollar currency index (DXY) extended its run from late February, hitting 92.19 over the weekend and holding above 92 on Monday.

Traditionally a problematic phenomenon for Bitcoin price strength, the index’s recent moves have been less noticeable than last year as BTC / USD largely shook sentiment to embark on an increasingly asymmetrical path.

US dollar currency index 1 day candle chart. Source: trade view

Simultaneously with the USD, there was a renewed strengthening in oil prices, which rose sharply on the news that Saudi Arabia’s infrastructure had been attacked. However, the output was reportedly not affected.

The stimulus checks the input

The main boost to the dollar’s strength was news that lawmakers will increase its supply to $ 1.9 trillion if it passes the latest coronavirus stimulus package.

President Joe Biden’s massive injection of cash, approved by the Senate on Sunday, is piling new debt on the country’s existing mountain, but will deliver $ 1,400 in payouts to eligible Americans.

Given Bitcoin’s increased public profile this year compared to the last big economic stimulus payout of $ 1,200 in March 2020, expectations are high that at least some of the money will flow into BTC.

The numbers that are now rampant online speak for themselves. According to online monitoring resource Bitcoin Stimulus, the combined value of the two previous checks – $ 1,200 and $ 600 – would be over $ 10,250 as of March 4 if each recipient had bought Bitcoin immediately.

In other words, the first $ 1,200 stimulus bought 0.18 BTC at the time of receipt, while the $ 600 check bought 0.02 BTC. This time around, although the USD amount was larger at the time of writing, it would only be worth 0.028 BTC.

Long-term, the dollar weakness is a heavy burden on investors, given the surge in supply and the other ramifications associated with the highly controversial economic response to the virus.

Despite not claiming to be a “Bitcoin maximalist,” veteran trader Peter Brandt said that Bitcoin would only benefit from current policies for extended periods of time.

“The devaluation of the purchasing power of the US dollar … has only just begun,” he warned on Sunday.

“Because of this, Bitcoin BTC, real estate, US stocks and commodities will continue to trend higher when expressed in USD fiat.”

Brandt also announced that its second largest investment position after real estate is its BTC allocation.

Bitcoin sees the second highest weekly closing price

Inside Bitcoin, the bulls were buoyed with the comings and goings of the weekend as BTC / USD surged above $ 50,000.

In step with the stimulus announcement, Bitstamp’s local highs were $ 51,177. At the same time, positive investment news from China widened the supply shortage, with a focus on institutional buy-ins, reducing the already dwindling amount of BTC available for purchase in the market.

Although the psychologically significant level could not be maintained on Monday, it managed to stay on for the weekly close, making Bitcoin the second largest weekly close of all time.

Rafael Schultze-Kraft, co-founder and CTO of on-chain analytics resource Glassnode, analyzed retailer behavior and predicted a return below $ 46,600 is unlikely.

“This support continues well. And it got stronger! We now have a wall of $ 1.2 million BTC that has moved between $ 46.6,000 and $ 48.6,000 in the chain, ”he wrote on Sunday.

“That is 6.5% (!) Of the circulation supply. I would be surprised if we went downstairs soon. I was at <$ 50,000 for a long time and am long now anyway. "

For the analyst from Cointelegraph Markets, Michaël van de Poppe, a noticeable trend despite the higher price level was a general lack of interest, especially from consumers.

“I recently noticed that there has been a decline in social media exposure and media attention to Bitcoin. A few weeks ago everyone and their parents wanted to get Bitcoin out of FOMO, ”he tweeted on Monday.

“However, the current period is the time to accumulate your positions. When there is no hype. “

The popular Twitter account Bitcoin Archive agreed and replied that interest is “going up and down” along with price developments.

BTC / USD 1 hour candle chart (Bitstamp). Source: trade view

Nobody sells

Additional on-chain indicators confirmed “business as usual” among market participants.

At $ 50,000, miners are not interested in selling, while inflows to exchanges and foreign exchange reserves continue to decline, data shows.

For statistician Willy Woo, the selling pressure came instead from institutional players who will have to prepare for reporting when the first quarter ends – far from a bearish signal.

“Who sold? Aside from the liquidation of the margin longs, according to the data, the hedge funds will be rebalanced at the end of the first quarter, ”he told Twitter followers late last week.

“Many have a mandate to restore balance if an allocation becomes too large. BTC has achieved incredible outperformance. (Sell your winners, buy more losers). “

Woo also noted that large whales have been selling while smaller whales holding between 10 and 100 BTC have increased their presence.

“If you look at the age of the coins in this sale, the low idle time tells us that they are young coins. They are new whales that recently sold their positions, ”he added alongside the charts from Glassnode and his own analytics resource Woobull.

In contrast, he said, buying support comes from “strong hodlers”.

Bitcoin Average Coin Rest Table. Source: Willy Woo / Twitter

Extreme greed is back

After a rapid decline in the area of ​​”fear”, the Crypto Fear & Greed Index is signaling “extreme greed” among investors again.

As an indication that further price hikes may be short-lived, the index hit 81/100 on Monday, up from 76 the previous day. A week ago it was 38/100.

Crypto Fear & Greed Index. Source: Alternative.me

However, the on-chain analysis has a compelling counter-argument. Glassnode’s Network Value to Transactions (NVT) data shows that volume has largely accompanied recent price increases.

“What makes a healthy price increase for Bitcoin? … one that is supported by the volume in the chain! “The co-founders Yann Allemann and Jan Happel tweeted and referred to Woo.

“If the price rises too quickly without blockchain activity catching up, it is often unsustainable.”NVT diagram adapted to the Bitcoin entity. Source: Glassnode / Twitter

The NVT has risen satisfactorily and steadily since before the bull market summit in 2017.