Bitcoin (BTC), which has returned to its annual opening price of $46,000, begins the last week in March with a bang.
BTC/USD started to rise in a surprising upward move on Saturday. It continued overnight to surpass its highs at the beginning of 2022.
Bitcoin’s strength is being taken with a grain of salt because it is trading in a macro environment of uncertainty. This is understandable considering that previous attempts at breaking out of the multi-month trading range for Bitcoin have all failed.
Bulls were disappointed even during volatile periods. Bitcoin often returned to the lower end of its range and reverted to it, which cost both short- and long-term positions dearly.
However, there is hope that this time will be different. Analysts have long maintained that a break above the range ceiling (formed by the annual open at $46,200) would be sufficient to trigger a paradigm shift.
This is now in motion on the charts. Now, let’s focus on the last hurdle: cementing these multimonth resistance levels for support.
Cointelegraph looks at possible triggers for this crucial episode in Bitcoin price action, which is currently ongoing Monday.
Bitcoin wipes out 2022 dip
Is it pure chance or gradual then sudden? This week, traders are still trying to understand Bitcoin’s sudden strength.
The chart has been missing this sight since the new year. BTC/USD is now back at $47,000. The largest cryptocurrency jumped nearly $3,000 in 24hrs, putting an end to resistance levels that had for months held bulls back.
Since almost two decades, the significance of $46,000 is a hot topic — many believe that a return at the yearly open would signal that Bitcoin was ready to take on bigger challenges once again.
Few people would have predicted that this phenomenon would occur “out of hours.” However, suspicions about the rally’s true strength are evident on social media as the week begins. They are just as prevalent as when the rally began.
march 2020 – fooo bullish may 2021, ct bullish may 2021, fooo bearish july 20,21 ct bearish, fooo bearish july 2030 ct bearish, fooo staked fooo’s entire reputation on greater upside november 2021 fooo started dumping, now ct bullish and fooo bearish Wholesome
— fooo-Mayor of Goblin Town (@bitcoinpanda69), March 26, 2022
Even though the longer-term outlook remains grim, more cautious voices don’t discount the possibility of further upside.
$BTC Update Yearly Open Tag Flip to supoort 50k Next with the potential move into 53k imo
— Pentoshi (@Pentosh1) March 27, 2022
Analyst and statistician Willy Woo reported that “fundamental buying pressure for Bitcoin is now climbing into bull market territory.”
Matthew Hyland, a fellow analyst and key supporter for the $46,000 argument, suggested that a $52,000 target would be the next long-term resistance wall.
#Bitcoin has broken above the $46k resistance zone The next major resistance zone is around $52k: pic.twitter.com/ueqi5xwkhi
Matthew Hyland (@MatthewHyland_), March 28, 2022
He stated in Twitter that the move was preceded a breakout of Bitcoin’s relative strength indicator (RSI), which is a classic signal for breakout trends.
RSI is a measure of how overbought an asset is at a particular price. In the case Bitcoin, it has been rising off a floor since mid-January according to data from TradingView and Cointelegraph Markets Pro.
The extent of the rally could be determined by historical behavioral norms and further development of RSI.
BTC/USD 1-day Candle Chart (Bitstamp), with RSI Data. Source: TradingView
nalyst eyes Bitcoin stocks decoupling
It is a confusing world, and it doesn’t get easier when it comes down to how Bitcoin should behave.
Commentators have predicted doom for stocks and risk assets in 2022 due to inflation, war in Europe, and the persistent threat from Coronavirus returning.
Multiple sources have warned that Bitcoin may soon be in trouble if a dramatic stock capitulation triggers another March 2020 moment.
It is now over. Some argue that only continued quantitative easing will bring back the massive capital flows Bitcoin experienced later in the year.
Bitcoin seems to be stepping out on its own now, challenging the intense stock market correlation that, in the case S&P 500, reached a 17-month peak last week.
The S&P has managed to shake off the effects of the Russia-Ukraine conflict and the plans for tightening by US Federal Reserve. However, analysis has shown that there has been significant selling and shorts are all around — ironically, the perfect fuel for a new “short squeeze” upwards.
This rally saw a lot of equity traders sell heavily: * A massive weekly purge (as a percentage of Market Cap) * Total $ sold hit a new record * Spec positioning now significantly net short – at risk for a further squeeze. Similar setups have led to other major rallies. pic.twitter.com/iTYGfEh5iS
— Macro Charts (@MacroCharts), March 26, 2022
“Risk-on/Risk off correlations to equities are a short-term effect. BTC trades this due to short-term speculators,” Woo stated in a recent Twitter thread.
“Bitcoin’s internal demand foundations, powered by its adoption curve, are more powerful.” The market eventually decouples, the last time being Oct 2020.
If speculators have been dominating the market so far this year then a rise in interest in Bitcoin futures may be something to keep an eye on going forward. Data from Coinglass indicates that Bitcoin futures open interest is at its highest level since December.
Chart showing open interest for Bitcoin futures. Source: Coinglass
Who would not want their money back?
There’s more to the story of $46,000 than meets the eye. It is not just symbolic.
Glassnode, an on-chain analytics firm, noted that the $45,900 area has a lot of previous buyer activity.
Market participants bought in when Bitcoin was at its lowest point, and have been under water ever since.
Glassnode warned that a return could ruin the mood, as buyers rush to get out.
The Short-Term Holder Actualized Price is the next major on-chain barrier for Bitcoin, currently trading at $45.9k. This metric represents the average price that investors paid for Bitcoin after October ATH,” explained Friday along with a chart showing its short- and long-term holder realized cap indicators.
STHs are looking to ‘get their money back. ‘”
Cap chart for Bitcoin short- and long-term holders. Source: Glassnode/ Twitter
Short-term holders, defined as entities that hold coins for less than 155 days, have not yet triggered a change in direction. However, Wall Street trading could bring about surprises.
Day-to-day difficulty should reach a new record high
The network fundamentals of Bitcoin are certain to not disappoint this year.
This week will not be an exception as Bitcoin’s network difficulty reaches new records of around 28.67 trillion.
This move follows a month of losses that, as Cointelegraph reported, accompanied upheavals for Kazakhstani miners.
Difficulty will add 4.4% to existing totals, thereby making it more difficult than ever.
Average chart for Bitcoin difficulty over 7 days. Source: Blockchain
This means that mining for block subsidy has never been more difficult, as demonstrated by Bitcoin’s bullish hash rate data.
As a result, Bitcoin is more resilient to network attacks because a growing number of miners dedicates more resources to competing to win the same fixed reward — protecting network participants in turn.
The 50% drop in hash rates last year, which was triggered by China’s crackdown on mining, seems like a distant memory.
The effects of “banning bitcoin mining.” New ATH for bitcoin hash rates, which is higher than the time when the “ban” occurred. pic.twitter.com/pY5ea1rCJB
— CZ Binance (@cz_binance) March 25, 2022
Last week, lawmakers rejected a second attempt to ban Proof-of-Work crypto support in the European Union.
According to MiningPolStats data, the hash rate of known mining pools was around 219 exahashes per minute (EH/s), which is the highest ever recorded.
Greed is back, for the first time in $60,000
It’s a classic market sentiment pattern that plays out over and over again.
Similar: Top 5 Cryptocurrencies to Watch This Week: BTC. ADA. AXS. LINK. FTT.
The Crypto Fear & Greed Index revealed for the first time, in 2022, how excited the average crypto investor feels.
The classic sentiment indicator, which was first introduced in November after Bitcoin hit its most recent all-time high of $69,000, has now entered “Greed” territory for the first time.
Its transformation has been remarkable, just like the change in sentiment this month. It measured the mood with a normalized score 22/100 a week back — not only “fear,” but also “extreme fear”
It is now on the verge of showing the opposite. Long-term investors know that sustained rallies are only possible when sentiment increases slowly.
Today’s $BTC move caused a huge jump in the Fear and Greed Index. The last time we reached Greed territory this far, the price was +$60k. Live chart: https://t.co/Jr5151icga pic.twitter.com/KZtsava7jZ
— Philip Swift (@PositiveCrypto), March 28, 2022
Some are however excited to see what the future holds.
“The crypto markets are in a steady uptrend, while the supply shock kicks into effect. JRNY Crypto stated Sunday that it will take only one bullish event for this to return to its all-time highs.
“Watch the crazy results when people feel fear and greed, even though there is limited supply.
Screenshot: Crypto Fear and Greed Index Source: Alternative.me