Bitcoin (BTC), starts the week on a tentatively strong footing, as macro cues curiously stabilize.
BTC/USD closed at its highest weekly close since February after a more peaceful weekend than usual, casting aside concerns about a possible bout below $40,000
Conditions are favoring a bullish outlook on shorter timeframes. However, it is not certain that everything will change. Bulls must tackle resistance and turn it into support. This month, the market is at $42,000.
However, signs that belief is heating back up come from the increasing activity in stablecoin market. As such, bearish views on what lies ahead are rare.
Cointelegraph looks at the impact of Bitcoin on the next week as global markets make a miraculous recovery following weeks of war-based nerves.
Stocks behave as if they don’t care about war
Although it may seem crazy, Holger Zschaepitz, a markets commentator, said that markets have begun to forget about the ongoing Russia-Ukraine conflict in just one month.
He says that the main cause of volatility in the previous weeks was the impotence of the market mover following the shock from sanctions.
Although its implications may not be fully evident, the current geopolitical reality on equities markets is becoming increasingly obvious. They are trending up with an emphasis on China’s policy changes.
Chinese equity markets suffered a severe beating this year due to tech stocks and government pressure. However, a apparent turnaround to stabilize Beijing is already having the desired effect.
Asia is leading, Europe and the United States are following this week — markets move higher and, in the case Stoxx 600, have already erased any losses caused by the war.
Zschaepitz observed Monday that global stocks gained $5tn mkt this week on the potential for a wave of stimulus from China and oversold stock markets.
“Investors ignored the ongoing war in Ukraine and rising rates. The yields on the US 10y have jumped 10bps, to 2.15%. All stock is now worth $112.4tn. This equals 133% of global GDP.
If the positive news continues, the attention of the public will be drawn to Bitcoin’s relationship with stock markets, especially those in the U.S. as a possible pretext for price stability.
The correlation paradigm, as noted by Decentrader trading suite last week, is still to be broken.
Analyst Filbfilb stated in a market report that “Price action has been following legacy markets since the Russia/Ukraine conflict began” and noted that there was a strong correlation throughout the period. This shows that Bitcoin is still a risk-off asset in uncertain times.
What would it take for the spell to end? According to Arthur Hayes, former CEO of BitMEX, investors may have to wait longer than usual to discover the truth, but it is possible to break the spell.
In a Medium post, he said that Bitcoin was currently linked at the hip to big tech risk assets.
Bitcoin will be the next big tech to fall if we believe that nominal rates will rise and cause an economic recession and an equity bear market. This correlation can only be broken by a shift in the narrative about what makes Bitcoin valuable. This relationship will be broken by a roaring bullish gold market, despite rising nominal rates and global stagnation.
Which cross will prevail?
Bitcoin ended the week with an impressive “engulfing” candle, which brought the weekly chart to a new one-month high.
Despite attempts to send it south, the largest cryptocurrency remains at $41,000. March is continuing.
#BTC is mere hours away from confirming a bullish engulfing Weekly candle This engulfing candle encompasses the previous 3 weeks’ worth of price action for Bitcoin$BTC #Crypto #bitcoin pic.twitter.com/n279Y7ue3q
— Rekt Capital (@rektcapital) March 20, 2022
However, things are not always as simple as they seem. Nervous analysts remain concerned about a possible resurgence of weakness.
The weekly chart showed a so-called death cross last week despite the strong close. Data from TradingView and Cointelegraph Markets Pro shows this.
These chart phenomena are formed when a moving average with a shorter timeframe crosses under one with a longer duration — usually the 50-period below the 200-period, but in this case it was the 20-period beneath the 50-period.
BTC/USD 1-week candle charts with 20 and 50WMA. Source: TradingView
Be that as it might, shorter time frames have their bullish cues.
BTC/USD is attacking the 100-period moving mean on the daily chart, according to popular Twitter account BTCfuel. This is reason for optimism, and mimics a structure that was in place way back in 2012.
He explained that Bitcoin had fallen below the MA’s and is now challenging the 100D MA(red) alongside comparison charts.
This is 33 bars after the bearish crossing happened. Very similar to 2012. The bullish cross should be completed soon.
BTC/USD 1-day candle charts with 100DMA (Bitstamp). Source: TradingView
This “softly-softly” approach favors a market that is still moving within a range of clearly-defined resistance levels. However, these should be squashed before any genuine trend change can be confirmed.
Matthew Hyland, analyst at TIAA, stated this opinion. Bulls should win the first four-dollar area with $42,600.
If #Bitcoin can successfully break $42.6k it will likely head up to the $46k area If it gets rejected here then the $40.3k area which was previous resistance would have to be used as support again: pic.twitter.com/ZcmKajSziP
Matthew Hyland (@MatthewHyland_), March 20, 2022
Analyst: Stop waiting for the top to fall off.
Cointelegraph reported that Bitcoin’s popularity has been overwhelmingly positive. This is true not only for this year but also for the entire last year.
Various well-known commentators assert that price action between $29,000 and $69,000 is simply consolidation.
However, 15 months later, questions have been raised as to whether Bitcoin should be reevaluated in the context of one its most well-known characteristics: the four-year cycle.
Block subsidy halving occurs approximately every four years and is a predictable event.
For example, bull market peaks have been observed in the year following a halving. Bearish corrections followed, and the cycle continues slowly.
This time, however, has been markedly different. The 2021 end did not see the same blowoff top as in 2017 and 2013.
Willy Woo, a popular statistician and analyst, announced that “we’re likely to see the first signs of The Last Cycle” thesis being fulfilled.
“Three relatively short bull and bear market have taken place since the 2019 bottom.” i.e. There are no more 4-year cycles.”
Woo’s thesis centers around the decomposition of the blow-off top, which is a characteristic of every halving cycle. He says that the blow-off top is not a bearish characteristic, but that price action will become less predictable with increased supply and demand.
The first signs of “The Last Cycle,” the thesis, are likely to be visible. Since the 2019 bottom, there have been three relatively brief bull and bear markets. i.e. There are no more 4-year cycles. https://t.co/N3VzlKx2IA
— Willy Woo, @woonomic, March 20, 2022
Therefore, comparing BTC/USD to its most recent all-time high and its potential to surpass it may not provide an accurate picture of market strength or ability.
Although it is similar to the “supercycle”, championed by Kraken growth leader Dan Held, not all agree that the cycle-based prices phases are no longer valid.
“Don’t quite agree. A parabolic/blow-off 5th wave will bring an equally violent drop. However, generally speaking, we can expect higher lows, higher highs, and more frequent drops over time,” Credible Crypto, a popular Twitter account, replied to Woo in October when he revealed the idea.
Bulls get excited by tether activity
To assess the likelihood of a bullish continuation on crypto markets, look no further than behind-the scenes moves on stablecoins.
Particularly, interactions with U.S. dollar stabilitycoins, which hold the largest share of the market are a key indicator for overall interest in crypto. Their trajectory is clearly upwards.
According to Santiment, there were more USDT addresses last week than any other day this year or last.
It commented, “As Bitcoin fluctuates around $41k Tether is indicating that big moves may be coming to crypto.”
“Thursday (83k), and Saturday (74k), were the largest days in 2022, respectively, in terms of the number of addresses that interacted on the network. This is a sign of declining stagnancy.
Annotated chart of Tether network interaction Source: Santiment/ Twitter
Tether is the largest stablecoin USD at $83 billion.
Weeks of “extreme fear” are overtaken by a heightened sense of sentiment
This week, crypto market sentiment is showing signs of positive change.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC. LUNA. AVAX. ETC.
After a new plunge into “extreme fear”, which lasted for most of March, Crypto Fear & Greed Index is back in its “fear” zone.
Screenshot: Crypto Fear and Greed Index Source: Alternative.me
The Index was at 31/100 Sunday, its highest level since March 4. This indicates that investors are finally feeling better about their macro-based cold feet.
It feels good to get up on Monday morning and see that #Bitcoin has not fallen back into the 30s as it used to. Still above 40k. Sentiment starting to shift… https://t.co/TIrJprHmxW
— Steve (@decodejar) March 20, 2022
Research suggests that sentiment was much lower last week than it was.
Concerning market composition, however, the Fear & Greed Index Newsletter last Wednesday highlighted the ongoing struggle between bears and bulls at current levels.
It read: “The bears have built a fortress of between $40,100 to $42,600,” assessing the need to reaffirm force by bulls upto $42,600.
“This breach would wipe the bears out completely and break their spirit. This is not an easy task but the bulls must do it if they want to regain their momentum.”
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