‘Up only’ for BTC fundamentals — 5 things to watch in Bitcoin this week

Bitcoin (BTC), starts the week slowly, with a drag downhill to pivotal support at $45,000

Bulls had much to be happy about last week. The current environment is a new dose of reality. BTC faces nervous stock markets and a resurgent U.S. Dollar.

As usual, the picture is mixed. While spot price might not be very impressive, Bitcoin is more powerful than ever and network participants are increasing their commitments to long-term.

The slow decline in risky behavior on derivatives market markets could also be a factor, and this could lead to some sustained price growth. Is it possible to see price growth this week?

Cointelegraph presents five factors you should consider for BTC/USD in the next days.

Bitcoin tests new 50-day moving Average support

After ten days of recovery Bitcoin now considers the resistance levels that have been missing from bulls radar since January’s middle.

The weekend was relatively calm with temperatures hovering around $45,500, but the daily chart saw several lower lows.

The close for the week was the same as last week’s. However, BTC/USD had a lower close at just under $42,000.

However, this does not mean that there is no short-term upside. The CME futures “gap”, which is now at close to $42,400, could be filled by short-term upside.

Matthew Hyland, a popular commentator, said Monday that Bitcoin is “still just sitting in support and resistance”, adding that he was “relaxing” in the face of current price movements.

Analyst and trader Rekt Capital reiterated BTC’s relative weakness in claiming support levels on a macro-scale, despite support and resistance levels being close by.

He had previously identified two moving averages that needed to be confirmed as support for Bitcoin to reach its November record.

#BTC is struggling to reclaim as support the Bull Market EMAs that constitute the mid-point of the macro re-accumulation range As long as these EMAs remain as resistance, Bitcoin will occupy the lower half of this macro range$BTC #Crypto #Bitcoin pic.twitter.com/m79CLY7P0K
Rekt Capital (@rektcapital), February 13, 2022

The 50-day moving mean is being challenged closer to home as the new week begins following a week of activity above, according to data from TradingView and Cointelegraph Markets Pro.

BTC/USD 1-day candle charts (Bitstamp), with 50-day MA. Source: TradingView

DXY sours risk mood asset

An advancing U.S. Dollar may have contributed to Bitcoin’s decline towards $40,000

The U.S. currency index (DXY), which measures the value of U.S. dollars, has been rebounding since February 4, cancelling the steep downtrend that had characterised the previous week.

This is a problem for risk assets and DXY traded back above the 96 mark on Monday.

U.S. dollar currency indicator (DXY), 1-day candle chart. Source: TradingView

Stocks are already feeling unmotivated by the possibility of Federal Reserve rate increases in March. However, this week’s geopolitical situation involving Russia and Ukraine remains a concern.

Analyst Lyn Alden noted that “over the past century, there have been only four years when both stocks and bonds experienced a negative year.”

Although it’s still early, both bonds and stocks have shown negative returns so far in 2022.

Brent Crude futures passed $96 per barrel Monday as oil continued its climb to $100 on the same tensions.

Cointelegraph reported that both Bitcoin and oil remain macro picks for the year.

Futures are more likely to be spot price than futures

Interesting activity has been occurring on the Bitcoin derivatives markets, despite the rise and fall from local highs.

Twitter monitors, including Checkmate, Glassnode analyst and Lead Analyst at Glassnode, have noted that open interest leverage is disappearing from futures market — with it the possibility of being deleveraged or “liquidated.”

However, this time the decrease is not due to a dramatic change in prices. Instead, investors are changing their strategies.

Checkmate tweeted Sunday, “Bitcoin Futures Leverage has fallen significantly this Week, falling from 2.0% Market cap to 1.75%,” along with a chart showing de-risking.

“But, this wasn’t the liquidation cascade that we all love and know. This is because traders chose to close their positions. “I expect spot to lead now.”

Bitcoin futures open-interest leverage ratio vs. USD/BTC annotated chart. Source: Checkmate/Twitter

Byzantine General, a fellow commentator, said that futures could now begin trading below the spot price, in contrast to the current relationship between futures and spot prices.

He said that the divergence between spot and futures basis is already “pretty substantial” in an overnight post.

This is an interesting, significant way to spot divergence. The quarterly futures basis continues to fall, flirting with backwardation. pic.twitter.com/hX9E7WKeSs
— Byzantine General (@ByzGeneral), February 13, 2022

CME futures were trading at around $200 below the spot price, which was $42,000 at the time of writing.

The difficulty of life drives the hash rate to new heights

This week has been another win for Bitcoin’s network foundations.

The weekend saw hash rate charts, which are an estimation of the mining power, rise to all-time highs.

Although it is impossible to determine the exact amount of Bitcoin network hashing power, estimates of the hash rate have shown an uptrend since the middle last year. The ecosystem only took months to completely cancel out the effects of China’s enforced miner migration.

It appears that mining is now a race for the top with the U.S. at the center of the action.

The hash rate did not jump 58 EH/s within 24 hours. Network hash rate metrics are merely estimates of how fast blocks are coming in. There is too much variability and randomness in shorter time frames. This is something that few people understand. pic.twitter.com/l6FHMDOXXW
— Joe Burnett ()3 (@IIICapital) February 13, 2022

Bitcoin’s mining difficulty is easier to measure, and has also fully recovered after diving to account for the decreased hashing activity post China.

Monday’s difficulty was at 26.69 trillion. However, the next automatic adjustment will push it even higher — to 27 trillion for its first time.

The adjustment will take effect in three days and represents approximately 2.2% of an increase.

Bitcoin difficulty chart. Source: Blockchain

Keep hodlin’

Bitcoin hodlers have a strong sense of conviction. While this is well-known, it is now more evident.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC. XRP. CRO. FTT. THETA.

PlanC’s Twitter account noted that wallets believed to be long-term hodlers are on the rise and that recent price action only added to the trend.

PlanC cited Glassnode data to show that these entities (defined as wallets with at least two significant incoming transactions) have reached a nearly five-year high.

Accumulation Addresses have seen their balance increase by 193,957 #Bitcoin since we broke below 50k. #Crypto Accumulation Address Balance, 57 Month High pic.twitter.com/sMU9o80JwT
— Plan(c), (@TheRealPlanC February 13, 2022

People looking for a position in Bitcoin/USD have found the last days of January to be particularly appealing after a two week absence.

To reduce the chance of target wallets containing “lost,” BTC that the owner has lost, the data does not include exchange addresses or those older than seven years.