US crypto executive order looms — 5 things to watch in Bitcoin this week

Bitcoin (BTC), starts a new week off with a bang, but not in the right direction.

Despite a promising weekend, BTC/USD was alerted to price movements that were not in the hours. These warnings proved timely as the weekly close sent BTC/USD down more than $1,000.

Analysts were not satisfied with the $37,900 price tag. The all-too-familiar behavior Bitcoin displayed throughout January continues.

Many people are asking themselves what changes will be made to the status quo.

It is possible that an external trigger could be responsible for a shakeup, despite the fact that there has not been any real spot market recovery. For example, the executive order of the United States on cryptocurrency regulation will be issued sometime in February. However, exact timing is not known.

Analysts should also be interested in the Federal Reserve, since any cues regarding inflation, interest rate increases, or asset purchase tapering could have a significant impact on traditional markets. However, Bitcoin and altcoins are closely related.

Cointelegraph looks at the market’s state this week, despite the difficult times that characterized the first month in 2022.

Five things to consider when deciding on Bitcoin’s next steps.

Bears “hammer” BTC weekly close

Bitcoin bulls had little to cheer about despite the modest gains in the weekly close.

Midnight UTC saw an instant rejection candle sweep in with Bitcoin/USD plummeting to $36,650 on Bitstamp.

Scott Melker, a trader, analyst, and podcast host, noted that strong volume was a part of the move. This underscores the unpredictable nature of weekend price movement when it comes building a position.

According to several sources, Melker stated that $39,600 must be reclaimed if a bullish outlook is to prevail.

$BTC Weekly Pretty Hammer Candle (or High Wave Spinning Top, choose). Strong volume, long wick into demand. Until >$39,000. Need confirmation. I have not had consecutive green weeks in several months. 2 weeks ago, there was also a bullish candle. It didn’t work out. pic.twitter.com/HlI8XI6RO2
— January 31, 2022, The Wolf Of All Streets (@scottmelker).

Rekt Capital, a fellow analyst and trader, was just as uninspired by the weekly candle. He updated his Twitter account to say that BTC is “continuing to struggle with $38,500 resistance”.

He said, “This is where BTC must Weekly candle Close Above to ensure upside above $39,000,”

Bitcoin’s disappointing performance means that it is back in the old range. Some warn that this could lead to a retest at lower levels.

Pentoshi, a popular trader, confirmed that he was looking forward to any opportunities to compound if he traded the 29-40k range for a long time.

As sentiment quickly changed from expecting more downside to anticipating a bullish continuation, the trip to $38,600 reached new highs.

However, the reversal saw funding rates fall back to negative territory. Most were hovering around neutral at the time.

Chart of BTC funding rates. Source: Coinglass

Can S&P 500 make a comeback in the worst month since March 2020?

Although Bitcoin’s monthly close has not been scheduled to surprise, the stock markets could provide some relief in the last minute.

Futures are up pre-session Monday. The S&P 500, which has shown a growing positive correlation with Bitcoin in recent months is headed for its worst monthly performance ever since March 2020.

The S&P fell 7% in March, echoing the nervous start to Bitcoin’s year. Fed policy is beginning to bite, echoing the unprecedented liquidity provision that was made at the outbreak of Coronavirus pandemic.

S&P 500 1-hour candle charts. Source: TradingView

The Fed is not revealing the exact timeframe for rate increases that should be implemented following the turn-off of “easy money”, but there is another problem for Bitcoiners.

Biden’s executive order on crypto, which was supposedly moved to February, could again cause a resurgence in already battered sentiment.

Many market participants remain concerned about the Infrastructure Bill. Further negative treatment of crypto phenomena would be extremely unwelcome in a country that hosts the largest Bitcoin mining hashrate.

Bloomberg reported last week that the order should be focused on the “risks, and opportunities” that crypto offers.

Plans have seen multiple meetings with officials as part of the plan, which aims to unify government regulatory approaches to crypto sphere.

Age well for old hands

The comforting trend that seasoned Bitcoin hodlers are still holding on to their assets is evident behind the scenes.

Glassnode, an on-chain analytics company, has revealed that the number coins that have moved since five to seven years ago is at an all-time high.

This group now includes 716,727 BTC.

The Bitcoin supply was last active between five and seven years ago, compared to the BTC/USD chart. Source: Glassnode/ Twitter

Despite price drops, there was a decrease in Bitcoin exchange reserves in January. According to Glassnode data major exchanges have lost around $243 million in the week.

Cointelegraph previously reported on the continuing depletion in BTC holdings by exchanges.

CryptoQuant also confirms that balances have fallen to their lowest level since 2018.

BTC/USD chart vs. Bitcoin exchange balance Source: CryptoQuant

Record 30% Discount for GBTC

Grayscale Bitcoin Trust (GBTC) is not doing so well.

Despite data showing a reemergence in institutional interest in Bitcoin in January 2018, demand for the industry’s flagship BTC investment product is still declining.

Coinglass data shows that GBTC traded last week at its largest ever discount relative the Bitcoin spot price.

GBTC premium, holdings and marker price chart. Source: Coinglass

This discount to net assets value (NAV), which is the BTC holdings of the fund, was once a premium paid by investors for exposure. But, now the tables are turning.

Technically, new entrants could technically buy GBTC shares on Jan. 22 at a price that was nearly 30% lower than the spot price.

Cointelegraph reported that GBTC has been facing a rapidly changing environment over the past months due to a combination price action and launch of ETFs. GBTC will soon become a spot-based ETF, but this requires U.S regulatory approval.

Jan Wuestenfeld, an on-chain analyst, stated that despite the discount, GBTC does not necessarily offer institutional investors a way to make long-term profits from “easy money”.

He said, as part of a Twitter discussion, “Yes, if it is converted into a spot-ETF at some point, but there’s also the fees and also the fact that you don’t really have the keys,”

Not so fearful after all?

Whether you consider Bitcoin on-chain sentiment trustworthy or not, there is something happening this week.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC. LINK. HNT. FLOW. ONE

The Crypto Fear & Greed Index has finally begun to look up after spending nearly all of January in extreme fear.

Sunday marked the first exit of the Index from the “extreme fear zone” — a range between 0 to 25 — since Jan. 3.

Fear & Greed considers a variety of factors in determining market sentiment. Its range highs and lowers accurately reflect extremes in prices.

Analysts are encouraged by the signs of a positive mood. However, it is important to determine if this recovery can be sustained and is not interrupted by external surprises.

It was a fleeting party, and the weekly close candle to the hammer sent readings back into “extreme terror.”

The Index made a brief, but not inexplicable trip to 29 — “fear”, and thus avoided the dubious honor that it spent the longest time in the “extreme fear zone” since its creation in 2018.

Crypto Fear & Greed Index. Source: Alternative.me

Peter Brandt, a veteran trader, didn’t seem to be surprised by the fickle nature sentiment. He joked about how people have changed their perspectives since the price correction.

It is fascinating to me that so many people on social media, not all of them, who predicted a $BTC rocket shot in Nov and wore laser eyes in Mar/Apr are now predicting that the $30k mark will be broken. When bulls don’t wear laser eyes — it is time to SELL. When bears take over — it’s time to BUY ???? pic.twitter.com/ytchaFLDfN
— Peter Brandt (@PeterLBrandt), January 30, 2022

Brandt referred to the second half of 2021, with the November record highs as the focal point, as the “Laser Greed Era”.

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