Bitcoin breaks out of the “fear” zone – 5 things to watch out for this week
The Bitcoin (BTC) market is hyped as prices close weekly with momentum after several weeks of decline, but can it keep growing?
After challenging the $42,000 area over the weekend, investors are still bullish and cautious as the higher levels hold. There was a renewed rally on Sunday, which broke above the $43,000 region before consolidating.
With Wall Street opening on Monday and big tech stocks in chaos this past weekend, the environment for crypto traders in February should prove quite interesting.
With a positive correlation, Bitcoin reacts very sensitively to the ups and downs on the stock markets, but the stocks are currently not moving consistently in the same direction.
Hodler will still need to keep an eye on the January lows in the $30,000 region and these are the things analysts should also be keeping an eye on.
To predict bullish momentum, investors need to look at the market and 5 factors that can help determine Bitcoin’s next price action.
Bitcoin avoids a sharp drop
Price action over the weekend does not align with Bitcoin’s newfound uptrend, although low volume is often a signal for fakeout and fakedown.
The $40,000 level is seen as support and analysts are keen to see the $41,000 area as long-term support going forward.
“That’s how I see things. As long as BTC holds $39,000, the price will continue to climb towards the year open,” summarized trader and analyst Pentoshi on Sunday. He also said that 80% of altcoins will fall behind, 20% will follow Bitcoin’s rise.
That’s how I see things. As long as $BTC holds 39k (as previously stated) and then opens annually next
Imo 80% of #alts delayed, 20% lead/follow pic.twitter.com/1S1BPqZ2wp
— Pentoshi Forbes Worst Trader in 40 Years (@Pentosh1) February 6, 2022
The annual opening price for 2022 is around $46,200, the market is getting closer to this area as BTC broke the weekend resistance area and hit a high of $43,070 on Bitstamp.
Analyst and trader Credible Crypto believes the recent action could be a signal that Bitcoin is starting its fifth sustained impulse move in a few years.
My thoughts on this $BTC dominance at this time. To make it short- $BTC during the initial phase of our final 5th wave pulse, the others steal the show thereafter as $BTC Tops, dominance makes a new all-time low before this is all over. pic.twitter.com/mjklIIN444
– Credible Crypto (@CredibleCrypto) February 2, 2022
If this is the case, it is likely that altcoins will lost “the limelight” in the hands of BTC as the bull run took place.
“If my thesis is correct and BTC actually starts its 5th wave here, the market will probably pump heavily, altcoins will knock out, but then grow and catch up with the market action as we saw in the previous two boosts (from $3,000 to $14,000 and from $12,000 to $65,000)”.
On the other hand, whales could be the answer holders. Data from on-chain monitoring platform Whalemap shows that the $38,000 region remains an area of interest for many whales that started buying BTC at this level last week.
Closest on-chain supports in case #BTC draws back pic.twitter.com/gcC00DbOg7
— Whale Map (@whale_map) February 6, 2022
The fact that BTC/USD is touching the $43,000 region, its highest level since Jan. 17 shows that the market has erased the losses of the last 2 weeks.
Inflation “still rising steadily” ahead of January CPI release
The stock market last week provided a springboard for Bitcoin to break out of the $30,000-$40,000 corridor, but “just up” is not characteristic of major asset classes.
It’s quite odd among the big tech stocks that Amazon has grown while Meta has lost, and Bitcoin has used this to its advantage.
Can the same trend continue this week? Equities are not alone as oil continues its upward momentum in tandem with rising inflation.
“Inflation will affect the Fed’s view. Inflation is REAL,” said veteran trader Peter Brandt on Monday mention on US bonds.
“This is due to increased liquidity over the past two years. USD is printed too much. The Fed will hike rates “later”. The 10-year bond is heading towards 2.35% in the short term and 3.0% in the next few years.”
Inflation remains very “moderate” compared to the last century, he added, but is still rising steadily over the long term.
Meanwhile pentoshi forecast Oil price will soon reach above $100 threshold.
“Oil appears to be breaching the $100 region at this price. Up 20% in the first 5 weeks of the year, up 13% in January. If you used to love inflation, you’ll love it when oil surges above $100. Consumer prices should also rise.”
As a result, Monday’s Wall Street opening could confirm Bitcoin’s gains or put the entire market at risk again. Right now, futures are tumbling after the S&P 500’s best-performing week of 2022.
Meanwhile, data shows Bitcoin’s correlation with Nasdaq is waning.
Bitcoin 1D correlation to Nasdaq starts falling from high levels pic.twitter.com/S4Sfa8nYrX
— Will Clemente (@WClementeIII) February 7, 2022
Consumer Price Index (CPI) data for January will be released on Thursday, which could add headwinds to inflation if the reading comes in below expectations.
Will the USD continue to cool?
Something is happening in the dollar and even as the stock market rallied, it started the year looking weak.
In early February, the winning streak that lasted all of 2021 suddenly broke the burden for USD bulls, and the past week has seen a sustained decline in the USD Index (DXY).
After breaking through 97 for the first time in over a year, the DXY has faced stiff resistance and is now back below 95.6. This is the lowest since mid-November when BTC/USD hit ATH at $69,000.
analysis establish Trader, investor and entrepreneur Bob Loukas is currently skeptical. He said last week:
“The USD market is making very interesting moves. Maybe a trap? One thing is for sure, price action is always ahead of our view whenever macro markets/major events are set to push prices higher.”
Traditionally, bitcoin has been negatively correlated with DXY, and strong USD gains could weaken the market slightly.
USD Index (DXY) 1-Day Chart | Source: TradingView
“Looks like DXY is starting to correct more,” said Michaël van de Poppe, forecast.
He noted that the European Central Bank’s (ECB) reluctance to raise interest rates has put pressure on the dollar.
“It would bode well for Bitcoin and risk assets if the DXY shows more weakness,” he argued.
Short-term holders are beginning to profit again
Those looking for signs of a long-term Bitcoin bottom needn’t look for much more on-chain data this week.
As noted by on-chain analytics account Root, the portion of BTC supply controlled by short-term holders is starting to rise after falling to an area that coincides with a macro bottom.
“It’s likely that a macro bottom has formed,” Root comment On Monday.
Meanwhile, late this week, the Spent Output Profit Ratio (SOPR) for short-term holders rose above 1 for the first time since Christmas Eve.
An indicator exceeding 1 indicates that short-term holders are starting to sell for a profit.
SOPR chart of short-term Bitcoin holders | Source: CryptoQuant
In terms of profitability, based on Glassnode’s on-chain data, Twitter account TXMC said nearly 25% of BTC supply remains underwater, compared to 16.7% of supply, which is between 30,000 and 41,500 was bought in US dollars.
#Bitcoin is a bit top-heavy here, but NumberGoUp is medicine for that.
About a quarter of the circulating supply (24.9%) lives on the chain above about $41.5K.
Another 16.7% is between the current price and $30,000, then Open Air below. pic.twitter.com/3u3t7jPWjq
— TXMC (@TXMCtrades) February 6, 2022
Bitcoin breaks out of the “fear” zone for the first time since the price hit ATH
The longer bitcoin prices linger at higher highs, the more impact they have on hardliners.
The Crypto Fear & Greed Index, which has spent most of the last month in the “extreme fear” zone, is now on track to break out of the “fear” zone entirely.
The move would mark the index’s first move into “neutral” territory since November’s record high and help to reinvigorate sentiment over the past two and a half months.
For comparison, just a week ago the index was at 20/100 while it is now at 45/100, more than double its usual zone.
History has shown that psychological sustainability — traders who don’t buy or sell too quickly after a given price action — lies in BTC’s measured price action. “Slow and steady” gains are what traders look for in order to have confidence in a longer-term trend.
Fear & Greed Index | Source: alternative.me
However, as the indicator hits a January low, analyst Philip Swift has issued a warning after comparing historical numbers.
“The Fear and Greed score versus bitcoin price shows that the score can be very low at non-low points. However, it should be noted that the extended period of the indicator (below 25) of more than 3 weeks is a signal of the formation of a large bottom.
Charting Fear & Greed score against it #Bitcoin The price shows that the score of non-low points can be very low
But it is interesting to note that prolonged periods of extreme anxiety (below 25) for +3 weeks tend to signal big lows
Live Charts: https://t.co/Jr5151zN7I pic.twitter.com/622kyDRqk2
— Philip Swift (@PositiveCrypto) February 4, 2022
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Author
Market
Bitcoin breaks out of the “fear” zone – 5 things to watch out for this week
The Bitcoin (BTC) market is hyped as prices close weekly with momentum after several weeks of decline, but can it keep growing?
After challenging the $42,000 area over the weekend, investors are still bullish and cautious as the higher levels hold. There was a renewed rally on Sunday, which broke above the $43,000 region before consolidating.
With Wall Street opening on Monday and big tech stocks in chaos this past weekend, the environment for crypto traders in February should prove quite interesting.
With a positive correlation, Bitcoin reacts very sensitively to the ups and downs on the stock markets, but the stocks are currently not moving consistently in the same direction.
Hodler will still need to keep an eye on the January lows in the $30,000 region and these are the things analysts should also be keeping an eye on.
To predict bullish momentum, investors need to look at the market and 5 factors that can help determine Bitcoin’s next price action.
Bitcoin avoids a sharp drop
Price action over the weekend does not align with Bitcoin’s newfound uptrend, although low volume is often a signal for fakeout and fakedown.
The $40,000 level is seen as support and analysts are keen to see the $41,000 area as long-term support going forward.
“That’s how I see things. As long as BTC holds $39,000, the price will continue to climb towards the year open,” summarized trader and analyst Pentoshi on Sunday. He also said that 80% of altcoins will fall behind, 20% will follow Bitcoin’s rise.
That’s how I see things. As long as $BTC holds 39k (as previously stated) and then opens annually next
Imo 80% of #alts delayed, 20% lead/follow pic.twitter.com/1S1BPqZ2wp
— Pentoshi Forbes Worst Trader in 40 Years (@Pentosh1) February 6, 2022
The annual opening price for 2022 is around $46,200, the market is getting closer to this area as BTC broke the weekend resistance area and hit a high of $43,070 on Bitstamp.
Analyst and trader Credible Crypto believes the recent action could be a signal that Bitcoin is starting its fifth sustained impulse move in a few years.
My thoughts on this $BTC dominance at this time. To make it short- $BTC during the initial phase of our final 5th wave pulse, the others steal the show thereafter as $BTC Tops, dominance makes a new all-time low before this is all over. pic.twitter.com/mjklIIN444
– Credible Crypto (@CredibleCrypto) February 2, 2022
If this is the case, it is likely that altcoins will lost “the limelight” in the hands of BTC as the bull run took place.
“If my thesis is correct and BTC actually starts its 5th wave here, the market will probably pump heavily, altcoins will knock out, but then grow and catch up with the market action as we saw in the previous two boosts (from $3,000 to $14,000 and from $12,000 to $65,000)”.
On the other hand, whales could be the answer holders. Data from on-chain monitoring platform Whalemap shows that the $38,000 region remains an area of interest for many whales that started buying BTC at this level last week.
Closest on-chain supports in case #BTC draws back pic.twitter.com/gcC00DbOg7
— Whale Map (@whale_map) February 6, 2022
The fact that BTC/USD is touching the $43,000 region, its highest level since Jan. 17 shows that the market has erased the losses of the last 2 weeks.
Inflation “still rising steadily” ahead of January CPI release
The stock market last week provided a springboard for Bitcoin to break out of the $30,000-$40,000 corridor, but “just up” is not characteristic of major asset classes.
It’s quite odd among the big tech stocks that Amazon has grown while Meta has lost, and Bitcoin has used this to its advantage.
Can the same trend continue this week? Equities are not alone as oil continues its upward momentum in tandem with rising inflation.
“Inflation will affect the Fed’s view. Inflation is REAL,” said veteran trader Peter Brandt on Monday mention on US bonds.
“This is due to increased liquidity over the past two years. USD is printed too much. The Fed will hike rates “later”. The 10-year bond is heading towards 2.35% in the short term and 3.0% in the next few years.”
Inflation remains very “moderate” compared to the last century, he added, but is still rising steadily over the long term.
Meanwhile pentoshi forecast Oil price will soon reach above $100 threshold.
“Oil appears to be breaching the $100 region at this price. Up 20% in the first 5 weeks of the year, up 13% in January. If you used to love inflation, you’ll love it when oil surges above $100. Consumer prices should also rise.”
As a result, Monday’s Wall Street opening could confirm Bitcoin’s gains or put the entire market at risk again. Right now, futures are tumbling after the S&P 500’s best-performing week of 2022.
Meanwhile, data shows Bitcoin’s correlation with Nasdaq is waning.
Bitcoin 1D correlation to Nasdaq starts falling from high levels pic.twitter.com/S4Sfa8nYrX
— Will Clemente (@WClementeIII) February 7, 2022
Consumer Price Index (CPI) data for January will be released on Thursday, which could add headwinds to inflation if the reading comes in below expectations.
Will the USD continue to cool?
Something is happening in the dollar and even as the stock market rallied, it started the year looking weak.
In early February, the winning streak that lasted all of 2021 suddenly broke the burden for USD bulls, and the past week has seen a sustained decline in the USD Index (DXY).
After breaking through 97 for the first time in over a year, the DXY has faced stiff resistance and is now back below 95.6. This is the lowest since mid-November when BTC/USD hit ATH at $69,000.
analysis establish Trader, investor and entrepreneur Bob Loukas is currently skeptical. He said last week:
“The USD market is making very interesting moves. Maybe a trap? One thing is for sure, price action is always ahead of our view whenever macro markets/major events are set to push prices higher.”
Traditionally, bitcoin has been negatively correlated with DXY, and strong USD gains could weaken the market slightly.
USD Index (DXY) 1-Day Chart | Source: TradingView
“Looks like DXY is starting to correct more,” said Michaël van de Poppe, forecast.
He noted that the European Central Bank’s (ECB) reluctance to raise interest rates has put pressure on the dollar.
“It would bode well for Bitcoin and risk assets if the DXY shows more weakness,” he argued.
Short-term holders are beginning to profit again
Those looking for signs of a long-term Bitcoin bottom needn’t look for much more on-chain data this week.
As noted by on-chain analytics account Root, the portion of BTC supply controlled by short-term holders is starting to rise after falling to an area that coincides with a macro bottom.
“It’s likely that a macro bottom has formed,” Root comment On Monday.
Meanwhile, late this week, the Spent Output Profit Ratio (SOPR) for short-term holders rose above 1 for the first time since Christmas Eve.
An indicator exceeding 1 indicates that short-term holders are starting to sell for a profit.
SOPR chart of short-term Bitcoin holders | Source: CryptoQuant
In terms of profitability, based on Glassnode’s on-chain data, Twitter account TXMC said nearly 25% of BTC supply remains underwater, compared to 16.7% of supply, which is between 30,000 and 41,500 was bought in US dollars.
#Bitcoin is a bit top-heavy here, but NumberGoUp is medicine for that.
About a quarter of the circulating supply (24.9%) lives on the chain above about $41.5K.
Another 16.7% is between the current price and $30,000, then Open Air below. pic.twitter.com/3u3t7jPWjq
— TXMC (@TXMCtrades) February 6, 2022
Bitcoin breaks out of the “fear” zone for the first time since the price hit ATH
The longer bitcoin prices linger at higher highs, the more impact they have on hardliners.
The Crypto Fear & Greed Index, which has spent most of the last month in the “extreme fear” zone, is now on track to break out of the “fear” zone entirely.
The move would mark the index’s first move into “neutral” territory since November’s record high and help to reinvigorate sentiment over the past two and a half months.
For comparison, just a week ago the index was at 20/100 while it is now at 45/100, more than double its usual zone.
History has shown that psychological sustainability — traders who don’t buy or sell too quickly after a given price action — lies in BTC’s measured price action. “Slow and steady” gains are what traders look for in order to have confidence in a longer-term trend.
Fear & Greed Index | Source: alternative.me
However, as the indicator hits a January low, analyst Philip Swift has issued a warning after comparing historical numbers.
“The Fear and Greed score versus bitcoin price shows that the score can be very low at non-low points. However, it should be noted that the extended period of the indicator (below 25) of more than 3 weeks is a signal of the formation of a large bottom.
Charting Fear & Greed score against it #Bitcoin The price shows that the score of non-low points can be very low
But it is interesting to note that prolonged periods of extreme anxiety (below 25) for +3 weeks tend to signal big lows
Live Charts: https://t.co/Jr5151zN7I pic.twitter.com/622kyDRqk2
— Philip Swift (@PositiveCrypto) February 4, 2022
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Latest
Dogecoin Price Gets $5 Prediction, Shiba Inu To Rally 1,100%, And ETFSwap (ETFS) To Jump 135x
AVAX Hits $1B in DeFi, Cardano Expected to Surge—BlockDAG Leads with $110M Presale & 100% Bonus!
Crypto Institutional Investors Move To ETFSwap (ETFS) Amid $500 Million Liquidity Injection Expectations
Press Release
AVAX Hits $1B in DeFi, Cardano Expected to Surge—BlockDAG Leads with $110M Presale & 100% Bonus!
Buyers Rush to Maximise Gains with BlockDAG’s 100% Bonus Offer; Plus, ETH Holds Strong as Solana Challenges Rivals
