Fundamentals “Only Up” – 5 Bitcoin things to watch this week
Bitcoin started the week with a slow slide towards key support at $40,000.
After bulls celebrated last week, the current environment looks like a fresh backdrop as the crypto king battles a tight stock market, a resurgent US dollar, and more.
As always, the picture is quite chaotic – while spot prices may not be as impressive, overall Bitcoin is stronger than ever and many network participants continue to work hard to gain long-term exposure.
In addition, risky behavior in the derivatives market is fading and the time could be set for some sustained price growth. Could it happen this week?
Here are 5 factors to consider for Bitcoin in the coming days.
Bitcoin test MADE support new 50 days
After a 10-day rally, Bitcoin is now facing resistance levels that have not been in the eye of the bulls since mid-January.
Although the price broke above $45,500 late last week, conditions were relatively calm as the daily chart marked a series of lower lows.
The market proved disappointed as BTC ended the week at almost the same spot as the week before, just below $42,000.
However, with that comes near-term upside potential to fill the “gap” on the CME futures chart, which is currently above spot prices near $42,400.
Renowned commentator Matthew Hyland has summary on Monday that “Bitcoin is in the midst of resistance, support” and feeling “relaxed” on current price action.
The source: Matthew Hyland
With support and resistance levels close together, trader and analyst Rekt Capital has reiterated BTC’s relative weakness when it comes to regaining macro-level support levels.
Previously, he identified two moving averages (MAs) to reconfirm as support for Bitcoin to return to its all-time highs set in November 2021.
#BTC is struggling to recapture the bull market EMAs, which are the midpoint of the macro reaccumulation range, as support
— Rekt Capital (@rektcapital) February 13, 2022
“BTC is struggling to regain support in EMA lines in The bull market forms the midpoint of the macro reaccumulation range. As long as these EMAs remain resistance, Bitcoin will do so transaction a lower half of the macro range”.
Additionally, according to TradingView data, the 50-day MA will be tested after a week of activity above it.
BTC/USD 1-day candlestick chart and 50-day MA | Source: TradingView
DXY confusing heart physically risky assets
Bitcoin’s reversal towards $40,000 may have nothing to do with the rising US dollar.
Since February 4th, the US Dollar Currency Index (DXY) has gradually recovered, reversing last week’s strong downtrend.
This traditionally poses problems for risky assets, and on Monday DXY is trading back above the 96 level.
US Dollar Currency Index (DXY) 1-Day Candlestick Chart | Source: TradingView
While equities were unaffected by the possibility of an interest rate hike by the US Federal Reserve in March, the geopolitical situation surrounding Ukraine and Russia remained a worrying factor this week.
“In the last century, there have only been four years in which both stocks and bonds have had a negative year. It’s obviously too early, but so far in 2022 both stocks and bonds have negative returns,” said analyst Lyn Alden. notice.
Meanwhile, oil prices continue to rally towards the $100 level on similar tensions. Notably, Brent crude futures topped $96 a barrel on Monday.
Both oil and bitcoin remain macro picks for this year.
Spot prices begin to lead futures contract
As prices rise and fall from multiple local highs, the Bitcoin derivatives market is seeing interesting activity.
As many Twitter watchers, including leading Glassnode analyst Checkmate, note, leverage in Open Contracts (OI) is gradually disappearing from the futures market and with it the risk of leverage being leveraged or “liquidated”.
However, this time the liquidation was not due to a drastic price change that resulted in the positions being eliminated entirely. Instead, investors choose to change their strategies.
“Bitcoin futures leverage has dropped significantly this week, from 2% of market cap to 1.75%. However, this is not the mass liquidation we all know and love. This is because traders choose to close positions – much healthier. I expect Spot to take the lead now,” Checkmate said tweet on Sunday along with a chart showing the level of risk reduction.
Bitcoin Futures Open Interest Leverage Ratio vs Chart price BTC/USD | Source: Checkmate
Regarding the relationship between spot and futures prices, commentator Byzantine General added that it is now likely that futures prices will trade lower rather than higher than spot prices.
The spread between futures and spot contracts is “quite large,” he emphasized in his contribution.
Interesting, fairly important basis for spotting divergence here.
The quarterly futures basis keeps making new lows and flirts with backwardation. pic.twitter.com/hX9E7WKeSs
— Byzantine General (@ByzGeneral) February 13, 2022
“Phalftime celebrationthe difference of the futures contract compared to spots interesting and calm large. Quarterly futures premium continues to make new lows, near the sell delay zone“.
At the time of writing, CME futures are trading $200 below the spot price.
Hashrate by Difficulty increase to all-time high
Bitcoin’s network fundamentals have had a successful year so far, and this week was no exception.
Over the weekend, the hash rate (an estimate of mining-specific processing power) surged to an all-time high.
While it is not possible to know exactly how much hash power is at work in the Bitcoin network, hash rate estimates show a clear upward trend since the middle of last year, and it took several months for the ecosystem to fully appreciate the impact of Bitcoin’s forced migration had eliminated miners from China.
Now that the United States is becoming the center of the mining industry, it seems that participants are racing for leadership in the industry.
The hash rate did NOT increase by 58 EH/s in 24 hours.
Most network hash rate metrics are nothing more than estimates based on how fast blocks are coming in. In shorter timeframes there is too much variability/randomness.
Few understand that. pic.twitter.com/l6FHMDOXXW
— Joe Burnett (????)³ (@IIICapital) February 13, 2022
“Hash rate is not increasing arrive 58 EH/s for 24 hours. Most stats Hashrate of the network is just an estimate based on how fast blocks are processed. There is too much momentum/randomness in shorter periods of time. Few people understand that.”
Easier to measure is Bitcoin’s mining difficulty, which has also fully recovered from a sharp decline due to mining difficulties due to China’s ban.
As of Monday, the difficulty is 26.69 trillion. The next auto-tuning will increase the difficulty even more – over 27 trillion the first time treasure.
The adjustment will take effect in about 3 days and will increase by about 2.2%.
Bitcoin Difficulty Chart | The source: Blockchain
Bitcoin holders have strong confidence at the moment. While this is quite common, their resolve is more evident than ever.
As Twitter account PlanC noted, wallets believed to belong to long-term holders are increasing significantly, and recent price action further supports this trend.
Citing Glassnode data, PlanC highlights that balances for these entities (defined as wallets with at least 2 large incoming transactions and no outgoing transactions) have now reached a near 5-year high.
Since we broke below 50,000, bulk addresses have increased their balance by 193,957 #Bitcoin
Defined as addresses that have at least 2 incoming non-dust transfers and have never spent any money. #crypto
Accumulated address balance, 57-month high pic.twitter.com/sMU9o80JwT
— Plan©️ (@TheRealPlanC) February 13, 2022
“Since Bitcoin Break below 50000 dollars, Locations only cumulative increase 193,957 bitcoin in her balance. Identified as addresses with at least 2 transfers to and never output Pepper. Accumulated address balance receive 57-month high”.
The final days of January seem particularly attractive for traders looking for a position as BTC has retreated to $40,000 after two weeks of smaller declines.
The data excludes exchange addresses and those over 7 years old to limit instances of wallets with “lost” BTC no longer accessible to the owner.
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