The War is Testing Bitcoin – 5 Things to Watch Out For This Week

Bitcoin (BTC) begins a new week in the shadow of a new geopolitical conflict. So what are the biggest obstacles investors face?

In a volatile macro environment, Bitcoin, like many other asset classes, is feeling under pressure.

The situation in Ukraine is wreaking havoc on global markets and political developments there could impact market sentiment.

The event has also impacted Bitcoin as it has seen a test of its “safe haven” qualities as investors seek safety and fiat holders seek exits.

Given the magnitude of this week’s major events, Bitcoin could react like this in the short term as it fends off complex and almost surreal macro events.

The Russia-Ukraine war is the driving force behind the market

The Russia-Ukraine conflict was the main driver of the market this week.

The war broke out just 5 days ago and sanctions are constantly being imposed, the market is also reacting to new threats.

First and foremost is the Russian economy, which is preparing for turbulence on Monday. Stock trading has halted and the ruble is in the doldrums, trading at record lows.

Negotiations are expected to start on Monday and any glimmer of hope could trigger a change in the near-term outlook, thereby changing the face of the market.

Given the regulatory uncertainty, everyone will be looking for an ultimate safe haven, and the use of Bitcoin, whether by Russians, ordinary Ukrainians or their government, poses a problem. The topic is hotly debated by the community.

Previously, Ukraine had raised millions of dollars in aid in the form of cryptocurrencies. Additionally, Mykhailo Fedorov, Deputy Prime Minister of Ukraine, has urged crypto exchanges to block Russian and Belarusian users.

Podcast host Preston Pysh has Summary Position:

“As with any valuable technology, its value comes from ease of use.”

Meanwhile, the market is likely to be driven depending on changing facts and direct government influences.

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So far, oil has been one of the few industries to benefit from the war, while bitcoin has managed to remain fairly stable, unlike gold, which rose quickly and then plummeted.

However, the correlation between bitcoin and altcoins for the traditional stock market remains and as such the volatility on the low time frame is something that traders have a huge headache about regardless of how the battle plays out. .

Spot price movements are subject to macroeconomic force majeure circumstances

While traditional markets are set for extreme volatility on Monday, as trading opens, it’s a real problem to guess how Bitcoin will rise in price any time soon.

Correlations aside, so far Bitcoin has established price stability in a fairly narrow range, and $40,000 is a clear area of ​​resistance for the bulls to clear.

The problem, however, is that any movement caused by major macro changes is an unreliable long-term signal.

Mike McGlone, commodity strategist at Bloomberg Intelligence warns:

“Bitcoin is down about 4% on Sunday compared to Friday and the market is showing a tough week for risky assets.”

Meanwhile, popular Twitter account Decodejar notice However, the current levels represent a control point over the past 15 months, with the $38,000 region showing greater volume than other prices in the current range.

“When it comes to bitcoin, the rules are pretty simple,” argues Michaël van de Poppe.

“The accumulation came after last week’s move higher. If the market wants to see more momentum, BTC needs to hold steady in the $38,100-$38,200 range. After that, it will be able to touch the $44,000 zone.”

With US markets still open for now, the picture could change radically before Monday’s close.

Compared to March 2020, then Bitcoin for the first time discount relative to the global market and only began to recover when the Hodler repeatedly bet on growth potential, which led to a bull run shortly thereafter.

Bitcoin may end the month with a new red candle

Bitcoin ended on Sunday as price action didn’t really go according to market watchers’ plans.

The last minute drop in price took the chance to end the week and month above $38,500, forming four consecutive red monthly candles. This is the first time the event has taken place since the 2018 bear market.

The events of the past week made things worse for bitcoiners, who are still unaware that cryptocurrencies are slowly decoupling from traditional assets.

The monthly chart of Bitcoin’s 21-month exponential moving average (EMA) is also giving traders a headache, suggesting that the market could lose support as BTC price continues to fall.

The broken EMA of 21 is a macro bearish signal for Bitcoin.

“The monthly closing tomorrow is very important. If the market closes below $37,000 (21-month EMA, purple), a bearish signal will emerge similar to previous macro downtrends,” cautioned analyst Kevin Svenson.

Bitcoin 1-month candlestick chart with 21EMA | Source: TradingView

Bitcoin previously failed to recover two key moving averages for a retest of higher resistances near the ATH in November. As a result, analyst Rekt Capital once warned that the market is likely to revisit the $28,000 lows.

On the plus side, Bitcoin’s 200-week moving average broke above the $20,000 threshold for the first time this weekend.

Difficulties will make BTC more stable

Aside from the current geopolitical situation, investors still have reasons to believe in the strength of the Bitcoin network.

Despite price pressure and uncertainty on all timeframes, miners continue to mine, hashrate and difficulties continue to increase.

This week, bitcoin hashrate remains stable, but difficulty has dropped for the first time in 12 weeks.

This is not a “bad” signal as a 1.25% drop is quite modest by Bitcoin standards and may reflect changes in the circumstances of miners entering the market and not a signal that a new trend is about to begin will.

According to monitoring service MiningPoolStats, the hashrate remains above 200 exahashes per second, a big change from a few months ago when Bitcoin price hit ATH.

Bitcoin Hashrate Chart | Source: MiningPoolStats

Differences between fundamentals and prices have been taken into account over the past year. The question now is whether the price will follow the hashrate as in the past.

Market sentiment is at its worst

Bitcoin does not seem to “like” the emergence of a new armed conflict in Europe.

Aside from its potential role, market sentiment is rather gloomy based on recent events.

According to the Crypto Fear & Greed Index, the market is quickly becoming more nervous.

BTC/USD saw a relatively small decline on Monday, but that was still enough to pull the index back into “extreme fear” territory, falling from 26/100 on Sunday to the lows of 20/100, the lowest As of February 22nd.

The January low of $32,800 coincided with the indicator falling into the 11/100 region, a macro low in recent years.

Crypto Fear and Greed Index | Source: alternative.me

Commentators said Monday’s decline could herald the doldrums and gloom that will dominate traditional financial markets.

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Meanwhile, the crypto market’s Fear & Greed Index has also dipped into the extreme fear zone before recovering.

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