09/03/2021
Bitcoin (BTC) started the new week on a solid uptrend while stocks fell and BTC managed to close the week above $50,000.
After a mixed performance last week with multiple tests of $46,000, buying support is picking up and BTC/USD is at 15% of its highest levels ever.
Cointelegraph looks at what could happen for traders in the coming days, with five factors that could influence the action on the price of bitcoin.
Table of Contents
Units denominated in US dollars as revenue
The tide is turning after last year’s equity miracle: The directions drop left and right, while the warnings indicate that the road is far from finished.
Amid significant losses in technology stocks, including cryptocurrency industry darlings Tesla and MicroStrategy, Asian shares lost more than 1% at Monday’s open.
Despite last week’s strong close, expectations were tied to the elimination effect of the U.S. before Wall Street’s return. According to analysts at Morgan Stanley, the Nasdaq 100 could even reach its 200-day moving average, 800 points below its current level of 12,642.
The markets will be very volatile, Kim Stafford, head of Asia Pacific at Pacific Investment Management, told Bloomberg.
We think confidence is increasing, especially with the advent of vaccines on line, so we will see growth around the world. There are many reasons to trust the market, but most come at a price.
With a bleak near-term outlook for stock traders, the U.S. dollar is adding to its previous strong performance.
Continuing the advance of late February, the U.S. dollar index (DXY) reached 92.19 over the weekend and remained above 92 on Monday.
Traditionally a problematic phenomenon for the strength of bitcoin prices, recent moves in the index have been weaker than last year, when the BTC/USD generally caught sentiment and took an increasingly asymmetrical path.
U.S. Dollar Index 1-day candlestick chart. Source : View on trade
Meanwhile, oil prices rebounded, along with the US dollar, on news that Saudi Arabia’s infrastructure was under attack. However, this would have had no effect on performance.
Deep Stimulation Tests
The key news for dollar strength, though counterintuitive, is that lawmakers will increase the proposal to $1.9 trillion when they approve the latest stimulus package.
After being approved by the Senate on Sunday, President Joe Biden is putting new money into the country’s existing mountain, but he is making sure that Americans who qualify will receive $1,400 in payments.
With Bitcoin getting more publicity this year than it did during the last major stimulus payment of $1,200 in March 2020, we can expect at least some of the money to go to BTC.
The figures, now widely available on the internet, speak for themselves. According to the online verification tool Bitcoin Stimulus, the combined value of the previous two checks – for $1,200 and $600 – would have been worth $1,000 on the 4th. The month of March amounted to more than $10,250 if every recipient had purchased Bitcoin immediately.
In other words: The first premium of $1,200 was paid at 0.18 CTB at the time of receipt, while the cheque for $600 was paid at 0.02 CTB. This time the dollar amount is higher, but at the time of writing it is only 0.028 BTC.
In the longer term, however, the weak dollar weighs heavily on investors, both because of increased supply and other implications related to the very inconsistent economic response to the virus.
Although he says he is not a Bitcoin maximalist, veteran trader Peter Brandt says Bitcoin will only benefit from the current policy over longer periods of time.
The devaluation of the purchasing power of the U.S. dollar has only just begun, he warned on Sunday.
Therefore, Bitcoin BTC, US real estate, stocks and commodities will continue to follow an upward trend when denominated in US dollars.
Brandt also revealed that his second largest investment position, after real estate, is the sale of BTC.
Bitcoin sees its second highest weekly close
Within Bitcoin, the bulls received a growing boost over the weekend, while a new push pushed the BTC/USD above $50,000.
Before the stimulus package was announced, the highest local price was $51,177 on Bitstamp. At the same time, positive investment news from China has broadened the discourse on the supply shortage by focusing on institutional purchases, reducing the already dwindling number of BTCs available for purchase on the market.
Although the psychologically significant level could not be held on Monday, it could be held on a weekly basis, giving Bitcoin its second highest weekly close in record time.
Raphael Schulze-Kraft, co-founder and chief technical officer of the analysis company Glassnode, analyzes the behavior of traders and predicts that returns below $46,600 are unlikely.
This support will continue. And he got stronger! We now have a $1.2 million BTC wall that has moved between $46.6k and $48.6k on the channel, he wrote on Sunday.
This represents 6.5% (!) of the stock in circulation. I wonder if we’ll collapse soon. I was tall at <50k, and now I’m tall anyway.
For Michael van de Poppe, analyst at Cointelegraph Markets, a notable trend, despite rising prices, is the lack of general interest, particularly from consumers.
I’ve noticed less Bitcoin activity and attention on social media lately. While a few weeks ago everyone and their parents wanted to take Bitcoin off the FOMO, on Monday he tweeted.
Nevertheless, the current period is a good time to build up your positions. If there’s no hype.
The popular Twitter account Bitcoin Archive joined in, noting that interest is increasingly driven by price.
BTC/USD 1-hour candlestick chart (Bitstamp). Source : View on trade
Not sold
Other indicators within the chain confirmed the usual sequence of market participants.
The data shows that the country’s stock market and exchange-traded reserves continue to decline.
For statistician Willie Wu, the selling pressure came more from institutional players preparing to announce the end of the first quarter – anything but a bearish signal.
Who sold? Aside from the fact that margins are being liquidated, I assume the data indicate that hedge funds will rebalance by the end of the first quarter, he told his followers on Twitter late last week.
Many have mandates that need to be rebalanced when allocations become too large; BTC has gained tremendously. (Sell your winners, buy other losers).
Wu also noted that large whales are selling, while small whales have increased their presence by 10 to 100 BTCs.
Looking at the age of the pieces in this sale, Dormancy tells us they are young pieces. These are the new whales that recently bought their positions at the sale, he added, along with Glassnode’s charts and Woobull’s analytics.
On the contrary, he said, support for the purchase comes from the strong Hodlers.
Diagram of the average activity of the components. Source : Willie Wu/Twitter
Extreme greed is back
After a sharp fall in scary territory, the Crypto Fear & Greed Index is once again signaling the extreme greed of investors.
The index reached 81/100 on Monday, up from 76 a day earlier, indicating that further gains may be short-lived. Just a week ago, he was 38/100.
Crypto index of fear and greed. Source : Another possibility. Я
Online analytics, however, has a compelling counterargument: Data from the Glassnode Network Value to Transactions (NVT) shows that volume has generally kept pace with recent price increases.
What determines a healthy rise in the price of bitcoin? …which is supported by the volume of the channel! tweeted co-founders Jan Allemann and Jan Happel in a reference to Wu.
When the price rises too fast without the activity of the retail chains catching up, it is often unsustainable.Custom NVT Chart for Bitcoin. Source : Glasnode/Twitter
NVT has experienced satisfactory and steady growth since before the peak of the bull market in 2017.
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