Big bullish restart for BTC: 5 things to watch out for about Bitcoin this week
The return to $ 43,000 worries weak hands, but does wonders for the health of the market as a whole, according to data from the Bitcoin rally. Bitcoin (BTC) looks stable at the start of a new week after recovering from a drop to $ 43,000 – what awaits us?
After last week’s 20% drop from all-time highs, opinions are divided on what the future might look like for Bitcoin price action in the short term. Macro factors are encouraging, but naysayers insist that a major decline remains a clear possibility.
Cointelegraph highlights five factors that could influence the BTC / USD pair in the coming days.
New stimuli, new acquisitions?
The macroeconomy is presented as a perfect storm for alternative assets, led by the United States. President Joe Biden’s stimulus package, worth $ 1.9 trillion, has been approved by lawmakers, who gave their approval for another money-printing exercise of unsuspected dimensions to begin. Traditionally an asset to Bitcoin, the huge increase in the dollar supply includes direct payments to eligible Americans, this time of $ 1,400.
The third “stimulus check”, or “stimmy” as it is popularly called, could easily find its way into the Bitcoin ecosystem if historical trends repeat this year. As Cointelegraph reported, amounts equivalent to stimulus check payments began showing up on exchanges in 2020 shortly after regulators approved them.
While it was a niche phenomenon a year ago, March 2021 is a completely different playing field for Bitcoin and altcoins, with explosive prices and with them advertising in recent months. Coupled with the current appeal and controversy of social media-inspired stock trading, the potential impact on cryptocurrencies in general from America’s “free money” couldn’t be more obvious.
“In the United States, a stimulus package of 1.9 trillion dollars is on the way. That’s more than all the cash currently in the US Treasury account at the Federal Reserve, ”the online analytics service Ecoinometrics summed up to Twitter followers. “This is good for Bitcoin.”
Stocks and DXY rising
On the issue of equities, they have rallied once again after a global bond sell-off last week worried regulators. So has the strength of the US dollar currency index (DXY), which has continued its rise since late last week after hitting lows of 89.67. At the time of this writing, DXY was over 91 for the first time since February 8.
A strong DXY tends to go hand in hand with price issues for the BTC / USD pair, a persistent trait that characterized much of the past year. However, since the temporary momentum from the stimulus package is likely to wear off sooner rather than later, the status quo may not last long. “I have no doubt that central banks will eventually rely heavily on a sustained rise in yields,” Deutsche Bank strategist Jim Reid said in a cautionary note to clients quoted by Reuters. “They just can’t afford it with such a high debt.”
Trader on the price of BTC: “Relax”
Within Bitcoin, a lot of attention is still being paid to “the downfall” on social media and beyond. After hitting lows of just over $ 43,000 over the weekend, the bulls were disappointed that previous lows around $ 44,000 had not constituted a definitive bottom. Yet against the backdrop of incredible performance since March 2020, the $ 15,000 drop from the all-time highs of $ 58,300 last month seemed almost a non-event to some.
“The panic yesterday was so unnecessary. Welcome to the markets, crashes happen. Part of the game, ”Cointelegraph Markets analyst Michaël van de Poppe wrote on Monday.
“We keep working and Bitcoin is just getting started. Relax. “
In a new video update, Van de Poppe noted that the net balance on exchanges is still declining, indicating that buyer appetite is clearly present at current levels and investors are taking advantage of cheaper levels to accumulate, not to sell. “There is absolutely no need to worry about this correction as it is a very healthy and natural correction that we are seeing in the markets, especially considering that we just anticipated a run from $ 10,000 to $ 58,000 in a matter of months.” , He said.
For the bulls, it is important to avoid a deeper dip to bring liquidity below the $ 42,000 level. If Bitcoin avoids this, there remains an opportunity to go higher.
A “Hard Reset” for Bitcoin’s Bearish Indicators
For Bitcoin metrics, the drop has also been a positive sign, rather than a negative. Most prominent among them is the Spent Production Profit Index (SOPR), which benefited from a “reset” when the BTC / USD pair returned to the mid-range of $ 40,000. As Cointelegraph reported, the SOPR provides a window into the trader’s mindset: once it turns negative, it indicates that anyone selling BTC is selling it at a loss.
“Bitcoin’s daily spent production profit index (SOPR) has fully reset and turned negative for the first time in five months: Investors on average were moving BTC with a slight loss, indicating that profit-taking it’s down, “Glassnode said in a series of tweets over the weekend.
Total realized losses on February 27 alone was $ 243 million for wallets impacted on their balance. Beyond the SOPR, derivatives funding rates saw a “reset” of their own last week, as the expiration dates for major options came and went on Friday. Short traders, with that, are effectively calling long positions once again, rather than the other way around.
The combined impact of these two phenomena is only good for Bitcoin, with historical precedent serving to support the theory that its current behavior is a bullish signal.
No greed, just a little fear
A final round of restarts focuses on sentiment rather than numbers. In an update, market information company Santiment noted that Bitcoin was receiving its most negative press on social media in five months. However, far from being a cause for concern, the implication could be that a BTC buy is a prime move to capitalize on investors’ overly cautious mood. “Believing in the fear of the crowd can lead to rewards,” Santiment wrote on Twitter.
“And while only slightly fearful, #Bitcoin comments on #Twitter are at the most negative ratio in about 5 months, according to our algorithm. After last week’s pullback, the bearish narrative is back.”
Meanwhile, in a breath of fresh air, the popular Crypto Fear & Greed Index, previously near all-time highs, has nearly halved in a matter of days. Based on multiple factors, the Fear & Greed index aims to process sentiment to provide a rough idea of when the cryptocurrency markets are too bearish or unreasonably bullish.
At the time of writing this report 03/06/2021, the index measured 38, its lowest level since September 2020.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.