Bitcoin (BTC) is in a fighting mood this week as the weekly close buoys bulls’ cause and wipes out several weeks of downside — can it continue higher?
Bitcoin (BTC) is in a fighting mood this week as the weekly close buoys bulls’ cause and wipes out several weeks of downside — can it continue higher?
After challenging $42,000 over the weekend, there was a cautious sense of optimism as higher levels remained in play. Sunday saw a fresh push, with overnight progress attacking $43,000 before fresh consolidation.
With Monday’s Wall Street open primed to deliver more of the turbulence in big tech stocks seen late last week, the environment for crypto traders is an interesting one in February.
With its notable positive correlation, Bitcoin is thus sensitive to moves up and down — but equities refuse to move unanimously in the same direction.
Looking for guidance, hodlers will still remember January’s lows, and these are also fresh in the mind of analysts who have not discounted the possibility of returning to $30,000.
With something of a week of reckoning for its latest gains ahead, Cointelegraph takes a look at the Bitcoin market and five forces at play that could help shape where BTC price action heads next.
Bitcoin dodges a major breakdown
The weekend was no match for Bitcoin’s newfound bullishness despite its typically lower volume providing fertile ground for both “fakeouts” and “fakedowns.”
$40,000 held as support, and analysts were keen to see $41,000 established as a longer-term basis going forward.
“Here’s how I see things. As long as $BTC holds 39k (as prev stated) then yearly open up next,” trader and analyst Pentoshi summarized Sunday.
“Imo 80% of alts will lag, 20% will lead/follow.”
The yearly open for 2022 stands at around $46,200, a price level that’s getting closer after BTC/USD broke through its weekend resistance zone to hit local highs of $43,070 on Bitstamp.
Fellow analyst and trader Credible Crypto believes that the latest action could provide proof that Bitcoin is beginning its fifth in a series of impulse moves stretching back several years.
My thoughts on $BTC dominance at this time. Long story short- $BTC outperforms during initial stages of our final 5th wave impulse, alts steal the show after that 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
Should that be the case, it is likely that altcoins will initially lose the limelight to BTC, he added, as with classic bull run performance.
“If my thesis is correct and $BTC is indeed starting its final 5th wave here, expect $BTC to steal the show, pump aggressively, alts to take an initial hit, but then rally/catch up just like we saw during the last two impulses (3-14k and 12-65k),” he explained.
Looking to the downside, whales may hold the answer. Data from on-chain monitoring resource Whalemap shows that the area around $38,000 remains a significant zone of interest for whales, who last week began adding to their positions there.
Closest on-chain supports in case #BTC retraces pic.twitter.com/gcC00DbOg7
— whalemap (@whale_map) February 6, 2022
BTC/USD at $43,000, meanwhile, is the highest since Jan. 17, the largest cryptocurrency erasing more than two weeks of losses in days.
Inflation stays “real” before January CPI readout
Stocks formed the springboard for Bitcoin’s exit from the $30,000–$40,000 corridor last week, but “up only” is hardly what characterizes major assets.
Among Big Tech, the story was one of Amazon’s gains and Meta’s losses, providing a curious dichotomy that Bitcoin ultimately used to its advantage.
Could the same trend continue this week? Stocks are not alone, as oil continues its own gains and the inflationary narrative rises with it.
“Inflation is going kick the Fed’s _ss. Inflation is REAL,” veteran trader Peter Brandt said Monday, eyeing United States bonds.
“This due to the flood of liquidity added in past two years. $$$ abounds. The Fed is way behind the curve in raising rates. The 10-Yr Note is headed to 2.35% in the near-term and 3.0% over the next couple of years.”
He added that inflation remains extremely modest compared with episodes during the last century but that there could be a long way still to climb.
Pentoshi, meanwhile, forecast an oil price of more than $100 incoming.
“Oil looks like it’s going to barrel over $100 at this rate. 20% increase in the first 5 weeks of the year, 13% in January. If you loved inflation before, you’ll love it when Oil is over $100. Consumer goods numbers go up,” he tweeted.
Monday’s Wall Street open could thus provide either a validation of Bitcoin’s gains or throw the party into jeopardy once more. At the time of writing, futures are pointing downhill after the S&P 500’s best week of 2022.
Data, meanwhile, shows that Bitcoin’s Nasdaq correlation is slowly ebbing.
Bitcoin’s 1D correlation to the Nasdaq is starting to fall from historically high levels pic.twitter.com/S4Sfa8nYrX
— Will Clemente…
cointelegraph.com