Bitcoin (BTC) starts the second week of February in a newly bearish mood as multi-month highs fail to hold.In what may yet bring vindication to those
Bitcoin (BTC) starts the second week of February in a newly bearish mood as multi-month highs fail to hold.
In what may yet bring vindication to those predicting a major BTC price comedown, BTC/USD is back under $23,000 and making lower lows on hourly timeframes.
Feb. 6 trading may not yet be underway in Europe or the United States, but Asian markets are already falling and the U.S. dollar gaining — potential further hurdles for Bitcoin bulls to overcome.
With some macroeconomic data to come from the Federal Reserve this week, attention is mostly focused on next week’s inflation check in the form of the Consumer Price Index (CPI) for January.
In the build-up to this event, the results of which are already hotly contested, volatility may gain a fresh foothold across risk assets.
Add to that those aforementioned concerns that Bitcoin is long overdue a more significant retracement than those seen in recent weeks, and the recipe is there for difficult, but potentially lucrative trading conditions.
Cointelegraph takes a look at the state of play on Bitcoin this week and considers the factors at play in moving the markets.
BTC price disappoints with weekly close
It is very much a tale of two Bitcoins when it comes to analyzing BTC price action this week.
BTC/USD has managed to retain the majority of its stunning January gains, these totaling almost 40%. At the same time, signs of a comedown on the cards are increasingly making themselves known.
The weekly close, while comparatively strong at just under $23,000, still failed to beat the previous one, and also represented a rejection at a key resistance level from mid-2022.
“BTC is failing its retest of ~$23400 for the time being,” popular trader and analyst Rekt Capital summarized about the topic on Feb. 5.
An accompanying weekly chart highlighted the support and resistance zones in play.
“Important BTC can Weekly Close above this level for a chance at upside. August 2022 shows that a failed retest could see BTC drop deeper in the blue-blue range,” he continued.
“Technically, retest still in progress.”
As Cointelegraph reported over the weekend, traders are already betting on where a potential pullback may end up — and which levels could act as definitive support to buoy Bitcoin’s newfound bullish momentum further.
These currently center around $20,000, a psychologically significant number and also the site of Bitcoin’s old all-time high from 2017.
BTC/USD traded at around $22,700 at the time of writing, data from Cointelegraph Markets Pro and TradingView showed, continuing to push lower during Asia trading hours.
“Some bids were filled on this recent push down (green box) but most of the remaining bids below have been pulled (red box),” trader Credible Crypto wrote about order book activity on Feb. 5.
“If we continue lower here eyes still on 19-21k region as a logical bounce zone.”
For a quietly confident Il Capo of Crypto, meanwhile, it is already crunch time when it comes to the trend reversal. A supporter of new macro lows throughout the January gains, the trader and social media pundit argued that breaking below $22,500 would be “bearish confirmation.”
“Current bear market rally has created the perfect environment for people to keep buying all the dips when the current trend reverses,” he wrote during a Twitter debate.
“Perfect scenario for a capitulation event in the next few weeks.”
Fed officials to speak as market eyes CPI
The week in macro looks decidedly calm compared to the start of February, with less in the way of data and more by way of commentary set to define the mood.
That commentary will come courtesy of Fed officials, including Chair Jerome Powell, and any hint of policy change contained within their language has the potential to shift markets.
The week prior saw just such a phenomenon play out, as Powell used the word “disinflation” no fewer than fifteen times during a speech and Q&A session accompanying the Fed’s move to enact a 0.25% interest rate hike.
Ahead of fresh key data next week, talk in analytics circles is on how the Fed might transition from a restrictive to accommodative economic policy and when.
As Cointelegraph reported, not everyone believes that the U.S. will pull off the “soft landing” when it comes to lowering inflation and will instead experience a recession.
“DON’t be surprised if the term “soft-landing” remains around for a while before the rug being pulled in Q3 or Q4 this year,” investor Andy West, co-founder of Longlead Capital Partners and HedgQuarters, concluded in a dedicated Twitter thread at the weekend.
In the meantime, it may be a case of business as usual, however, with smaller rate hikes after Powell’s “mini victory lap” over declining inflation, further analysis argues.
“Personally, my belief is that the Fed will most likely raise by +0.25% in the upcoming…
cointelegraph.com