Bitcoin (BTC) starts a new week on a tentatively stronger footing as macro cues curiously stabilize.After a calmer weekend than most recently, BTC/USD
Bitcoin (BTC) starts a new week on a tentatively stronger footing as macro cues curiously stabilize.
After a calmer weekend than most recently, BTC/USD managed to seal its highest weekly close since February, casting off concerns that an imminent bout below $40,000 could enter.
Instead, conditions are beginning to favor a more bullish perspective on shorter timeframes, but as ever, nothing is certain — bulls need to tackle resistance and flip it to support, beginning with levels just north of $42,000, a case of “so near yet so far” for the market this month.
Signs that belief is heating up again nonetheless come from increasing activity in stablecoin markets, and as such, truly bearish takes on what lies ahead are now few and far between.
As global markets stage a miraculous recovery after weeks of war-based nerves, Cointelegraph takes a look at what could impact Bitcoin in the coming week.
Stocks act like they no longer care about war
It may seem “crazy,” markets commentator Holger Zschaepitz said this weekend, but it appears that in just one month, markets are beginning to forget the ongoing Russia-Ukraine war.
What was the main trigger for volatility in previous weeks is becoming an increasingly impotent market mover after the shock of sanctions came and went, he says.
While its implications are far from fully apparent, the current geopolitical reality is nonetheless increasingly unnoticeable on equities markets, which are now trending up with a focus on policy changes in China.
Chinese equities took a pummeling this year, led by tech stocks on the back of government pressure, but a seeming about-turn to shore up stability in Beijing is already having its desired effect.
Where Asia leads, Europe and the United States follow this week — markets are heading higher, and in the case of Europe’s Stoxx 600 have already eradicated losses engendered by the war.
“Global stocks have gained ~$5tn in mkt cap this wk on potential for wave of stimulus in China & oversold stock prices,” Zschaepitz noted Monday.
“Investors shrugged off ongoing war in Ukraine & rising rates. US 10y yields have jumped 10bps to 2.15%. All stock now worth $112.4tn, equal to 133% of global GDP.”
Should the good news continue, attention will return to Bitcoin’s correlation with stock markets, and in particular those in the U.S., as a potential pretext for price strength.
As noted by trading suite Decentrader last week, the correlation paradigm is yet to be broken.
“Price action has been in lockstep with legacy markets since the Russia-Ukraine conflict began with a high correlation visible throughout the period, demonstrating that Bitcoin remains a risk-off asset during uncertain times,” analyst Filbfilb wrote in a market report.
What would it take to break the spell? Investors may need to wait longer than the coming week to find out, but break it should, according to former BitMEX CEO, Arthur Hayes.
“As you can see, Bitcoin is currently tied at the hip with big tech risk assets,” he wrote in a Medium post released last week.
“If we believe nominal rates will go higher and cause an equities bear market and an economic recession, Bitcoin will follow big tech into the latrine. The only way to break this correlation is a narrative shift on what makes Bitcoin valuable. A rip roaring bull market in gold in the face of rising nominal rates and global stagflation will break this relationship.”
Which cross will win out?
Bitcoin managed to end the week with an impressive “engulfing candle,” which took the weekly chart to a one-month high close.
Still about $41,000 despite attempts to send the market south at the last minute, the largest cryptocurrency is thus on a firmer footing as March continues.
#BTC is mere hours away from confirming a bullish engulfing Weekly candle
This engulfing candle encompasses the previous 3 weeks’ worth of price action for Bitcoin$BTC #Crypto #bitcoin pic.twitter.com/n279Y7ue3q
— Rekt Capital (@rektcapital) March 20, 2022
All is not as straightforward as it seems, however, and nervous analysts are still concerned about a possible spate of weakness coming up.
Despite the strong close, for example, the weekly chart nonetheless saw a form of so-called “death cross” last week, data from Cointelegraph Markets Pro and TradingView shows.
Formed when a shorter-timeframe moving average crosses under a longer one — normally the 50-period under the 200-period but in this case the 20-period under the 50-period — such chart phenomena tend to signal upcoming weakness.
Be that as it may, however, lower timeframes are not without their bullish cues.
As noted by popular Twitter account BTCfuel, BTC/USD attacking the 100-period moving average on the daily chart is cause for optimism and mimics a structure from way back in 2012.
“After falling below the MA’s, Bitcoin is now challenging the 100D MA (red),” he explained alongside…
cointelegraph.com