‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

Bitcoin (BTC) is starting a new week in a strange place – a week eerily similar to what it was this time last year.

After what various sources described as a full 12 months of “consolidation,” the price of BTC/USD reached around $42,000 – roughly exactly where it was in the second week of January 2021.

The ups and downs in between have been big, but basically, Bitcoin is still in the midst of a now-familiar range.

Forecasts vary depending on perspective – some believe all-new highs are more likely this year, while others are calling for more consolidating months.

With crypto sentiment at some of its lowest levels in history, Cointelegraph takes a look at what could change the status quo on shorter time frames in the coming days.

Will $40,700 hold?

Bitcoin had a difficult weekend as the latest in a series of sudden bearish moves saw support at $40,000 per inch.

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching $40,700 on major exchanges before rebounding, a correction that has continued since then.

Ironically, this very level was in focus on the same day in 2021, which nonetheless came during what turned out to be the most vertical phase of Bitcoin’s recent rally.

Last September also brought focus back to $40,700, which was a turning point after several weeks of correction, and eventually saw the BTC/USD pair climb to $69,000 all-time highs.

Now, however, the chances of a breakout of the $30K region are unreservedly higher among analysts.

“Weekly Close is too close,” Rekt Capital Summarization Along with a chart of the target levels.

“Theoretically, there is a possibility that $BTC will trigger a weekly close above ~$43,200 (black) to enjoy a green week next week. Weekly close below ~$43,200 however, BTC could revisit the red zone below.”

Annotated candlestick chart for BTC/USD. Source: Rekt Capital / Twitter

Bitcoin eventually closed at $42,000, hovering around that level in what could be some temporary relief for the bulls.

“I think the market is setting a lower top,” said fellow trader and analyst Bentoshi. Climate forecast, adding that he believes $40,700 will eventually fall.

Meanwhile, an increasingly attractive target lies last summer’s $30,000 floor.

Consensus forms on poor expectations of criticism

The overall picture this week is particularly complex for fans of risky assets, with bitcoin and altcoins no exception.

However, what the future holds varies greatly from one analyst to the next.

The US Federal Reserve is widely seen as starting to raise interest rates in the coming months, driving investors away from risk and causing headaches for cryptocurrency speculators. The “easy money”, which began streaming in March 2020, has become much more difficult to get.

The bearish view was neatly summed up by former BitMEX CEO Arthur Hayes in his latest blog post last week.

“Let’s forget what non-crypto investors think; my reading of the sentiments of crypto investors is that they naively believe that the fundamentals of network and user growth for the entire pool will allow crypto assets to continue their relentless upward trajectory.”

“For me, this represents a setting for extreme skewness, where the adverse effects of higher interest rates on future cash flows are likely to drive speculators and margin investors to abandon or severely reduce their crypto holdings.”

This week sees the release of US Consumer Price Index (CPI) data for December, numbers that will likely feed the story of inflationary surprise gains.

Hayes is not alone in worrying about what the Fed may bring to crypto this year, as Bentoshi, among others, has similarly called for a temporary end to the bull run.

“And the final question is, can cryptocurrency ignore the Fed if it decides to go all out with its deflationary scythe? I doubt it,” analyst Alex Krueger said. I finish In a series of tweets on this topic this weekend.

“Don’t fight the Fed” applies in both directions, up and down. If the Fed is *too hawkish* and then Houston, we have a problem.”

There were some optimists in the room. Dan Tabero, founder and CEO of 10T Holdings, told followers to “ignore” the latter path and focus on an unchanged long-term investment opportunity.

“Most bullish macro wallpaper in 75 years” He said.

“Booming economy backed by massive negative real rates. The Fed will never equate interest rates with inflation. Stay long, Bitcoin and ETH. Hodl through short-term volatility. Real dollar cash savings will continue to lose value.”

Tabero highlighted data collected by Charlie Bellow, founder and CEO of Compound Capital Advisors.

RSI hits two-year low

Amid the gloom, not everything is pointing to a prolonged downturn for bitcoin specifically.

As Cointelegraph reports, on-chain indicators are calling for the upside in large numbers – and the historical context works to support those claims.

This week, the Bitcoin Relative Strength Index (RSI) continues to emerge, hitting a two-year low.

The Relative Strength Index is a key measure used to determine whether an asset is “overbought” or “oversold” at a particular price point.

Plumbing in the depths at $42,000 suggests that such a level is indeed considered too extreme by the market, and a recovery should occur to offset it.

By contrast, last January the RSI was very high and, on the contrary, was within the “overbought” area, while BTC/USD was trading at the same price.

“Bitcoin RSI is at its lowest point in 2 years daily. March 2020 and May 2021 were the last ones. People are bearish here/want to sell,” said Michael van de Poppe, a hopeful Cointelegraph contributor. hung.

BTC/USD 1-day candle chart (Bitstamp) with RSI. Source: TradingView

Cointelegraph noticed similar bullish hints on the monthly RSI chart last week.

The hash rate compensates for Kazakhstan’s losses

Another flash from last week to “cure itself” comes from the realm of bitcoin fundamentals.

After hitting an all-time high in recent weeks, the Bitcoin network’s hash rate took a hit when the turmoil in Kazakhstan damaged internet availability.

Kazakhstan, home to about 18% of bitcoin’s hash rate, has since stabilised, allowing the hash rate to return to previous levels of 192 exahashes per second (EH/s).

At one point down to 171 EH/s, responses to what had reminded some of China’s mining ban last May seem to have raised the hash rate and kept record-breaking miners engaged.

The difficulty of the Bitcoin network, despite the turmoil, still managed a modest increase this weekend and is currently on track to do so again in the next automated readjustment in less than two weeks.

Screenshot of a live Bitcoin hash rate chart. Source: MiningPoolStats

“Forever Ascension”, series analyst Dylan Leclerc hung About the classic mantra: “Price follows hash rate.”

For context, the defeat of mining in China caused the hash rate to drop by 50%. It took about six months to make up for the losses.

“What if…?”

The person who has long been saying that it is time for a Bitcoin reversal is quantitative analyst PlanB, creator of stock-to-stream BTC price models.

Related Topics: Top 5 Cryptocurrencies to Watch This Week: BTC, LINK, ICP, LEO, ONE

However, PlanB remains more optimistic than most when it comes to price movement in the medium to long term, and is currently weathering the test of its creativity – and the accompanying storm of social media criticism.

“I know some people have lost faith in this bullish Bitcoin market,” he said I confess End of this week.

“However, we are only halfway into the cycle (2020-2024). Although BTC is facing some turmoil at $1 trillion, yellow gold group is at S2F60/$10T (the little black dots are the 2009-2021 gold data). ) is still the target IMO.”

Stock-to-asset flow chart (S2FX). Source: PlanB / Twitter

He was referring to the stock-flow value of bitcoin, gold and other assets as part of his cross-asset (S2FX) model, which requires an average BTC/USD price of $288,000 over the current halving. Course.

Closer to home, a simpler comparison of Bitcoin in this cycle and its two previous cycles saw a possible path starting with the now U-cycle.

A separate model, the Floor Model, which demanded $135,000 per bitcoin by the end of December, has now been ignored, having failed to hit its target for the first time ever in November.