Big and smallholders alike are seizing the opportunity to buy Bitcoin, figures show, as on-chain data hints that the coin has bottomed out at the $38,000 level.
Bitcoin (BTC) begins the final week of February on the down but showing signs of strength as it holds a key support level.
After a few days of nervousness in both the macro and crypto markets, the BTC/USD pair is below $40,000, but there are already signs that a comeback could be what starts the week off in the right direction.
The new signals from the Federal Reserve will be a hot topic in the short term, as the first-rate hike is expected to be announced and implemented in March.
Could it all be a storm in a teacup for Bitcoin, which on a technical basis is stronger than ever? Cointelegraph lays out five factors that could influence price action in the coming days as dark clouds linger over the global economy.
Stocks lead a gloomy macro week
The main story for Bitcoin traders this week comes from outside: the post-covid economic landscape and concerns over relations with Russia.
The first comes in the form of how the Fed will respond to rising inflation and, more specifically, whether its hinted interest rate hikes will kick off in March as anticipated.
Such gains are bad news for burgeoning equities, which have enjoyed two years of runaway gains thanks to the Fed’s massive liquidity program to counter yet another Covid-era demon: lockdowns and unprecedented controls on economic activity. .
With the “easy money” soon to start running dry, there could be a kind of reality check for everyone.
As for rate hikes, too many too soon risk causing a recession – an issue that is already being discussed as a possible “necessary evil” for other countries – while a light touch might, on the contrary, not be able to reduce the highest inflation of the last 40 years.
To make matters worse, the situation with Russia and its alleged plans for Ukraine is even more worrying for equities.
Conversely, commodities like oil have benefited from fears of all-out war, which have so far been unfounded as diplomacy is weak this week.
Overall, however, the short-term view is one of considerable uncertainty, while optimism remains for the recovery of risk assets, such as cryptocurrencies and traditional stocks, by the end of 2022.
However, we cannot ignore the figures, as market commentator Holger Zschaepitz summed up on Sunday, “Global stocks have lost another $1.3m in market cap this week on increased Russia/Ukraine risk and the possibility of the Fed raising rates further this year.”
BTC Price Considers CME Futures Gap
With the above stated, it has been tough for the average Bitcoin day trader this month.
February 2022 has only allowed for about two weeks of easy gains, with macro influences ending the party the week before.
Since then, the BTC/USD pair has lost support at $40,000 and has threatened a full pullback from the ground it just gained this month.
However, the $38,000 level – a level previously highlighted as essential for the bulls – remained untouched.
The weekly close, although the lowest in several weeks, came along with a new RSI breakout on the 4-hour chart, a classic signal that precedes short-term price rebounds.
True to form, the price of Bitcoin rose, hovering around $39,200 at the time of writing.
Who is Buying While You are Selling
Amid disbelief that some are choosing to sell their BTC now after hanging on for several months in the downside, data shows that the big players are smelling a bargain.
Some of the biggest Bitcoin wallets are putting their money where their mouth is, and have been doing so throughout 2022 and even before.
There are many examples; the BitInfoCharts on-chain monitoring resource shows the “up only” trend of a particular entity.
Monday alone saw his balance increase by 150 BTC, and he is not the only one: others have been collecting coins during this weekend’s local low.
The situation is far from easy: concerns over inflation, the US monetary policy, and geopolitical tensions are in play, and with these, the possibility that stocks will continue to suffer.
With all the influencing factors, it is arguably not surprising that cryptocurrency market participants are not sure how to feel about the prospects.
By Audy Castaneda
