Bitcoin (BTC) begins a new week in the shadow of a new geopolitical conflict. In what has become an unrecognizable macro-environment compared to a few days ago, Bitcoin, like many other assets, is feeling the pressure.
The invasion led by Russia, and the subsequent war against Ukraine, is wreaking havoc on global markets, and events can shake sentiment in a matter of hours or minutes.
The timing has affected Bitcoin as well: Its “safe haven” status is undergoing a serious test as investors seek safety and shareholders seek an exit.
As this week’s top influencer, Cointelegraph examines what could be in store for Bitcoin in the short term as it faces complex and almost surreal macro events.
Below, there are five topics for BTC investors to consider this week.
The Ukrainian War Dominates
The situation, which emerged in its current form only five days ago, remains in a state of flux: sanctions keep coming, both sides and their allies continue to bring themselves to their knees, markets react to new threats and odds.
Chief among them is Russia’s economy, which is gearing up for turmoil on Monday. Stock trading is delayed to at least 3 pm local time, and the outlook is grim for its currency, the ruble, already trading at record lows.
Until now, oil, but not Russian oil, has been one of the few beneficiaries of the war, while Bitcoin has managed to remain fairly stable, unlike gold, which first gained rapidly and then lost all of its newly gained ground.
However, the correlation of Bitcoin and altcoins with traditional stock markets remains and therefore low periods can provide a real headache for traders, whatever turns that the war takes.
Macro Spot Price Action Faces Force Majeure
With the traditional markets poised to be extremely volatile at their respective open on Monday, guessing how Bitcoin will fare in the shorter periods is a real problem.
Correlations aside, Bitcoin has managed to stay in a fairly tight range so far, and $40,000 is a clear resistance zone for the bulls to break out of.
The problem, however, is that any more dramatic moves could ultimately be the result of large macro swings and thus be an unreliable long-term signal.
Another Month, Another Red Candle
Sunday’s close did not really go as planned for Bitcoin market watchers.
A last-minute dip eliminated the chances of closing the week and month above $38,500 and thus giving the history books its first four consecutive monthly red candles since the 2018 bear market.
The events of last week, already an unexpected drop, seem to make things worse for Bitcoiners, who have yet to see the cryptocurrency branch out on its own, away from traditional assets.
Another headache for analysts is the monthly chart relative to its 21-month EMA, which could fade as support if losses continue.
The breakout of the 21st EMA has been a common feature of Bitcoin’s bearish macrotrends, and February, fortunately, prevented a repeat performance.
Analyst Kevin Svenson noted that, “tomorrow’s monthly close is critical. If we close below $37,000 (purple 21m/EMA), that gives us the same bearish signal as every other previous macro beartrend.”
Difficulty Stabilizes the Ship
Moving away from geopolitics, investors have every reason to keep faith in the strength of the Bitcoin network.
Despite price pressures and uncertainty on virtually every timeframe, miners continue to mine, and hash rate and difficulty have continued to rise.
This week there may be a challenge to the status quo: the hash rate is constant, but the difficulty will drop for the first time in 12 weeks to account for the latest changes.
This is nothing “bad” as a phenomenon: the 1.25% decline is modest by Bitcoin standards and likely reflects circumstantial changes in miner participation, rather than the start of a new trend.
According to the monitoring resource MiningPoolStats, the hash rate, for its part, remains above 200 exhashes per second (EH/s), a radical change from a few months ago when Bitcoin reached its all-time highs.
Sentiment Predicts the Worst
Its potential roles aside, the largest cryptocurrency is not enjoying a sentiment boost because of recent events.
According to the Crypto Fear & Greed Index, a sentiment indicator that has received increasing attention in 2022, the market is getting increasingly nervous.
BTC/USD saw a relatively small drop overnight on Monday, but that was enough to drag the Index back into its “extreme fear” territory: from 26/100 on Sunday to 20/100, its lowest level since February 1st this year.
In short, this has been a week like no other in Bitcoin history, coming all of a sudden, as traders brace for guaranteed turmoil.
By Audy Castaneda
