First Ever Weekly Death Cross – 5 Things to Know in Bitcoin This Week
Bitcoin (BTC) starts another week below $22,000 as bulls fail to regain ground lost in February.
After modest volatility towards the weekly close, BTC/USD remains near three-week lows as a new status quo moves in at $22,000 as resistance.
The biggest cryptocurrency is at the start of an important week of macroeconomic data, but with plenty of scope for volatility to return.
These come primarily in the form of the US Consumer Price Index (CPI), the January printout for which will be released on February 14.
Other data prints will follow throughout the week, with analysts keenly watching the crypto markets’ response, along with the US dollar.
Within Bitcoin circles, whales are taking the opportunity to buy at current levels, data shows, in a glimmer of hope for those hoping that the 2023 Bitcoin price rally could continue.
At the same time, a formidable new chart event is causing discomfort for some – can Bitcoin avoid significant downside as its first weekly “death cross” confirms?
Cointelegraph takes a look at these issues and more in its weekly roundup of potential Bitcoin market triggers for the week ahead.
Bitcoin Confirms Weekly Chart ‘Breakdown’
At around $21,800, the latest weekly close had few surprises in store for those on either side of the Bitcoin trade, data from Cointelegraph Markets Pro and TradingView show.
The lowest since mid-January, the event sealed a long-awaited retracement for BTC/USD after it spent January experiencing virtually unchecked upside.
Attention is now focused on the holding of the most important support levels, these mostly in the form of long-term trend lines that were recovered as support during the January run-up.
In a recent update for Twitter followers on February 13, popular trader Crypto Tony confirmed that $21,400 was where the situation could get interesting.
“From there we can really assess whether the bulls have it in them to save the bears, or lead them to slaughter,” read part of the commentary.
Zooming in, fellow account Daan Crypto Trades noted that BTC/USD sat between the 200-period and 400-period exponential moving averages (EMA) on the 4-hour time frames.
“Looks like we’ll be opening up with a little gap under us as we speak. All in all just a choppy weekend for BTC with some altars popping up. Waiting for CPI. Probably won’t take many actions until then,” he in summary.
A more formidable line in the sand, meanwhile, comes in the form of the 200-day MA. While still at $20,000, the level now represents an important level for the bulls to maintain control.
On weekly timeframes, the picture is no better, trader and analyst Rekt Capital warns. He flagged $21,839 as the point of interest and said a weekly close below this would “confirm the breakdown” in BTC/USD, a move that eventually came true.
The same level had acted as resistance several times since the middle of last year.
“Main” CPI print coming
The macro landscape is set to be dominated by one data point in particular this week with the release of the US consumer price index (CPI) for January on February 14.
Bets on inflation to continue to ease in a move that could still boost risk assets despite a fall in early February.
The picture is complicated by a shuffling of how the CPI is calculated, but analysts dispute its significance versus the general trend of slowing inflation.
Regardless, however, this month’s print is being closely watched far beyond crypto circles.
“Tuesday’s CPI report is the most important report to date. After a strong jobs report in January and “revised” higher CPI in December, uncertainty is everywhere, says the capital markets newsletter, The Kobeissi Letter, told Twitter followers this weekend.
“Both bulls and bears need the report to go their separate ways. Whichever side is correct will drive the market for the next month.”
Popular trader and analyst Myles G meanwhile underlined consequences for crypto should the CPI come in higher than expected, warning that this will “dump the market big.”
“Almost every single CPI reveal in the past 6 months has been an immediate dump, then an immediate recovery after traders digested the data,” co-trader Satoshi Flipper noted on the relationship between CPI and market volatility.
“Will this time be different?”
The extent to which the CPI plays a role in policy adjustments at the Federal Reserve is also currently a topic of debate, after Chairman Jerome Powell suggested that another metric could be the “most important” inflation monitoring tool late last year.
However, with the next decision on interest rates not due until the third week of March, policymakers will have February’s CPI numbers on hand should January prove to be an unexpected anomaly.
The first weekly “death cross” is causing concern
Bitcoin is caught between two “crosses” this month in a strange scenario, which divides opinion when it comes to its meaning.
As Cointelegraph reported, a “golden cross” on daily timeframes is paired with a “death cross” on the weekly chart.
The latter is the first of its kind for BTC/USD, but deadlocks on other timeframes have often preceded significant price declines.
Whether the daily golden cross will repeat historical patterns and lift the market remains to be seen, but in the meantime, another brand new cross is taking place.
As noted by Caleb Franzen, senior market analyst at Cubic Analytics, Bitcoin’s 1-year exponential moving average (EMA) is about to fall below its 3-year counterpart for the first time ever.
“This crossover has never happened before and highlights the severity of the BTC bear market,” he wrote in part of the Twitter commentary on February 11.
The event actually happened in mid-December, but the 1-year EMA has since continued to decline, plunging further and further below the 3- and 2-year EMAs.
In the accompanying analysis, Franzen argued that the crossover could change the behavior of the Bitcoin bear market. This time the depression may be harder and more extensive than before.
“While many Bitcoin investors have noticed that BTC typically falls about 400 days after the peak of the bull market, this chart suggests that this time is different,” he wrote.
“Given that we have never seen this signal until now, the implication is that the 1-year trend could stay below the 3-year trend even longer!”
He continued that the 2-year EMA could also end up crossing below the 3-year EMA, which would also constitute a first of its kind.
“Personally, I wouldn’t be surprised if that happens within the next 6 months as a result of further sideways action or downward consolidation,” the analyst forecast predicted.
Whales remain engaged
As for interest in Bitcoin at current prices, whales may have already broken their silence.
In data released on February 13, research firm Santiment noted that whales had stepped up transaction activity as BTC/USD fell to $21,600 around the weekly close.
“Bitcoin tumbles to $21.6k on Sunday, whales respond by trading at fastest pace in 3 months,” in summary.
Santiment community contributor sanr_king called the whale’s movements “significant.”
A snapshot of the order book activity at Binance, meanwhile, showed the presence of a large whale unit on February 12, along with a new selling wall at just over $22,000 entering the weekly close.
On-chain analytics resource Material Indicators, which uploaded the data, noted that it “shows new ask liquidity coincides with resistance at the 21-day moving average and .618 Fib.”
“No matter how high BTC bulls can push before the W close/open, expect the Death Cross to have a negative impact on short-term upside momentum,” it commentedwith reference to the aforementioned weekly chart instance.
Hodlers bounce back to health
Regardless of what the whales choose to do, the average hoarder has yet to turn a profit, data shows.
Related: Bitcoin is already in its ‘next bull market cycle’ – Pantera Capital
According to chain analysis firm Glassnode, long-term holders (LTH) have been busy accumulating new positions over the past month, in particular.
Its Hodler Net Position Change metric hit three-month highs on February 13, marking a return to hodling behavior not seen since the FTX debacle hit.
For those LTHs who choose to withdraw some of their coins, conditions are also improving. In the previous edition of its weekly newsletter, “The Week On-Chain”, Glassnode described that profitability will be “restored” in 2023.
It referred to the Spent Output Profit Ratio (SOPR), which measures the relative proportion of in-profit coins that appear in transactions.
“Considering the long-term holder cohort, we can observe a sustained regime of persistent losses since the LUNA collapse,” it wrote.
“Despite this group continuing to take losses over the past 9 months, there are initial signs of improvement, with a potential uptrend in LTH-SOPR beginning to form.”
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
