BTC Price “In the Chop Zone” – 5 Things to Know in Bitcoin This Week
Bitcoin (BTC) is starting another week of mid-air consolidation amid some of the least volatile conditions ever.
Despite losing 5% in one hour last week, Bitcoin’s subsequent lack of volatility is on every trader’s mind.
The question is whether that will change over the next few days.
There are many potential catalysts, from macroeconomic data to exchange setups and more, but which will win out – and in what direction it will send the BTC price – remains to be seen.
Behind the scenes, it remains business as usual for the basic Bitcoin network, with miners preserving their newfound buoyancy and poised for new all-time highs in difficulty.
Cointelegraph takes a look at these key market moving factors and summarizes opinions on how they could shape BTC price action this week.
Bitcoin price remains paralyzed after weekly close
While anything can and does happen in Bitcoin, the weekend was marked by only one word when it comes to BTC price action – boring.
After flash volatility on March 3 due to a combination of Silvergate banking concerns and FX margin calls, BTC/USD has remained eerily quiet.
Data from Cointelegraph Markets Pro and TradingView prove the point, with the spot price moving within a barely perceptible range since then.
Still, the bulls failed to regain much of the lost ground, which led to Bitcoin ending the week down around 5.1% on Bitstamp.
For Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading company Eight, there is still reason to believe that the market will soon draw a line below the current short-term trend.
“Bitcoin price action dull since the correction, but still working to support here,” he told Twitter Followers March 6.
– The indices have already bounced and look set to continue to do so. You may get another weakness from the lows and then reverse up, losing $21.5000 = trouble time.”
ONE further posts eyed a potential $23,000 bounce target if the bulls were to regain some form of strength.
“I just want to see some price movement today to be honest,” popular trader Crypto Tony continued.
“I remain short a few days ago with stop loss at $23,200 to remain transparent. I would like to see a move up to $22,800 before any downside.”
Fellow trading account Daan Crypto Trades, meanwhile, noted that BTC/USD had already closed the modest CME futures gap from the weekend.
$22,000 or $22,650 must be crossed for Bitcoin to provide “clear direction,” he acknowledged.
For trading resource Skew, the weekly open of around $22,300 should act as a “pivot” for price performance in the short term.
“Likely this weekly open price will act as a pivot for 1D breakdown against weekly demand ($19K) otherwise HL with confirmation above $23K,” a chirping about the daily chart provided.
“We are in the logging zone at the moment. (weakness or strength in the coming day will lead to momentum/direction).”
All eyes on Fed’s Powell as macro signals return
The macroeconomic scene is starting to heat up in the coming days after a chilly week, with Jerome Powell, chairman of the US Federal Reserve, due for two rounds of testimony.
A classic source of market volatility, Powell’s words to the US Congress’ House Financial Services Committee could turn the general mood – at least briefly – depending on the language he uses when it comes to future economic policy.
In particular, interest rates are at stake, with the next decision on a benchmark interest rate increase by the Fed two weeks away.
“Expect Bitcoin Volatility to Pick Up Mid-Week Next Week During Powell’s Testimony,” Trader, Analyst, and Angel Investor Crypto Santa confirmed in part of this weekend’s Twitter post.
Popular analytics account Tedtalksmacro also flagged non-farm payrolls data and a statement and press conference from the Bank of Japan towards the end of the week as crunch points.
As Cointelegraph reported, the liquidity decisions of central banks outside the US are increasingly seen as an important influence on Bitcoin markets.
“US dollar liquidity on the rise so far in March (~+100 billion inflows),” Tedtalksmacro added.
“Liquidity leads, price lags!”
According to CME Group’s FedWatch Tool, the odds of the Fed’s March rate hike coming in at 50 basis points versus the previous 25 basis points were 28.6% as of March 6.
The foundation is set for even more all-time highs
Another adjustment, another all-time high – when it comes to Bitcoin difficulty, the only way is up.
The latest data from BTC.com confirms that later this week the difficulty will go 1% higher to new record levels of 43.5 trillion.
This is no easy feat, at a time when BTC/USD has been consolidating for weeks and miners’ profit margins continue to be thin.
Nevertheless, the hash rate shows that the engagement of mining participants is also in a strong upward trend. Raw data estimates from MiningPoolStats put the hash rate at 320 exahashes per second (EH/s) as of March 6.
On-chain analytics firm Glassnode, meanwhile, shared profitability statistics for Bitcoin miners, which has improved significantly compared to the second half of 2022.
However, additional data shows that miners have not yet started a steady accumulation trend at current prices, despite these being up 40% compared to the beginning of the year.
On a rolling 30-day basis, miners’ BTC balances were lower in March.
Financing rates give reason for optimism
In derivatives markets, analysts are eyeing a potential repeat of conditions that sent BTC/USD to its February highs above $25,000.
This is mainly thanks to funding rates, which since last week’s 5% BTC price drop have flashed negative twice.
“Bitcoin Funding Rate similar to Ethereum now, turned negative a few times after the nuke a few days ago,” trading suite Decentrader noted on 6 March.
“Prior to this, funding rates were last negative before the pump at $25k on February 12th.”
That way, however, the relationship between longs and shorts remains “stubborn,” Decentrader addedwith two longs for every short “typically higher than usual for Bitcoin.”
Cointelegraph has published a guide that provides a full explanation of funding rates and how they work.
The sentiment index hits a 6-week low
In a more pronounced reversal as price action suggests, sentiment in the crypto market is increasingly shedding traces of bullishness this month.
Related: EOS, STX, IMX and MKR show bullish signs as Bitcoin searches for direction
According to the Crypto Fear & Greed Index, the mood on the ground is now “neutral”, while the return of “fear” is getting closer.
At 47/100, the index actually reached its lowest levels since mid-January at the weekend.
As Cointelegraph reported, research is even questioning the extent of crypto’s newfound cold feet, arguing that the market’s reaction to the Silvergate episode was blown out of proportion.
“Traders are more of a mixed bag when it comes to shorting or longing the markets right now,” said research firm Santiment, which published the findings.
Santiment added that sentiment does not necessarily provide an accurate reflection of market strength given the aforementioned state of funding rates.
“So there may be something funky going on with an inflated amount of negative commentary, although perpetual contract funding rates on exchanges don’t necessarily match sentiment,” it concluded.
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.
