Market Analysis

Bitcoin (BTC) starts a new week on a tentatively stronger footing as macro cues curiously stabilize.

After a calmer weekend than most recently, BTC/USD managed to seal its highest weekly close since February, casting off concerns that an imminent bout below $40,000 could enter.

Instead, conditions are beginning to favor a more bullish perspective on shorter timeframes, but as ever, nothing is certain — bulls need to tackle resistance and flip it to support, beginning with levels just north of $42,000, a case of “so near yet so far” for the market this month.

Signs that belief is heating up again nonetheless come from increasing activity in stablecoin markets, and as such, truly bearish takes on what lies ahead are now few and far between.

As global markets stage a miraculous recovery after weeks of war-based nerves, Cointelegraph takes a look at what could impact Bitcoin in the coming week.

Stocks act like they no longer care about war

It may seem “crazy,” markets commentator Holger Zschaepitz said this weekend, but it appears that in just one month, markets are beginning to forget the ongoing Russia-Ukraine war.

What was the main trigger for volatility in previous weeks is becoming an increasingly impotent market mover after the shock of sanctions came and went, he says.

While its implications are far from fully apparent, the current geopolitical reality is nonetheless increasingly unnoticeable on equities markets, which are now trending up with a focus on policy changes in China.

Chinese equities took a pummeling this year, led by tech stocks on the back of government pressure, but a seeming about-turn to shore up stability in Beijing is already having its desired effect.

Where Asia leads, Europe and the United States follow this week — markets are heading higher, and in the case of Europe’s Stoxx 600 have already eradicated losses engendered by the war.

“Global stocks have gained ~$5tn in mkt cap this wk on potential for wave of stimulus in China & oversold stock prices,” Zschaepitz noted Monday.

“Investors shrugged off ongoing war in Ukraine & rising rates. US 10y yields have jumped 10bps to 2.15%. All stock now worth $112.4tn, equal to 133% of global GDP.”

Should the good news continue, attention will return to Bitcoin’s correlation with stock markets, and in particular those in the U.S., as a potential pretext for price strength.

As noted by trading suite Decentrader last week, the correlation paradigm is yet to be broken.

“Price action has been in lockstep with legacy markets since the Russia-Ukraine conflict began with a high correlation visible throughout the period, demonstrating that Bitcoin remains a risk-off asset during uncertain times,” analyst Filbfilb wrote in a market report.

What would it take to break the spell? Investors may need to wait longer than the coming week to find out, but break it should, according to former BitMEX CEO, Arthur Hayes.

“As you can see, Bitcoin is currently tied at the hip with big tech risk assets,” he wrote in a Medium post released last week.

“If we believe nominal rates will go higher and cause an equities bear market and an economic recession, Bitcoin will follow big tech into the latrine. The only way to break this correlation is a narrative shift on what makes Bitcoin valuable. A rip roaring bull market in gold in the face of rising nominal rates and global stagflation will break this relationship.”

Which cross will win out?

Bitcoin managed to end the week with an impressive “engulfing candle,” which took the weekly chart to a one-month high close.

Still about $41,000 despite attempts to send the market south at the last minute, the largest cryptocurrency is thus on a firmer footing as March continues.

All is not as straightforward as it seems, however, and nervous analysts are still concerned about a possible spate of weakness coming up.

Despite the strong close, for example, the weekly chart nonetheless saw a form of so-called “death cross” last week, data from Cointelegraph Markets Pro and TradingView shows.

Formed when a shorter-timeframe moving average crosses under a longer one — normally the 50-period under the 200-period but in this case the 20-period under the 50-period — such chart phenomena tend to signal upcoming weakness.

Be that as it may, however, lower timeframes are not without their bullish cues.

As noted by popular Twitter account BTCfuel, BTC/USD attacking the 100-period moving average on the daily chart is cause for optimism and mimics a structure from way back in 2012.

“After falling below the MA’s, Bitcoin is now challenging the 100D MA (red),” he explained alongside comparative charts.

“This is 33 bars after the bearish cross happened, very similar to 2012. A bullish cross should follow soon after that.”

The “softly-softly” approach is very much in favor for a market still moving within a range with firmly-defined resistance levels, however, and these should be firmly squashed before a genuine trend change is confirmed.

That was the opinion of analyst Matthew Hyland this weekend, with $42,600 the first area to beat for bulls.

Stop waiting for the blow-off top, says analyst

As Cointelegraph reported, popular consensus argues that Bitcoin has in fact been sideways ranging not just this year, but all of last year as well.

With $29,000 and $69,000 as the limits of the range, price action in between is thus just consolidation, various well-known commentators claim.

Nonetheless, after 15 months, questions are now being raised about whether Bitcoin needs to be reevaluated within the context of one of its best-known traits: the four-year price cycle.

Based on the block subsidy halving which occurs once every 210,000 blocks — roughly every four years — halvings have historically had a predictable impact on price performance.

Bull market peaks, for example, have occurred the year after a halving, with bearish corrections following, before the process slowly repeats.

This time has been decisively different, as the end of 2021 failed to see the same blow-off top witnessed in 2013 and 2017.

“We’re likely seeing the first signs of ‘The Last Cycle’ thesis playing out,” popular analyst and statistician Willy Woo announced this week.

“3 relatively short bull and bear markets have transpired since the 2019 bottom already. i.e. No more 4 year cycles.”

Woo’s thesis revolves around the disintegration of the blow-off top as a feature of each halving cycle. Far from a bearish feature, however, he says that price action will simply become less predictable as supply and demand forces ramp up.

As such, measuring BTC/USD against its latest all-time high — and its potential to beat it — may no longer provide an accurate depiction of market strength or capability.

While similar to the so-called “supercycle” championed by names including Kraken growth lead Dan Held, not everyone agrees that the cycle-based price phases are no more.

“Don’t quite agree. If we get a parabolic/blow off 5th wave there will be an equally aggressive drop that follows. But generally, yes, we can expect higher lows and higher highs to be put in over time of course,” popular Twitter account Credible Crypto responded to Woo when he unveiled the idea in October.

Tether activity gets bulls excited

Look no further than behind-the-scenes moves on stablecoins to assess the chances of a bullish continuation occurring on crypto markets.

Interaction with U.S. dollar stablecoins in particular, these holding the lion’s share of the market, are a key indicator of overall interest in crypto, and their trajectory is now pointing clearly upwards.

As explained by on-chain analytics firm Santiment, two days last week saw more active Tether (USDT) addresses than at any other time this year or last.

“As Bitcoin wavers around $41k, Tether is indicating big moves may be coming for crypto,” it commented.

“Thursday (83k) and Saturday (74k) had the two largest days of 2022, in terms of addresses interacting on the network. Keep an eye on this diminishing stagnancy.”

The largest USD stablecoin, Tether’s market cap now stands at over $83 billion.

Sentiment exits weeks of “extreme fear”

A hint of good news is surfacing in crypto market sentiment this week.

Related: Top 5 cryptocurrencies to watch this week: BTC, LUNA, AVAX, ETC, EGLD

After a fresh dive into “extreme fear” which lasted most of March, the Crypto Fear & Greed Index has risen back to its “fear” zone.

At 31/100 on Sunday, the Index measured its highest since March 4, and points to the worst of the macro-based cold feet among investors — at least temporarily — being alleviated.

Last week, by contrast, the picture was far gloomier, with research arguing that sentiment could hardly be much lower than it was.

Discussing market composition, meanwhile, the dedicated Fear & Greed Index Newsletter last week highlighted the ongoing struggle between bulls and bears at current levels.

“The bears have a built a fortress between $40,100 and $42,600,” it read, assessing the need for an “incremental” reassertion of force by bulls up to $42,600.

“This breach would wipe out the bears entirely and break their spirit. It’s not an easy task, but if the bulls plan on recapturing their momentum, this would have to be done,” it added.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

This article was originally published by Cointelegraph.com. Read the original article here.

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