Bitcoin (BTC) moves lower in the last week of February, but shows signs of strength with an important level of support in place.
After several days of turmoil in both the macro and crypto markets, BTC / USD has fallen below $ 40,000, but there are indications that a return may be the start of the week in the right direction.
The situation is far from simple – concerns about inflation, US monetary policy and geopolitical tensions are all factors that come into play, and with them the likelihood that equities will continue to suffer.
Additional signals from the US Federal Reserve will be relevant in the short term as March is expected when the first major interest rate hike will be announced.
Could all this be a storm in a glass of bitcoin, which is technically stronger than ever?
Cointelegraph presents five factors that could affect price movements in the coming days as storm clouds remain over the global economy.
Stocks are leading a gloomy week overall
The main news for bitcoin traders this week comes from abroad – the economic outlook for COVID and concerns about relations with Russia.
First, this is how the Fed will react to rising inflation, and especially whether the rise in interest rates will begin in March, as expected.
This increase is bad news for fast-growing stocks, which have seen ongoing gains for two years thanks to the Fed’s huge liquidity program to counter another demon from the COVID era: closures and unprecedented controls on economic activity.
With “easy money” soon to dry up, something like a reality check can be available to anyone.
When it comes to raising interest rates, many are at risk of recession soon – a topic already discussed as a potential “necessary evil” for other countries – and a light touch, conversely, may not bring down the highest inflation rate in 40 years. year.
In addition, the situation with Russia and its alleged plans for Ukraine raises even more concerns about supplies.
On the contrary, commodities such as oil have benefited from the fear of open war, and they have so far been misplaced as diplomacy falters this week.
Overall, however, the short-term outlook is characterized by a great deal of uncertainty, while optimism remains about the return on both risky assets such as cryptocurrencies and traditional equities by the end of 2022.
Do not hide the numbers.
“Global equities have lost another $ 1.3 trillion in stock capitalization this week due to escalating risks associated with Russia and Ukraine and the prospect of further rate hikes this year,” market commentator Holger Scheibitz summed up on Sunday.
The latter is expected to stop growth and lead to a recession by 2023 in the first half of the United States. The stock is now worth $ 114 trillion, equivalent to 134 percent of global GDP. ”
One-day S&P 500 candlestick chart. Source: TradingView
Trading on Wall Street starts on Tuesday this week due to a public holiday in the United States.
BTC Price Target CME Futures Gap
However, the average daily bitcoin trader has had a tough time this month.
In February, it was easy to earn just around two weeks, and generally the party ended a week earlier.
Since then, BTC / USD has lost $ 40K support and is threatening to reverse the last level this month.
In this case, however, $ 38,000 – the level previously set as necessary to keep the bulls – remains the same.
The weekly close, which was at a multi-week low, was accompanied by a new burst of the relative strength index (RSI) on the 4-hour chart, a classic signal ahead of a short-term price jump.
According to Altcoin, bitcoin has since risen slightly, holding around $ 39,200 at the time of writing.
Experienced traders tend to ignore BTC / USD weekends due to the lack of volume which exacerbates a particular move. So the $ 38,000 drop may in itself be an exaggeration of market sentiment.
Furthermore, the reversal has clear targets of $ 40,000 with inverted support / resistance levels, as well as Friday’s CME futures end of $ 39,860, over most of Saturday’s decline.
Bitcoin usually fills these “gaps” in the CME chart, often within days or even hours of a new week’s trading start.
Hourly candlestick chart for CME bitcoin futures. Source: Trading View
Who buys when you sell?
The data show that in the midst of mistrust that someone chooses to sell their bitcoins now, after holding in the red for several months, the big players are sniffing at a deal.