Bitcoin (BTC) is starting a new week in a strange place, very similar to what it was at this time last year.
According to various sources, for the full 12 months of the “consolidation,” the price of BTC/USD is around $42,000 – roughly the same as in the second week of January 2021.
The ups and downs between the two have been big, but Bitcoin remains mostly in the middle of a known range.
Forecasts vary depending on the point of view, with some believing that all-new highs are more than possible this year, while others need months longer to consolidate.
With cryptocurrency sentiment at one of the lowest levels in history, Cointelegraph is considering what could change the status quo in a shorter time frame in the coming days.
Is 40,700 dollars enough?
Bitcoin has had a difficult weekend as the latest in a series of sharp moves lower sees support near $40,000.
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD hit $40,700 on the major exchanges before the debut, and that correction has remained unchanged since then.
Ironically, this level was in the spotlight on the same day in 2021, which nonetheless fell below what turned out to be the most vertical phase of Bitcoin’s recent bullish rally.
In September last year, interest also returned to $40,700, which was a turning point after several weeks of correction, and finally, the BTC/USD pair surged to an all-time high of $69,000.
However, the chances of a collapse now in the $30K region are unconditionally higher for analysts.
“The weekly close is very close,” summed up Rekt Capital along with the chart of the target levels.
“Theoretically, there is a possibility that USD BTC will complete a weekly close above ~$43,200 (black) to enjoy the green week next week. Weekly close is below $43,200, but BTC may visit the red zone below.”
Detailed BTC/USD chart. Source: Rect Capital / Twitter
Bitcoin finally closed at $42,000 as it hovered around that level, which may come as a temporary relief for the bulls.
“I think the market is heading towards a lower top,” trader and analyst Bentoshi predicted, adding that he believes $40,700 will eventually fall.
An increasingly tempting target is the $30,000 minimum reached last summer.
Forming a consensus on dire monetary prospects
This week’s macro presents a particular challenge to the risky asset enthusiast, and bitcoin and altcoins are no exception.
However, what the future will hold varies greatly from one expert to another.
The US Federal Reserve is set to start raising interest rates in the coming months, which will force investors to reduce risks and create trouble for cryptocurrencies. Getting the “simple money” that started pouring in in March 2020 is now much more difficult.
The bearish outlook was well summarized by former BitMEX head Arthur Hayes in his latest blog post last week.
“Let’s forget what non-crypto investors think; as far as I understand crypto investors, they naively believe that core networks and the growth in the number of users across the entire pool will allow cryptocurrencies to continue their upward journey.”
“For me, this setup represents a major breakthrough because the detrimental effect of higher interest rates on future cash flows is likely to cause speculators and margin investors to dump or depreciate their cryptocurrency.”
US Consumer Price Index (CPI) data for December is due this week, numbers that are likely to contribute to the story of the unexpected rise in inflation.
Hayes is not alone in worrying about what the cryptocurrency Federal Reserve may bring this year, as Pentoshi is calling, among other things, for a temporary halt to the bull market.
And the last question: Could cryptocurrency ignore the Federal Reserve if it decided to do its best with a deflationary machete? Analyst Alex Krueger concluded in a series of tweets on the issue this weekend that he doubted it.
The phrase “don’t fight the Fed” applies both ways, up and down. If the Fed is *too belligerent* from Houston, we have a problem. ”
A few optimists remained in the hall. Dan Tabero, founder and CEO of 10T Holdings, urged followers to “ignore” the latter path and focus on a durable long-term investment opportunity.
“The most optimistic macroeconomic background in 75 years,” he said.
An economic boom fueled by huge negative real interest rates. The Fed will never equate interest rates with inflation. Hold long stocks, bitcoin and ethereum. Hold on to short-term swings. Real dollar savings will continue to lose value. ”