Bitcoin (BTC) is starting a new week of struggle to maintain support as important macroeconomic changes appear on the horizon.

This week could be pivotal for bitcoin and altcoin’s relationship with traditional assets. The US Federal Reserve should be the most important topic for discussion by their owners.

In an atmosphere of persistent large-scale inflation, ongoing quantitative easing, and geopolitical turmoil with a focus on Europe, there is a lot of uncertainty in the air, regardless of trade.

Add to that the fact that Bitcoin failed to capitalize on the chaos and the result was some dangerous cold moves – what does it take to build trust?

Just as nothing seems to be breaking the multi-month status quo in the bitcoin markets that have been stuck in trading territory for all of 2022 so far, upcoming events continue to act as a catalyst to change both sentiment and price action.

Cointelegraph is considering factors that should help move the markets in the coming days.

Russia, China, inflation and the Fed
Fight it or not, the Federal Reserve is probably king when it comes to cryptocurrencies this week.

On March 16, politicians will decide whether to continue to increase the course of policy expected from last year.

The Fed has a problem – inflation is brewing. But the desire to reduce the record balance from the two-year excess of the coronavirus is also present.

Thus, the rate increase is expected to be modest – perhaps a quarter of a basis point – but the implications for Bitcoin could still be significant.

Bitcoin has already proven to be highly correlated with US equities and any quick reaction from the Fed is likely to be copied.

Stocks are not friendly with high interest rates as the period of easy money followed by the Covid-19 response was a golden era that only ended at the end of 2021. This comes with the end of the Fed. Similarly, bitcoin reached an all-time high in November and then began a rapid decline.

“This is going to be a big week for crypto and equity traders as the Fed is expected to decide on a quarter point rate hike this week. Bitcoin and Ethereum are pegged to the SP500 in 2022 and these decisions should have a big impact on coins.” Encrypted”, in short Sentiment. March 14th.

However, the Federal Reserve is far from the only macro player worrying bitcoin customers.

In Europe, lawmakers are about to vote to legalize cryptocurrencies, with some attempts to ban proof-of-work (POP protocols) citing environmental concerns.

Although critics have already dismissed the idea as absurd, the potential triumph still poses a threat to sentiment.

Knut Svanholm, author of Bitcoin: Sovereignty Through Mathematics, warned that “a ban on proof-of-work would mean a ban on number guessing.”

“Think about what such a ban would entail.”
At the same time, the Russian-Ukrainian conflict continues to escalate against the backdrop of an economic downturn, with Russia facing default and sanctions and trade embargoes adding to inflationary pressures.

Meanwhile, in China, COVID-19 itself has once again become the focus of attention as the number of incarcerated people increases.

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So for short-term bitcoin traders, everything is risky at best.

Given that one of the macro factors mentioned above could lead stocks to rally again, bitcoin seemed like a steady duck to many at the start of the week.

Popular Twitter account Crypto Tony claimed, “We haven’t seen a surrender drop yet due to another significant drop we’ve seen.”

This capitulation move has already been billed as a good opportunity and the timing will be bleak as it is almost two years away from the day the BTC/USD pair crashed to $3,600 in the first round of the COVID-19 chaos.

As Cointelegraph previously reported, the level of support remains unknown as $40K refuses to hold for more than a few days or hours.

There was a last-minute drop to $37,000, BTC/USD, at the close of the week, but at the time of writing, it still managed to recover a lot of lost ground and trade at around $38,600.

Analyzing the short term, another Twitter account planner turned to the Confluence Floor Model to conclude that a general price bottom could come next month.

However, that low could drop to around $27,000. This will see Bitcoin drop below its 2021 opening price and soon exit the area it has been consolidating since.

Source: CoinTelegraph