Cryptocurrency

“The most bullish macro background in 75 years”-5 things to watch for Bitcoin this week

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Bitcoin (Bitcoin) Start a new week in a strange place-this place is very similar to this time last year.

After various sources describe it as a full 12 months of “consolidation”, BTC/USD is approximately US$42,000-almost the same level as in the second week of January 2021.

The ups and downs between the two are huge, but basically, Bitcoin is still within the familiar range it is now familiar with.

The outlook varies from point of view-some believe that this year may hit a record high, while others call for more consolidation months.

Since cryptocurrency sentiment is at its lowest level in history, Cointelegraph has studied the factors that may change the status quo in a shorter period of time in the coming days.

Will 40,700 USD be held?

Bitcoin has experienced a difficult weekend as the recent series of sudden drops have brought the USD 40,000 support level one step closer.

Data from Cointelegraph Markets Pro and Transaction view Display BTC/USD Reached 40,700 USD The major exchanges before the rally have been corrected ever since.

The irony is that it was the level that was focused on on the same day in 2021, and nonetheless, it emerged during the vertical phase of Bitcoin’s recent bull market.

In September last year, the market focus returned to US$40,700, which became a turning point after several weeks of correction, and finally BTC/USD climbed to a historic high of US$69,000.

However, analysts now believe that the possibility of falling to the $30,000 area is undoubtedly higher.

“The weekly closing is coming soon,” Rekt Capital Summarize Next to it is a chart with target levels.

“Theoretically, BTC may close above $43,200 (black) each week to enjoy the green week of next week. However, if the weekly closing price is below $43,200, BTC may re-examine the red area below. “

BTC/USD annotated candlestick chart.Source: Rekt Capital/Twitter

Bitcoin eventually closed at $42,000 as it hovered around that level, which may be a temporary relief for the bulls.

“I think the market is at a lower high,” trader and analyst Pentoshi forecastAnd added that he believes it will eventually fall by US$40,700.

At the same time, an increasingly attractive goal is the $30,000 bottom line last summer.

Reached consensus on poor cash prospects

For risk asset enthusiasts, the macro situation this week is particularly complicated, and Bitcoin and altcoins are no exception.

However, the future situation will vary from one expert to another.

It is widely believed that the Fed will start raising interest rates in the next few months, which will allow investors to reduce risk and cause a headache for cryptocurrencies. “Easy to make money” began to flow in in March 2020 and will now be more difficult to obtain.

Former BitMEX CEO Arthur Hayes neatly summarized the bearish views in his latest blog post last week.

“Let us forget the beliefs of non-crypto investors; my interpretation of the sentiment of crypto investors is that they naively believe that the network and user growth fundamentals of the entire complex will allow crypto assets to continue their unabated upward trajectory,” He wrote.

“To me, this represents a serious wash, because the harmful effect of rising interest rates on future cash flows may prompt speculators and fringe investors to sell or significantly reduce their cryptocurrency holdings.”

Saw this week US Consumer Price Index (CPI) data For the data released in December, these data may contribute to the story of an unexpected rise in inflation.

Hayes is not the only one worried about what the Fed might bring to cryptocurrencies this year. Pentoshi and others also called for a temporary end to the bull market.

“The last question is, if the Fed decides to go all out to wield a deflationary knife, can cryptocurrencies ignore the Fed? I doubt that,” analyst Alex Kruger concluded in a report. Series of tweets On the issue this weekend.

“‘Don’t go against the Fed’ applies to both top and bottom. If the Fed is *too tough* then Houston, we have a problem.”

There are still some optimists in the room. Dan Tapiero, founder and CEO of 10T Holdings, told his followers to “ignore” the recent rout and focus on long-term investment opportunities that remain unchanged.

“The most bullish macro backdrop in 75 years,” he said Say.

“A booming economy supported by a large number of negative real interest rates. The Fed will never equate interest rates with inflation. Holds long stocks, Bitcoin and ETH. Temporary short-term fluctuations. Real Dollar cash savings will continue to depreciate.”

Tapiero highlighted the data compiled by Charlie Bilello, founder and CEO of Compound Capital Advisors.

RSI hits two-year low

In the haze, not everything points to the long-term bearish phase of Bitcoin.

Just like Cointelegraph Report, On-chain indicators are calling for the upward movement in droves-the historical background helps support these needs.

This week, Bitcoin’s Relative Strength Index (RSI) continued to make headlines, reaching its lowest level in two years.

RSI is a key indicator used to determine whether an asset is “overbought” or “oversold” at a given price point.

Exploring the depth of $42,000 shows that the market does believe that such a level is too extreme, and there should be a rebound to balance it.

In contrast, in January last year, RSI was at a high level, on the contrary, it was in the “overbought” zone, while BTC/USD traded at the same price.

“Bitcoin RSI is at its lowest point in 2 years every day. March 2020 and May 2021 are the last. People are turning bearish/want to go short here,” a hopeful Cointelegraph writer Michaël van de Poppe Comment.

BTC/USD 1-day candlestick chart (Bitstamp) with RSI. Source: TradingView

Cointelegraph noticed similar bullish hints Monthly RSI chart last week.

Hash rate makes up for Kazakhstan’s losses

Another short-lived that has “self-repaired” last week comes from the Bitcoin fundamentals field.

After hitting all-time highs in recent weeks, Bitcoin’s network hash rate Get hit When the turmoil in Kazakhstan includes internet availability.

Kazakhstan, which has a hash rate of about 18%, has stabilized, which makes the hash rate most return Reached the previous level of 192 exahashes per second (EH/s).

At one point it dropped to 171 EH/s, and some reactions to what might be reminiscent of China’s mining ban in May of last year seemed to increase the hash rate and maintain a record level of miner participation.

Bitcoin Network difficulties, Despite the drastic changes, it managed to increase slightly this weekend, and is now expected to do so again in the next automatic adjustment in less than two weeks.

Screenshot of the real-time Bitcoin hash rate chart. Source: MiningPoolStats

“Always Up”, on-chain analyst Dylan LeClair Comment related Classic spell, “The price follows the hash rate.”

In terms of background, the mining crash in China caused a 50% drop in hash rate. It took about six months to make up for the loss.

“if…?”

The person who has long believed that it is time for the Bitcoin trend to reverse is the quantitative analyst PlanB, who is the creator of the BTC price model based on stock-to-flow.

related: The 5 most noteworthy cryptocurrencies this week: BTC, LINK, ICP, LEO, ONE

For now, his work has withstood the test — and the storm of social media criticism that followed — but when it comes to mid- to long-term price behavior, PlanB is still more optimistic than most people.

“I know some people have lost faith in this Bitcoin bull market,” he said admit this weekend.

“However, we have just entered half of the cycle (2020-2024). Although BTC has experienced some turbulence at 1T USD, the gold cluster of S2F60/10T USD (the little black dot is the gold data for 2009-2021) is still The goal of IMO.”

Stock flow cross-asset (S2FX) chart.Source: PlanB/Twitter

He was referring to the circulating value of stocks of Bitcoin, gold and other assets as part of its stock circulating cross-asset (S2FX) model, which requires the average price of BTC/USD to be 288,000 USD during the current halving period.

However, to get back to business, a simpler comparison between this cycle of Bitcoin and the previous two cycles has seen a viable trajectory and is now beginning to turn around.

A separate model, the floor model, requires $135,000 per bitcoin by the end of December, and it’s now throw away After failing to reach the target for the first time in November last year.