After a quiet weekend, Bitcoin (BTC) managed to hit its highest weekly close since February, dispelling concerns that a close drop below $40,000 could enter. As global markets are recovering after weeks of war-based movements, investors are wondering what could affect the markets this week. Here are the various items that investors can keep an eye on this week…
Stocks are rising: How will Bitcoin be affected?
This weekend may seem “crazy,” according to market commentator Holger Zschaepitz, but it seems that in just a month, markets have begun to forget about the ongoing Russia-Ukraine war. He says war, which had been the main driver of volatility in previous weeks, has become an increasingly weak market determinant after the shock of sanctions has come and gone. Chinese stocks, on the other hand, took a hard hit this year, led by tech stocks after government pressure, but a seeming turn towards stabilization in Beijing is having the desired effect.
Where Asia leads, Europe and America follow this week – markets are bullish and Europe’s case of the Stoxx 600 has already wiped out war-induced losses. According to experts, if the recovery continues, attention will return to Bitcoin’s correlation with stock markets and especially those in the US. As noted by Decentrader, the correlation paradigm has yet to be broken.
“Since the Russia-Ukraine conflict started with a high correlation that can be seen throughout the period, price action in legacy markets shows that Bitcoin remains a risky asset in uncertain times,” analyst Filbfilb said in a report. What would it take to break the spell? According to former BitMEX CEO Arthur Hayes, investors may have to wait longer than next week to find out.
A “death cross” has occurred on the Bitcoin chart
Bitcoin managed to end the week with an impressive “engulfing candle” that took the weekly chart to the highest close in a month. Around $41,000 is therefore on a firmer footing as March continues. However, analysts are still worried about a possible wave of weakness coming. For example, despite the strong close, the weekly chart saw a so-called “death cross” pattern last week.
This pattern occurs when the moving average crosses below a longer period. Such chart phenomena tend to signal impending weakness. However, bullish hints are visible on shorter timeframes. As BTCfuel points out, BTC/USD above the 100-period moving average on the daily chart indicates an optimism and mimics a 2012 structure.
Analysts believe the halving cycle is over
The consensus argues that Bitcoin has actually followed a sideways trend not only this year, but throughout the past year as well. Various prominent commentators claim that the price action in between, with $29,000 and $69,000 as the limits of the range, is merely consolidation. However, 15 months later, questions are being raised as to whether it should be reassessed in the context of one of Bitcoin’s best-known features, its four-year price cycle.
Based on the halving that happens every four years, halvings have historically had a predictable impact on price performance. For example, bull market highs occurred the year after a halving, before the process gradually repeated itself, followed by corrections. The end of 2021 was different this time as it did not see the same eruption witnessed in 2013 and 2017.
“We’re probably seeing the first signs of the ‘Final Cycle’ thesis,” said popular analyst Willy Woo this week. “There have been 3 relatively short bull and bear markets since the 2019 low. So there is no longer a 4-year cycle,” he said. While similar to the so-called “super-cycle” advocated by names including Kraken growth leader Dan Held, not everyone agrees that cycle-based price tiers are no more. Credible Crypto, for example, said he “didn’t quite agree” with Woo.
Tether event excites bulls
The movements of stablecoins are monitored to assess the chances of continued bullishness in the crypto markets. Interaction with stablecoins in particular, which hold the lion’s share of the market, is an important indicator of the general interest in crypto, and their trajectory now clearly points upwards. Two days last week saw more active Tether (USDT) addresses than any other time this year or past, as explained by on-chain analytics firm Santiment. “Thursday (83K) and Saturday (74K) had the two biggest days of 2022 in terms of addresses interacting on the network,” the firm said.
Market sentiment begins to rise
After “extreme fear” for much of March, the Crypto Fear and Greed Index is back in the “fear” zone. At 31/100 on Sunday, the Index measured its highest level since March 4, marking an easing of macro-based negative sentiment among investors. Last week, by contrast, the picture was much bleaker, with research arguing that sensitivity could not be much lower than it was. Meanwhile, discussing market composition, last week’s Fear and Greed Index Bulletin highlighted the ongoing struggle between bulls and bears at current levels.
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