5 things to know about Bitcoin this week

Bitcoin (BTC) started a new week struggling to maintain support as important macro changes loom on the horizon.

In what could turn out to be a pivotal week for Bitcoin and altcoins’ relationship with traditional assets, the US Federal Reserve is set to become the main talking point for miners.

With inflation still rampant, quantitative easing still underway, and geopolitical uncertainty centered on Europe, there’s a lot of uncertainty in the air, no matter what trade.

Add to that Bitcoin’s failure to benefit from the chaos and as a result some seriously cold feet – what gives confidence?

Just as nothing seems to be able to disrupt the month-to-month status quo in the Bitcoin market, which has been stuck in a trading range throughout 2022 so far, upcoming events could still provide provided the catalyst for a major shift in both sentiment and price action.

Cointelegraph will be looking at factors that are set to help move the market in the coming days.

Russia, China, inflation and the Fed

Against it or not, the Fed is likely to be the king maker when it comes to crypto performance this week.

On March 16, policymakers will decide whether or not to proceed with the key rate hike that has been expected since last year.

The Fed has a problem – inflation is heating up. But its desire to drop its record balance sheet from a two-year coronavirus surplus is too much.

As a result, the rate hike is said to be modest – perhaps a quarter of a basis point – but its effects could still be significant for Bitcoiners.

BTC has shown itself to be closely tied to US stocks and any knee-jerk reaction to the Fed could be copied.

Stocks aren’t friends with rate hikes, as the easy money period that accompanied the COVID-19 response was something of a golden age that only ends at the end of 2021. This happens when in fact are the moves of the Fed have returned home. Likewise, Bitcoin hit an all-time high in November and then began a rapid decline.

“This week will be huge for crypto and equities traders, as the Fed is expected to decide on a quarter rate hike this week. Bitcoin and Ethereum are already pegged to SP500 in 2022 and these decisions will greatly affect crypto,” analytics firm Santiment summary on March 14.

However, the Fed is not the only macro player Bitcoiners have to worry about.

In Europe, lawmakers are set to vote on crypto legislation, with some attempting to instigate a ban on proof of work (Poprotocols cites environmental concerns.

While critics have dismissed the idea as ludicrous, the threat to sentiment from a potential victory remains.

“A PoW ban would be a single-digit ban,” said Knut Svanholm, author of Bitcoin: Sovereignty Through Mathematics, alert.

“Think of what such a ban would imply.”

In addition, the Russia-Ukraine conflict continues to intensify along with the economic downturn – Russia is at risk of default, and sanctions and trade blocs are increasing inflationary pressures.

Meanwhile, in China, COVID-19 itself is back in the spotlight with an increasing number of residents in lockdown.

Spot prices “celebrate” two years since COVID-19 crash

Therefore, things are at best precarious for short-term Bitcoin traders.

Given that any of the above macro factors could create a new trend in the stock market, for many, Bitcoin is like a sitting duck as the week begins.

“We have yet to see a drop in investment capital like every other macro drop we have seen,” said popular Twitter account Crypto Tony. Discuss.

Such a speculative move has been voiceover is a clear possibility, and times will be grim, it will be almost exactly two years from the day BTC/USD dropped to $3,600 during the first COVID-19 turmoil.

As Cointelegraph previously reported, support level is still unclaimed because $40,000 refuses to hold for more than a few days or hours.

The weekly close saw a last-minute drop to $37,000, BTC/USD, but still manages to regain most of the lost money to trade at around $38,600 at press time. .

Analyzing the short-term outlook, fellow Plan C Twitter account turned to his Confluence Model to conclude that a macro price bottom could emerge in the next month.

However, such a low could fall around $27,000. This would take Bitcoin below its 2021 opening price and quickly break out of the range it has been consolidating since.

“I don’t believe we are going to 27k, but if history repeats for the 4th time in a row, that could be the bottom of this accumulation period,” Plan C added on Twitter.

Accumulation provides a faint silver lining

On the topic of accumulation, it doesn’t seem like this is bad news when it comes to demand for Bitcoin at current prices.

As Cointelegraph reported, whales have been active in recent days while the share of the overall BTC supply controlled by smaller investors has hit a one-year high.

Now, those habits are being reflected in the exchanges’ supply that continues to be at its lowest.

The changes were noted by Philip Swift, creator of on-chain analytics resource LookIntoBitcoin, on March 1.

Separate data from online chain analysis company CryptoQuant confirm trends and shows that of the 21 major exchanges it includes, BTC balances are at their lowest combined since early August 2018 – 2.32 million BTC.

The story of the balance of foreign exchange is actually quite complicated, as different exchanges exhibit different trends.

In the latest edition of its weekly newsletter, The Week On-Chain, released March 7, online chain analysis platform Glassnode devoted pay much attention to this phenomenon, noting that the supply and sell side in general is still at a “relatively modest” level in macro terms.

In light of volatile macroeconomic and geopolitical events of the past few weeks, net cash inflow volumes for exchange have also been reasonably stable, albeit with slight bias, the researchers note. with capital flows this week,” the researchers noted at the time.

The latest Glassnode data shows that exchanges have pass away Another $1.9 billion in BTC over the past week.

Market sentiment doesn’t impress anyone

Perhaps unsurprisingly, Bitcoin and broader crypto sentiment is down sharply this week.

After two months of oscillating and forging, the bulls felt tired and the threat of a macro-induced speculation hung in the air.

“Bitcoin sentiment is now worse than July 21 imo and price is now $8k above the July 21 low,” Twitter analytics account On-Chain College summary.

Check Indeed online this week, the research, insights and educational resource Cane Island Digital Research highlighted volume as another sign that momentum has waned away from Bitcoin.

“Bitcoin volume is a terrible indicator of price but it is a good indicator of sentiment,” it commented.

“It is hard to think that volume could drop that much, meaning bitcoin must be close to bottoming out.”

While this can be an indicator of impending speculation and trend reversal, fear is still appreciable.

Mark Yusko, Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management, description Cane Island is assessed as “about to be swept away” mentality.

Meanwhile, the Crypto Fear & Greed Index rest in “extreme fear” territory, near the 20/100 mark, has been acting like a line in the sand since mid-February.

Crypto Fear & Greed Index (screenshot). Source: TradingView

Blast for volcanic bonds?

Looking for a countermeasure to the seemingly endless bad news from macro sources?

Related: Top 5 Cryptocurrencies to Watch this Week: BTC, DOT, SAND, RUNE, ZEC

It could come this week in the form of El Salvador and its massive 10-year Bitcoin bond issuance, informally known as volcanic bonds.

The country that became the first to accept Bitcoin as legal tender last year, has since switched to using geothermal energy from volcanoes to mine BTC.

To that end, they are currently seeking long-term investment partnerships by issuing bonds directly tied to the mining operation — a move that has piqued commentators’ excitement about serious amounts of money. likely to flow into the ecosystem.

Although the exact date of the bond issuance, which is expected to attract $1 billion, is unknown, doubts are growing that it could arrive this week.

In addition to the benefits of using cash to invest in BTC, the long-term consequence of the El Salvador scheme, if successful, should be underestimated as a shift in the global economic paradigm, according to the former executive. Blockstream Strategy, Samson Mow.

In one interview with Saifedean Ammous on the Bitcoin Standard Podcast this weekend, Mow is as upbeat as anyone on the outlook.

“So if El Salvador pulls this bond, it shows the world that you don’t have to rely on the IMF or any Central Lending Institute where it’s not necessarily in your best interest. , but you can fund everything with Bitcoin guaranteed bonds,” he said.