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Buying pressure “in bull market territory” – 5 things to know about Bitcoin this week

Bitcoin (Bitcoin) starts the last week of March with a bang after returning to its annual opening price of over $46,000.

In a surprisingly strong bullish move for a weekend, BTC/USD started surging higher on Saturday and continued overnight to challenge its early 2022 highs.

With an ongoing macro climate of significant uncertainty, Bitcoin’s strength will naturally be taken with a pinch of salt this month. The reaction is understandable as previous attempts to break out of the multi-month trading range have all failed.

Despite volatile times, bulls were always leave disappointed and Bitcoin subsequently not only reversed, but often revisited the bottom of its range, costing both short and long positions dearly.

Still, there is hope that this time will be truly different – analysts had long argued that just a break above the range ceiling formed by the year’s open around $46,200 would be enough to trigger a paradigm shift.

Now that this is springing into action on the charts, attention is focused on the final hurdle – cementing these multi-month resistance levels as support.

As the process continues on Monday, Cointelegraph takes a look at potential triggers that could start or interrupt this important episode of Bitcoin price action.

Bitcoin Erases 2022 Plunge

“Gradually then suddenly” or pure coincidence? Traders are still trying to understand Bitcoin’s newfound strength this week.

It’s a sight that’s been off the chart since the New Year – BTC/USD is back at $47,000. After surging nearly $3,000 in 24 hours, the largest cryptocurrency dealt a hard blow to resistance levels that bulls had been holding firmly in place for months.

The meaning of $46,000 has been a hot topic for almost as long – a return to the annual Open, many saidwould be the signal that Bitcoin is ready for something bigger again.

Few would have guessed that the phenomenon would play out “out of hours” and suspicions about the true strength of the rally are of course pervasive on social media at the start of the week, just as they were at the start of the rally itself.

Nonetheless, even more cautious voices are no longer ruling out the potential for further upside, even as longer-term forecasts continue to turn down.

“The underlying buying pressure for Bitcoin has now moved into bull market territory,” says analyst and statistician Willy Woo reported.

Meanwhile, fellow analyst Matthew Hyland, a key proponent of the $46,000 argument, cited a target of $52,000 as the next long-term resistance wall to break.

In Twitter posts, he added that the move was preceded by a breakout in Bitcoin’s Relative Strength Index (RSI), even a classic signal of breakout trends.

RSI assesses how overbought or oversold an asset is at a given price, and in Bitcoin’s case, its score has been rising from a bottom since mid-January, data from Cointelegraph Markets Pro and trading view shows.

Further development of the RSI could therefore dictate the magnitude of the rally according to historical norms of behavior.

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

Analyst Sees Bitcoin Stocks Decoupling

It’s a confusing world out there, and when it comes to how Bitcoin should behave, the picture doesn’t get any easier.

Inflation, war in Europe and the lingering threat of the coronavirus returning – to name just three key macro triggers – have prompted commentators to predict 2022 will be doom and gloom for equities and risk assets.

Just this month, multiple sources warned that Bitcoin could soon face its Waterloo as a dramatic stock capitulation sparks another moment in March 2020.

The age of “easy money” that followed this event is over, and only continued quantitative easing would bring back the huge capital flows that Bitcoin enjoyed later that year, some argued.

Now, however, Bitcoin appears to be hitting itself, challenging an intense stock market correlation that, in the case of the S&P 500, hit a 17-month high last week.

While the S&P has shrugged off the fallout of the Russia-Ukraine war and plans for Fed tightening, analysis shows that selling has been substantial and shorting is everywhere – ironically the perfect fuel for a new short squeeze . ” up.

“Risk-on/risk-off correlations to stocks are a short-term effect. BTC trades this correlation due to short-term speculators,” Woo explained in a recent publication Twitter thread on the subject.

“Bitcoin’s internal demand fundamentals, driven by its adoption curve, are more powerful. Eventually the market decouples; the last time was October 2020.”

If speculators are in charge so far this year, a return of interest in bitcoin futures could be a trigger to watch going forward. Bitcoin futures open interest is now at its highest level since December, data from coin jar shows.

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Bitcoin futures open interest chart. Source: coin jar

Who wants their money back?

There is another side to the $46,000 story that makes it more than just a symbolic level of the New Year.

as written down by on-chain analytics firm Glassnode this weekend, the $45,900 area is one with a huge amount of previous buyer activity.

Market participants bought in on the way down from all-time highs and have since been underwater as it caps Bitcoin’s trading range for 2022.

A return, Glassnode warned, could ruin sentiment as a rush to exit these buyers unfolds.

“The next major on-chain resistance for Bitcoin is the Short-Term Holder Realized Price, which is trading at $45.9K. This metric is the average price investors paid for BTC that bought after the ATH in October,” she explained on Friday alongside a chart of the long-term and short-term holder realized cap indicator.

“Bearish resistance comes from STHs trying to ‘get their money back’.”

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Bitcoin Long and Short Term Holder Realized Cap Chart. Source: Glassnode/Twitter

So far, short-term holders — defined as entities holding coins for 155 days or less — have not triggered a directional reversal. However, the start of trading on Wall Street could still surprise.

The difficulty should reach a new all-time high in days

Bitcoin network fundamentals are certainly determined not to disappoint this year.

The coming week will be no exception as Bitcoin’s network difficulty surges to new record highs about 28.67 trillion.

The move follows a month of losses, according to Cointelegraph reported accompanied the consequences of the upheaval for the miners working in Kazakhstan.

However, the next automatic Difficulty rebalance will not only recoup these losses, but increase the existing balance sheet by 4.4%, making Difficulty bigger than ever.

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Bitcoin difficulty 7-day moving average chart. Source: Blockchain

Essentially, the implication of the increasing difficulty is that mining for block subsidies has never been more competitive, as evidenced by Bitcoin’s equally bullish hash rate data.

In turn, Bitcoin becomes more resilient to network attacks as an increasing miner presence devotes more and more resources to competing for the same fixed reward – thus protecting network participants in the process.

Last year’s 50% drop in hash rate, sparked by a crackdown in China, which was previously the world’s mining stronghold, now seems like a distant memory.

An attempt to ban support for proof-of-work cryptocurrencies in the European Union, meanwhile, failed to win the support of lawmakers a second time last week.

The hash rate provided by well-known mining pools was around 219 exahashes per second (EH/s), according to data from the monitoring resource. MiningPoolStatisticseven the highest level ever recorded.

Greed is back for the first time since $60,000

Bearish at bottom and bullish at resistance is a classic trait of market sentiment that plays out over and over again.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, ADA, AXS, LINK, FTT

However, for the first time in 2022, the Crypto Fear & Greed Index has revealed just how exuberant the average crypto investor is feeling.

For the first time since shortly after bitcoin’s recent all-time highs of $69,000 in November, the classic sentiment indicator has entered “greed” territory.

His transformation, like the mood itself this month, was impressive. Just a week ago, mood was measured as a normalized score of 22/100 — not just “anxiety,” but “extreme anxiety.”

Now it’s well on its way to showing the opposite, and as long-term investors know, sustained rallies are typically only accompanied by a gradual rise in sentiment.

However, some of them remain visibly excited about what happens next.

“Crypto markets are in a steady uptrend as the supply shock hits. It will only take one bullish event to send this back to all-time highs,” JRNY Crypto argued Sunday.

“Watch how crazy things get as the mood shifts from fear to greed while supply is limited.”

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Crypto Fear & Greed Index (Screenshot). Source: Alternative.me

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.