US crypto order approaching – 5 things to see in Bitcoin this week
Bitcoin (BTC) starts a new week with a bang – but not in the right direction for bulls.
A promising weekend nevertheless led BTC / USD to attract warnings about false price movements outside opening hours, and these finally showed up in time when the weekly closing sent the pair down over 1000 dollars.
With $ 37,900, even that industry was not enough to satisfy analysts’ demands, and the all-too-familiar distance-bound behavior Bitcoin has shown throughout January continues thus.
The question for many is therefore what will change the status quo.
In the midst of a lack of real recovery of the spot market despite solid data in the chain, there may be an external trigger that ends up being responsible for a quake. The US executive order on cryptocurrency regulation comes at a time in February, for example, while the exact time is unknown.
The Federal Reserve is a further area of interest for analysts, as any signs of inflation, interest rate hikes or a slowdown in asset purchases could significantly affect traditional markets, with which Bitcoin and altcoins are still closely correlated.
With frustrating times marking the first month of 2022, Cointelegraph is taking a look at the state of the market this week.
We have identified five things that are worth considering when preparing Bitcoin̵[ads1]7;s next move.
Bears “hammer” down on BTC weekly close
Even the meager gains until the weekly close were a short-lived reason to celebrate for Bitcoin bulls this Sunday.
Midnight UTC saw an instant bounce light sweep in, with the BTC / USD dive to $ 36,650 on Bitstamp.
As noted by trader, analyst and podcast host Scott Melker, the move was accompanied by strong volume, underscoring the unreliable nature of weekend price action when it comes to building a position.
As several other sources said last week, Melker reiterated that $ 39,600 must be recovered for a more bullish outlook.
$ BTC Weekly
Nice hammer light (or high wave spin, select).
Strong volume, long week into demand.
Not really bullish until> $ 39,600.
Have not had consecutive green weeks for months, need confirmation. 2 weeks ago was a “bullish candle” too, did not work. pic.twitter.com/HlI8XI6RO2
– The Wolf Of All Streets (@scottmelker) January 31, 2022
Equally uninspired by the weekly light was trader and analyst Rekt Capital, as in a fresh Twitter update said the BTC “continues to struggle with resistance at $ 38,500.”
“This is the area that BTC needs to illuminate weekly above to secure upside over ~ $ 39,000,” he added.
With a disappointing performance behind it, Bitcoin is thus back in the same old area – one that some warn can result in a retest of lower levels.
“Personally looking forward to any opponents putting together if we trade this 29-40k series for too long,” the popular trader Pentoshi confirmed.
The trip to peaks around $ 38,600 has meanwhile succeeded in raising previously negative financing rates on derivatives as sentiment quickly changed from expecting further downside to expecting a bullish continuation.
However, the reversal sent financing rates back to negative territory, with most just under neutral at the time of writing.
Can the S&P 500 turn around the worst month since March 2020?
While Bitcoin’s monthly closing is not yet intended to bring any surprises, the stock markets can still provide some relief at the last minute.
With futures up pre-session on Monday, the S&P 500, which Bitcoin has shown increasing positive correlation with in recent months, is heading for its worst monthly performance since March 2020.
S&P is down 7% this month, reflecting the nervous start to the year for Bitcoin, as Fed policies begin to bite enthusiasm that followed the unparalleled liquidity supply at the start of the coronavirus pandemic.
While the Fed is now tight-lipped about the rate hike schedule that should follow the closure of the “easy money” tap, closer to home, another problem for Bitcoiners is on the horizon.
The Biden administration’s forthcoming executive order on crypto, apparently moved until February, may once again put the cat among the pigeons when it comes to already expressed feelings.
The ghost of the Infrastructure Bill remains for many a market participant, and further unfavorable treatment of the crypto phenomenon would be seriously unwelcome from a country that now hosts the bulk of the Bitcoin mining hash rate.
According to a report from Bloomberg last week, the order will focus on the “risks and opportunities” crypto provides.
The plans have already seen “several meetings” with officials, with a view to seemingly uniting the government’s regulatory approaches to the cryptosphere.
Old hands age well
Behind the scenes, the more comforting trend continues with experienced Bitcoin holders clinging to their assets.
Data from analysis company in the chain Glassnode this week confirms that the number of coins last moved between five and seven years ago has reached a record high.
This cohort of coins now amounts to a total of 716,727 BTC.
At the same time, January actually saw a general decline in Bitcoin foreign exchange reserves despite exchange rate losses. According to Glassnode datamajor stock markets are down around $ 243 million this week alone.
Cointelegraph previously reported on the ongoing depletion of the stock exchange’s BTC holdings.
Separate figures from CryptoQuant, which tracks 21 major trading platforms, further confirm that balances are at their lowest since 2018.
GBTC dives to register 30% discount
Things are not going so well for the Grayscale Bitcoin Trust (GBTC).
Despite data showing the resurgence of institutional interest in Bitcoin in January, demand for the industry’s flagship BTC investment product continues to decline.
According to data from the analysis company Coinglass in the chain, GBTC was traded with its biggest discount ever compared to the spot price of Bitcoin last week.
This discount to net asset value (NAV) – the fund’s BTC portfolio – used to be a premium investors paid for exposure, but now the tables have long been reversed.
On January 22, new entrants were technically able to buy GBTC shares at almost 30% below the spot price on the day.
As Cointelegraph reported, GBTC has faced a rapidly changing environment in recent months, thanks to a combination of price action and the launch of exchange traded funds (ETFs). GBTC itself will be a spot-based ETF – but only with US government approval.
Clarifying the situation, chain analyst Jan Wuestenfeld said that despite the rebate, GBTC did not necessarily represent a way for institutional investors to make “easy money” in the long run.
“Yes, if you think it will be converted to a spot ETF at some point, but it is also the fees you have to consider and also that you do not really have the keys,” he said as part of a Twitter debate in the weekend.
Not so scared though?
Reliable or not, something is happening with Bitcoin on the chain sentiment this week.
Related: Top 5 cryptocurrencies to watch this week: BTC, LINK, HNT, FLOW, ONE
After spending almost all of January in the depths of “extreme fear”, accompanied by a reunion with rare downturns seen only a handful of times, the Crypto Fear & Greed Index finally looks up.
On Sunday, the index went out of the “extreme fear” zone – a reading between 0 and 25 – for the first time since 3 January.
Fear & Greed uses a basket of factors to determine the overall market sentiment, and the range of ups and downs has accurately depicted extreme prices.
That a more positive mood can finally come in is a welcome signal for analysts, but that always depends on whether such an upturn is sustainable and remains uninterrupted by external surprises.
The party turned out to be fleeting, as the weekly near-hammer light sent readings back to “extreme fear.”
Nevertheless, with a short run to 29 – “fear” – the index thus avoided questionable honor spends the longest time ever in the “extreme fear” zone since it was created in 2018.
However, the volatile character of the sentiment in general was not lost on veteran trader Peter Brandt, who this weekend wondered how perspectives have changed since the price correction began.
I find it fascinating that many (not all) on social media who used laser eyes in March / April and predicted a rocket shot for $ BTC in November now predicts that the $ 30k level will be broken
When bulls use laser eyes – time to sell
When bulls become bears – time to BUY ???? pic.twitter.com/ytchaFLDfN– Peter Brandt (@PeterLBrandt) January 30, 2022
With the highlights of November as the focal point, Brandt described the last half of 2021 as the “Laser Greed era”.
