‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

Diagram Bitcoin

‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

Can 2022 still turn out to be a bull year? Not many believe so, but short-term volatility should pass nonetheless, analysts say this week.

‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

Bitcoin (BTC) starts a new week in a strange place — one that is eerily similar to where it was this time last year.

After what various sources have described as an entire 12 months of “consolidation,” BTC/USD is around $42,000 — almost exactly where it was in week two of January 2021.

The ups and downs in between have been significant, but essentially, Bitcoin remains in the midst of a now-familiar range.

The outlook varies depending on the perspective — some believe that new all-time highs are more than possible this year, while others are calling for many more consolidatory months.

With crypto sentiment at some of its lowest levels in history, Cointelegraph takes a look at what could change the status quo on shorter timeframes in the coming days.

Will $40,700 hold?

Bitcoin saw a trying weekend as the latest in a series of abrupt downward moves saw $40,000 support inch closer.

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $40,700 on major exchanges before bouncing, a correction that has since held.

Ironically, it was that very level that was in focus on the same day in 2021, which nonetheless came during what turned out to be the more vertical phase of Bitcoin’s recent bull run.

Last September also returned the focus to $40,700, which acted as a turning point after several weeks of correction, and ultimately saw BTC/USD climb to $69,000 all-time highs.

Now, however, the chances of a breakdown to the $30,000 zone are unreservedly higher among analysts.

“Weekly Close is just around the corner,” Rekt Capital summarized alongside a chart with target levels.

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

RSI hits two-year lows

Amid the gloom, not everything is pointing to a protracted bearish phase for Bitcoin specifically.

As Cointelegraph has been reporting, on-chain indicators are calling for upside in droves — and historical context serves to support those demands.

This week, it’s Bitcoin’s relative strength index (RSI) that continues to headline, reaching its lowest levels in two years.

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

Plumbing the depths at $42,000 suggests that such a level really is considered too extreme by the market, and a rebound should occur to balance it.

By contrast, last January, RSI was sky-high and, conversely, well within “overbought” territory, while BTC/USD traded at the same price.

“The Bitcoin RSI is on the lowest point in 2 years on the daily. March 2020 & May 2021 were the last ones. And people flip bearish here / want to short,” a hopeful Cointelegraph contributor Michaël van de Poppe commented.

‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

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

Cointelegraph noted similarly bullish hints on the monthly RSI chart last week.

Hash rate recoups Kazakhstan losses

Another blip from last week already “curing itself” comes from the realm of Bitcoin fundamentals.

After hitting new all-time highs throughout recent weeks, Bitcoin’s network hash rate took a hit when turbulence in Kazakhstan compromised internet availability.

Kazakhstan, home to around 18% of Bitcoin’s hash rate, has since stabilized, allowing the hash rate to mostly return to prior levels of 192 exahashes per second (EH/s).

At one point down to 171 EH/s, responses to what may have reminded some of last May’s China mining ban appear to have lifted the hash rate and preserved record-breaking miner participation.

Bitcoin’s network difficulty, despite the upheaval, still managed to put in a modest increase this weekend and is currently on track to do so again at its next automated readjustment in just under two weeks.

Live Bitcoin hash rate chart screenshot. Source: MiningPoolStats

“Going up forever,” on-chain analyst Dylan LeClair commented about the classic mantra: “price follows hash rate.”

For context, China’s mining rout caused the hash rate to decline by 50%. It took around six months to recoup the losses.

“What if…?”

Someone who has long been saying that it’s high time for a Bitcoin trend reversal is quant analyst PlanB, creator of the stock-to-flow-based BTC price models.

Currently weathering a test of his creations — and the accompanying storm of social media criticism — PlanB nonetheless remains more optimistic than most when it comes to mid-to-long-term price action.

“I know some people have lost faith in this bitcoin bull market,” he acknowledged this weekend.

A separate model, the floor model, which demanded $135,000 per Bitcoin by the end of December, has now been discarded after failing to hit its target for the first time ever in November.

Rate article
( No ratings yet )