Feb 21, 2023
Bitcoin Price Volatility Continues as Bulls Struggle to Break Crucial Resistance
Bitcoin (BTC) is ending the last week of February in a volatile mood as a crucial area of resistance fails to break. After a classic “fakeout” during low-volume weekend trading, BTC/USD is back below $25,000, with bulls still lacking momentum.
The largest cryptocurrency saw what looked like the next stage of its 2023 recovery last week, making swift gains and even tapping new six-month highs. However, February’s progress has been much slower and hard won than January’s 40% gains, leaving investors wondering what the rest of the month will bring.
A critical monthly close is due, along with a potential external price trigger in the form of minutes from the United States Federal Reserve. At the same time, Bitcoin network fundamentals are due to leap to yet another all-time high, with miners in full recovery mode.
Cointelegraph takes a look at these factors and more in an overview of BTC price perspectives for the final week of February.
RSI “bearish divergence” causes alarm
After a mostly calm start to the weekend after days of macroeconomic data reactions, Bitcoin woke up late Sunday to rise back above $25,000. However, this was not to last, and as Cointelegraph reported, signs on exchange order books pointed to manipulative moves by large-volume traders.
A subsequent comedown after the weekly close took BTC/USD below $24,000 before a bounce back to the same levels as Saturday, where the pair still traded at the time of writing, according to data from Cointelegraph Markets Pro and TradingView.
For traders, there was natural cause to be wary. “Not paying much attention to weekend PA.. BTC typically saves its meaningful moves for US stock market hours,” Crypto Chase wrote in part of a Twitter summary. Monitoring resource Material Indicators initially flagged the order book activity, queried how long the phenomenon might continue with bulls powerless to make inroads higher.
An additional chart of the Binance order book confirmed that major bid support, known as a “bid wall,” had moved lower to $23,460, giving the spot price room to drift lower. Fellow trader and analyst Matthew Hyland admitted that it was “really hard to tell” whether Bitcoin could break higher on short timeframes.
More concerned about the rally’s strength was Venturefounder, a contributor to on-chain analytics platform CryptoQuant. In a Twitter thread, he warned that external factors such as “macro weakness” could have an immediate bearish impact on crypto markets. Venturefounder referenced the Relative Strength Index (RSI) metric, which measures how overbought or oversold an asset is at a given price point.
All eyes on FOMC minutes and U.S. dollar
What form that “weakness” on macro markets might take remains to be seen. The upcoming week holds considerably fewer potential macro triggers than the last, with a sprinkling of U.S. data releases, including personal spending in the form of the Personal Consumption Expenditures Index (PCE).
However, the event on most crypto pundits’ radar is the release of the minutes from February’s Federal Open Market Committee (FOMC) meeting at the Fed. This was where the latest benchmark interest rate hike was decided, with expectations that Fed Chair Jerome Powell included talk of a moratorium on rate hike policy, if only theoretically.
Any return of inflationary tendencies would boost U.S. dollar strength, which spent the last macro trading day of the previous week erasing prior gains. Analyst Matthew Dixon spelled out the bearish scenario for the U.S. Dollar Index (DXY) in what would be a bullish tailwind for risk assets, including crypto.
Hash rate, difficulty in line for fresh record highs
In a familiar silver lining, Bitcoin’s network fundamentals are keeping the bullish vibe firmly intact as the month draws to a close. The next automated readjustment will see difficulty adding an estimated 10% to its current tally. This will cancel out the previous readjustment’s modest decline to send difficulty to new all-time highs.
Data from on-chain analytics firm Glassnode bears this out. Miners have begun retaining more BTC than they sell on rolling monthly timeframes, reversing a trend of net sales in place from mid-January. Raw data from MiningPoolStats meanwhile shows Bitcoin network hash rate also preserving its upward trend, remaining at over 300 exahashes per second (EH/S).
Joe Burnett, head analyst at Blockware, described hash rate growth as “truly relentless.” “The 14 day moving average of total global hash rate now sits at ~ 290 EH/s. Bitcoin miners are scavenging the Earth for cheap, wasted, excess energy,” he added alongside Glassnode figures.
Longtime Bitcoin market participants will recall the once popular phrase, “price follows hash rate,” which postulates that a large enough hash rate uptrend has inevitable bullish implications for BTC price action.
Most “greed” since Bitcoin all-time highs
$25,000 is a headache for reasons beyond solid resistance — breaking above it could be an unsustainable move for Bitcoin. The latest findings from research firm Santiment suggest that crypto market sentiment becomes too greedy around those multimonth highs.
The ever-popular Crypto Fear & Greed Index meanwhile shows “greed” as the overriding sentiment flavor across crypto this week. The push to the highs for Bitcoin coincided with a reading of 62/100 for the Index, marking new highs since the November 2021 push to $69,000 on BTC/USD.
The key takeaway from the last week of February is that Bitcoin is still in a volatile state, unable to break through the crucial resistance level. The upcoming week holds a few potential triggers that could affect the price, including the release of the minutes from the Federal Open Market Committee meeting and the US Dollar Index. At the same time, Bitcoin network fundamentals are at an all-time high, with miners in full recovery mode. Finally, the market sentiment is at an all-time high, suggesting that
Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
