By the end of February, Bitcoin had slowed significantly, and most price estimates for the cryptocurrency had become less optimistic.
With BTC price action at a crossroads, traders are preparing for the February monthly closure. Will the highs hold?
The largest cryptocurrency, which is still above $50,000, has lost positive momentum in the last two weeks.
certain still hold out hope for an attack on higher levels, but when buyer pressure fails to quell certain parties’ desire to sell, reality seems to be catching up with sentiment.
The status quo will almost certainly be overturned in the next few days as important macroeconomic data from the US will mix with a traditional source of volatility – the monthly candle closure.
The macro environment is unstable in and of itself; the recent surprise in inflation has put doubt on the actions of the Federal Reserve going forward and on the likelihood that risk assets will see a reduction in the benchmark interest rate anytime soon.
With the second halving of Bitcoin approaching, the timing of this is particularly relevant considering its internal dynamics.
Examines these subjects and more in the weekly summary of important BTC price elements to take into account when analysing the market in the upcoming days.
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After the weekly close, the price of bitcoin stays within a small range, as it did for the most of February.
The most recent finish, at $51,700, came in about $450 lower than before, which gave bulls little cause for encouragement, according to data from TradingView.
The writing is already on the wall when it comes to trading material indicators.
It stated regarding one of its proprietary trading technologies in a post on X (previously Twitter) that there was a red W close for Bitcoin with a fresh Trend Precognition (down) signal.
“Until this new candle closes, the signal is tentative.” Although we do have some wild cards because Thursday’s U.S. Economic Data coincides with the Monthly Close, I do expect it to validate. I’m anticipating increased volatility as the M Close draws near.
Despite the sideways movement, some popular market experts are more optimistic. Social media commentator Bitcoin Munger is one of them.
A portion of his most recent X post says, “Market makers look like they now have their eye on $53k shorts.”
According to data sourced from CoinGlass, the BTC/USD exchange rate continued to rise by over 20% in February.
The U.S. jobs and spending data, which is recognised as the Fed’s favoured inflation indicator, are the main highlights of the week in macro markets.
Both arrive on February 29 and present risk assets with a potentially tumultuous month-end.
In January, market sentiment was influenced by employment trends, and the Fed’s policy regarding interest rate decisions is heavily reliant on the Personal Consumption Expenditures (PCE) Index.
The figures arrive at a challenging moment. Recent inflation data has exceeded forecasts, and the likelihood that the Fed will lower rates at its meeting in March has been significantly repriced by the markets.
March presently has just a 4% chance of seeing rates decrease, with May having a 25% possibility, according to data from CME Group’s FedWatch Tool.
Simultaneously, the S&P 500 is almost at all-time highs due to the extreme confidence surrounding US markets.
“This week is back to the Fed, last week was all about Nvidia,” a trade resource said. Part of an X post on the next week was written by The Kobeissi Letter.
“Will the trend of record highs last?”
Kobeissi brought up the tech company Nvidia’s exceptionally impressive earnings report from last week.
This week, network fundamentals are examining their own growth while the price movement of bitcoin cools.
According to the most recent projections from statistics website BTC.com, the difficulty of mining Bitcoin will go down during the next automated readjustment on February 29.
Similar to hash rate, difficulty has shown nearly vertical growth over the course of the last year, with retracements never lasting long before being replaced by new all-time highs.
Currently, the two prior adjustments were rises of 8.2% and 7.3%, respectively, and the upcoming drop is expected to be roughly 2%.
According to a widely accepted idea, Bitcoin miners would be keen to take advantage of the current supply constraints before the block subsidy halving in April, which will reduce the incentives earned for each newly mined block by 50% to 3.125 BTC.
Nevertheless, a distribution pattern among miners has been observed in 2024 that is in contrast with some higher volume investor classes, or “whales.”
The BTC balance of known miner wallets has dropped by 1.16% since peaking at 1,833,321 BTC on October 23, per data from on-chain analytics company Glassnode.
However, studies show that accumulation generally outpaces the rate of current new supply.
The amount of Bitcoin that is issued each month is currently 27,000, however in April there will be a halving event that will reduce this amount to 13,500 BTC per month.
Intriguingly, nearly four times as much Bitcoin is being accumulated as is being issued across all cohorts, according to research and data analyst James Van Straten of the crypto analytics company CryptoSlate, who reported this last week.
“Delving further into particular cohort behaviour, ‘Whales,’ or individuals with between 1,000 and 10,000 Bitcoins, are winning the accumulation race by amassing almost 236,000 BTC in a 30-day period. In the meantime, throughout the previous month, “Super Whales,” or individuals with at least 10,000 Bitcoin, have been seen dispersing roughly 50,000 Bitcoin.
At the start of major uptrends, bitcoin halvings typically present investors with a “final bargain-buying opportunity,” according to well-known trader and analyst Rekt Capital.
Rekt Capital examined BTC price retracements around the 2020 and 2016 halving events in one of his most recent YouTube Shorts.
Prior to the halving, the first of them achieved 40% of the local top; 2020, however, accomplished a 19% correction.
He clarified, “But let’s say the pre-halving top is coming quite soon.”
“We would get into $42,000 with a 19% retrace, which is basically mimicking a 2020 retrace around the halving event. That’s about the top of that reaccumulation range that we just broke out from.”
A deeper decline was also suggested in the video, with $37,000 and $31,000 listed as important floor levels in light of past halves patterns.
A contributor to the on-chain analytics site CryptoQuant, Venturefounder, is also considering the prospect of a significant decline in the price of Bitcoin.
The 50-day moving average serves as a historical reference point for him.
He said on X that “there had been a correction every time BTC is over 12% above its 50-day moving average since Bitcoin’s cycle bottom in 2023.”
“Each correction ended eight to eleven percent below its fifty-dMA.”
The 50-day trendline is presently at $45,700, which Venturefounder noted represents the dollar-cost average (DCA) price for investors in the recently established spot Bitcoin exchange-traded funds (ETFs).
However, he conceded that the trendline is rising and drawing nearer to the spot price, suggesting that it may become less significant if the market keeps going in a sideways direction.
Another reason to think that a decline in the price of bitcoin may be imminent is the presence of short-term holders, or STHs.
On February 25, contributor to CryptoQuant, CryptoOnChain, cautioned against possible profit-taking in one of its Quicktake market reports.
According to CryptoOnChain’s analysis of the Short-Term Holders' Spent Output Profit Ratio (SOPR) indicator, the timing may soon be favourable for speculators to distribute to the market.
STH-SOPR calculates the profit margin against purchase price for STHs, or investors who hold bitcoin for 155 days or less. Price retracements for bitcoin have occurred at the same time as the metric’s 30-day moving average value reached local highs.
Bitcoin “is approaching the selling area of short-term investors,” claims CryptoOnChain.
The Quicktake verified, “Looking at the technical chart also confirms this issue.”
On the technical chart, Bitcoin is located in the region beneath the resistance. It appears like Bitcoin might fall to about $48,000.
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