‘No more four-year cycles’ — 5 Bitcoin facts to know this week

This weekend, Bitcoin escapes another “Bart”-style price rise, but what is the market’s mood going forward? Consider the following five potential Bitcoin price themes.

Bitcoin (BTC) begins the new week on a little better footing as macroeconomic indicators strangely steady.

Following a more tranquil weekend than in recent weeks, BTC/USD managed to secure its best weekly close since February, allaying fears of a potential bout below $40,000 entering.

Rather than that, conditions are beginning to favour a more bullish outlook on shorter time frames, but nothing is definite – bulls must confront resistance and convert it to support, starting with levels just north of $42,000, a case of “so close yet so far” for the market this month.

However, signs that belief is reviving come from increased activity in stablecoin exchanges, and as a result, truly gloomy assessments of the future are now few and far between.

Stocks act as if they are unconcerned about conflict

While it may sound “insane,” markets pundit Holger Zschaepitz stated this weekend, it appears as though markets are forgetting about the ongoing Russia-Ukraine conflict after just one month.

What was the primary driver of volatility in recent weeks has become an increasingly ineffective market mover, he adds, as the shock of penalties has passed.

While the entire extent of its effects is unknown, the current geopolitical reality is becoming increasingly invisible on equity markets, which are now heading upward due to a focus on China’s policy reforms.

Chinese equities have taken a beating this year, headed by tech stocks, as a result of government pressure, but an apparent U-turn to bolster Beijing’s stability is already having the desired effect.

Where Asia leads, Europe and the United States have followed suit this week – markets are rising and, in the case of Europe’s Stoxx 600, have already wiped all war-related losses.

“Global stocks gained $5 trillion in market capitalization this week on the prospect of a Chinese stimulus wave and oversold stock prices,” Zschaepitz reported Monday.

“Investors ignored the ongoing conflict in Ukraine and rising interest rates. US 10-year rates have increased by 10 basis points to 2.15 percent. All stock is now valued at $112.4 trillion, or 133 percent of global GDP.”

If the good news continues, focus will shift back to Bitcoin’s association with stock markets, particularly those in the United States, as a possible explanation for price strength.

As trading platform Decentrader noted last week, the correlation paradigm has not yet been broken.

“Since the Russia-Ukraine war began, price behaviour has been in lockstep with traditional markets, with a high correlation observable throughout the period, proving that Bitcoin remains a risk-off asset in uncertain times,” analyst Filbfilb stated in a market analysis.

What would be required to end the spell? Investors may have to wait longer than a week to find out, but according to former BitMEX CEO Arthur Hayes, the market should break it.

“As you can see, Bitcoin is currently inextricably linked to large tech risk assets,” he said last week in a Medium post.

“If we believe that nominal interest rates will rise, precipitating a bear market in stocks and an economic crisis, Bitcoin will follow big tech into the latrine.” The only way to disrupt this association is for the narrative surrounding Bitcoin’s value to evolve. A raging bull market in gold against the backdrop of rising nominal rates and global stagflation will end this relationship.”

Which of the crosses will triumph?

Bitcoin ended the week with an incredible “engulfing candle” that pushed the weekly chart to a one-month high.

Despite last-minute attempts to knock the market lower, the largest cryptocurrency is on a solid footing as March progresses.

However, it is not as clear as it appears, and worried experts remain apprehensive about a probable episode of weakness.

Despite the robust closing, the weekly chart, for example, witnessed a so-called “death cross” last week, according to data from TradingView.

Typically formed when a shorter-timeframe moving average crosses beneath a longer-timeframe one — typically the 50-period beneath the 200-period, but in this case the 20-period beneath the 50-period — such chart occurrences tend to foreshadow impending weakness.

Regardless, shorter timeframes do include bullish signals.

As highlighted by prominent Twitter account BTCfuel, BTC/attack USD’s on the daily chart’s 100-period moving average is cause for optimism, as it resembles a pattern from way back in 2012.

“Bitcoin is now challenging the 100D MA (red) after going below the MA’s,” he noted with comparing charts.

“This is 33 bars following the bearish cross, which is quite similar to what happened in 2012. Following that, a bullish cross should occur.”

However, the “softly-softly” strategy is strongly recommended for markets that are still trading inside a range with clearly defined resistance levels, which should be firmly squashed before a genuine trend change is confirmed.

That was analyst Matthew Hyland’s assessment this weekend, with $42,600 the initial target for bulls.

Put an end to your wait for the blow-off top, an analyst advises

Public consensus maintains that Bitcoin has been trading in a sideways range not just this year, but for the entirety of last year.

With $29,000 and $69,000 as the range’s upper and lower boundaries, numerous well-known commentators assert that the price movement in between is simply consolidation.

Nonetheless, 15 months later, concerns are being raised about whether Bitcoin should be reevaluated in light of one of its most well-known characteristics: the four-year price cycle.

Based on the fact that the block subsidy is halved once every 210,000 blocks — roughly every four years — halvings have traditionally had a predictable effect on price performance.

For example, bull market tops have occurred one year after a halving, followed by negative corrections, before the trend gradually resumes.

This time has been markedly different, as the end of 2021 did not witness the same blow-off peak as in 2013 or 2017.

“We are probably witnessing the earliest manifestations of ‘The Last Cycle’ concept,” noted popular analyst and statistician Willy Woo this week.

“Three relatively brief bull and bear markets have already occurred since the 2019 bottom. That is, no more four-year cycles.”

Woo’s theory is on the blow-off top’s disintegration as a characteristic of each halving cycle. Rather than being a bearish trait, he asserts that as supply and demand factors intensify, market movement will simply become less predictable.

As a result, comparing BTC/USD to its most recent all-time high — and its potential to surpass it — may no longer be a reliable indicator of market strength or capability.

While this is akin to the so-called “supercycle” championed by Kraken’s growth lead Dan Held, not everyone feels that cycle-based price phases have ended.

“I’m not quite convinced. If we have a parabolic/blow off fifth wave, we can expect an equally aggressive plunge. However, we may anticipate higher lows and higher highs being added over time,” popular Twitter account Credible Crypto commented to Woo in October when he revealed the concept.

Bulls are enthused by rising tether activity

Consider the behind-the-scenes activity on stablecoins to determine the likelihood of a bullish continuation on crypto markets.

Interactions with US dollar stablecoins in particular, which account for the lion’s share of the market, are a leading sign of overall interest in crypto, and their trend is obviously increasing at the moment.

According to Santiment, two days last week saw more active Tether (USDT) addresses than at any point this year or last year.

“As Bitcoin oscillates around $41,000, Tether is hinting that significant crypto moves may be on the horizon,” it added.

“In terms of addresses engaging on the network, Thursday (83k) and Saturday (74k) were the two busiest days of 2022. Keep an eye out for this waning stagnancy.”

Tether, the largest USD stablecoin, now has a market capitalization of almost $83 billion.

Sentiment returns to normal after weeks of “severe terror”

This week, the crypto market sentiment is showing signs of improvement.

Following a new plunge into “severe fear” that lasted the majority of March, the Crypto Fear & Greed Index has returned to the “fear” zone.

At 31/100 on Sunday, the Index reached its highest level since March 4, indicating that the worst of investors’ macro-based cold feet has been relieved – at least temporarily.

By contrast, last week’s outlook was far bleaker, with research claiming that mood couldn’t have been any lower.

Meanwhile, the dedicated Fear & Greed Index Newsletter highlighted the ongoing battle between bulls and bears at present levels last week.

“The bears have constructed a fortress between $40,100 and $42,600,” it stated, indicating the necessity for bulls to reassert their position “incrementally” up to $42,600.

“This gap would annihilate the bears and destroy their soul. It is not an easy undertaking, but if the bulls are to reclaim their momentum, this must be accomplished,” the report concluded.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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