Bitcoin (BTC) begins 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, while the bulls still lack momentum.
The largest cryptocurrency saw what appeared to be the next phase of its 2023 recovery last week, posting rapid gains and even hitting new six-month highs.
However, the good times would not last and progress in February was much slower and more difficult than January’s 40% gain. How will the rest of the month go?
There will be a critical monthly close, along with a possible external price trigger in the form of minutes from the United States Federal Reserve.
Meanwhile, the Bitcoin network’s fundamentals will soar to a new all-time high, with miners in full recovery mode.
Cointelegraph takes a look at these factors and more in an overview of BTC price outlook for the last week of February.
RSI “bearish divergence” causes alarm
After a mostly quiet start to the weekend following days of reaction to macroeconomic data, Bitcoin woke up late on Sunday to climb back above $25,000.
This wouldn’t last long, however, and as Cointelegraph reported, signs on the exchange’s order books pointed to manipulative moves by large-scale traders.
A subsequent comedown after the weekly close took BTC/USD below $24,000 before returning to the same levels as Saturday, where the pair was still trading at the time of writing, according to data from Cointelegraph Markets Pro and TradingView.
There was a natural reason for traders to be wary.
“We don’t pay much attention to PA on weekends. BTC typically saves its meaningful moves for US trading hours,” Crypto Chase wrote in part of a Twitter digest.
Surveillance Source Material indicators initially signaled activity in the order book, but wondered how long the phenomenon could continue with bulls powerless to move up the ranks.
An extra graphic of the Binance order book confirmed that the big bid support, known as a “bid wall”, had dropped to $23,460, giving the spot price room to move lower.
Fellow trader and analyst Matthew Hyland admitted it was “really hard to say” whether Bitcoin could break higher in a short period of time.
Keeping the area around $22,800 in the event of a pullback, followed by the main breakout, “wouldn’t surprise me though,” he said. said on the day.
More concerned about the strength of the rally 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.
“Bitcoin bearish RSI divergence continues…Almost the exact opposite direction of the May-July 2021 period. I think any macro weakness could cause BTC to bounce back to $19-20,000 very quickly,” part of the comments mention.
Venturefounder was referring to the Relative Strength Index (RSI) metric, which measures how overbought or oversold an asset is at a given price. In 2021, the RSI surged against a BTC price correction, before ending at the current all-time high of $69,000 in November of that year.
All eyes on FOMC minutes and US dollar
What form that “weakness” will take in macro markets remains to be seen.
The week ahead features significantly fewer potential macro triggers than the previous one, with a sprinkling of US data releases including personal spending in the form of the Personal Consumption Expenditures Index (PCE).
However, the event on the radar of most crypto pundits is the release of the minutes of the February Federal Open Market Committee (FOMC) meeting at the Fed.
This was where the latest benchmark a rate hike was decided, with the expectation that Fed Chairman Jerome Powell also talked about a moratorium on rate hike policy, if only theoretically.
“We also have FOMC minutes to be released Wednesday where Powell will describe what a ‘pause’ from a rate hike could look like,” Crypto Chase said of the event.
“I’ll start considering swing submissions in the middle of next week.”
However, not everyone is convinced that the FOMC minutes will go smoothly. Among them is financial market research source Capital Hungry, which this week warned that “secretly aggressive revisions” could be revealed.
“Feds are creeping aggressive revisions out of the spotlight (no active FOMC) with the market already adjusted to CPI revisions and Jan’s report. PCE data contributes to heightened inflation sentiment argued in part of the Twitter comment.
Any return of inflationary trends would bolster the strength of the US dollar, which spent last week’s last macro trading day erasing past gains.
Matthew Dixon, founder and CEO of crypto rating platform Evai, outlined the bearish scenario for the US Dollar Index (DXY) in what would be a bullish tailwind for risky assets, including crypto.
Analyst: Moving average “cloud” is there to be broken
As Cointelegraph continues to report, Bitcoin bulls have a problem, which is increasingly apparent in short time frames: the 200-week moving average (WMA).
A classic “bear market” trendline, the 200WMA has acted as resistance since mid-2022, with BTC/USD spending more time below the level than ever before.
Reclaiming the level would be a standout achievement, but all attempts so far have been flatly rejected.
“If Bitcoin manages to move above the 200-week MA cloud, which is increasingly likely, we will see a lot more TradFi coverage of crypto again,” said Caleb Franzen, senior market analyst at Cubic Analytics, In summary on weekends.
Franzen also showed what levels are at stake in the near term, with a $25,200 ceiling to be broken.
The “cloud” he was referring to encompasses more than just the 200WMA – Bitcoin’s 50WMA currently stands at $24,462, coinciding with the current focus on the spot price.
In addition, questions in the exchange’s order books are stacked around 200WMA, increasing the challenge of turning it from resistance to support.
In research published Feb. 18, Franzen described the WMA cloud as one of “two key signals to add more bullish fuel to the fire” in addition to realized price.
“BTC was first rejected at this dynamic range in August 2022 and was briefly rejected at this level earlier this week. Will it be able to break above on this second attempt? he asked.
Hash rate, difficulty in line for new 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.
In the next automated adjustment, it will be difficult to add an estimated 10% to the current count. This will offset the modest drop from the previous adjustment to send difficulties to new all-time highs.
This is a crucial metric for gauging Bitcoin miner sentiment, as such significant increases indicate corresponding progress in the competition for block grants.
It comes on the back of increasing coverage of so-called “ordinals” fees, with miner profitability clearly recovering after months of pressure.
Data from on-chain analytics company Glassnode confirms this. Miners have started holding more BTC than they sell on rolling monthly timeframes, reversing a trend of net sales from mid-January.
Raw data from MiningPoolStats, meanwhile, shows that the Bitcoin network hash rate is also continuing its upward trend, staying at over 300 exahashes per second (EH/s).
“Unstoppable!” noticed economist and analyst Jan Wuestenfeld on the phenomenon as the 30-day moving average climbed to new all-time highs last week.
Joe Burnett, chief analyst at Blockware, described hash rate growth as “really relentless”.
“The 14-day moving average of total global hash rate is now at ~290 EH/s. Bitcoin miners scour the earth for cheap, wasted, excess energy,” he added alongside Glassnode figures.
Longtime Bitcoin market participants will remember the once-popular phrase “price follows hash rate” which states that a large enough hash rate uptrend has unavoidable bullish implications for BTC price action.
The most “greed” since Bitcoin’s all-time highs
$25,000 is a headache for reasons beyond solid resistance – breaking above it could be an unsustainable move for Bitcoin.
Related: Bitcoin’s bullish price action continues to reinforce rallies in FIL, OKB, VET and RPL
The latest findings from research firm Santiment suggest that crypto market sentiment is getting too greedy around those month-long highs.
“Bitcoin’s 8-month high yesterday came with a great deal of euphoria,” it reads noticed on a graph showing social media activity.
“Perhaps a little too much, because the positive comments on social platforms may have resulted in a local summit. Just as the negative commentary on February 13 probably contributed to the bottom.”
The phenomenon is also visible on altcoins, with Santiment highlighting Dogecoin (DOGE) as an important example this month.
“This pattern of social volume and very positive sentiment towards Dogecoin perfectly illustrates how euphoria creates price spikes. Regardless of your opinion on DOGE, the hype surrounding this asset in particular has historically foreshadowed market corrections closed.
The ever-popular Crypto Fear & Greed Index, meanwhile, shows “greed” as the predominant sentimental taste in crypto this week.
The push to the highs for Bitcoin coincided with the Index standing at 62/100, marking new highs since the November 2021 push to $69,000 on BTC/USD.
The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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