Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Bitcoin (BTC) begins the last week of March with a bang after returning to its yearly opening price above $46,000.

In a surprisingly strong upward move for a weekend, BTC/USD began surging upwards Saturday, continuing overnight to challenge its highs from the start of 2022.

Coming against an ongoing macro climate of considerable uncertainty, strength in Bitcoin is naturally being taken with a pinch of salt this month. The reaction is understandable given that previous attempts to break out of its multi-month trading range have all ended in failure.

Despite volatile periods, bulls were always left disappointed and Bitcoin subsequently not only reversed but often revisited the lower end of its range, costing both short and long positions dearly.

Nonetheless, the hope is that this time really will be different — analysts had long argued that only a breakout above the range ceiling, formed by the yearly open around $46,200, would be enough to cause a paradigm shift.

Now that this is in action on the charts, attention is focusing on the final hurdle — cementing these multi-month resistance levels as support.

With the process ongoing Monday, Cointelegraph takes a look at potential triggers that could make or break this important episode in Bitcoin price action.

Bitcoin wipes out the 2022 dip

“Gradually then suddenly” or pure chance? Traders are still trying to make sense of Bitcoin’s newfound strength this week.

It’s been a sight absent from the chart since the New Year — BTC/USD is back at $47,000. After jumping almost $3,000 in 24 hours, the largest cryptocurrency dealt a firm blow to resistance levels which had for months kept bulls firmly in their place.

The significance of $46,000 has been a hot topic for almost as long — a return to the yearly open, many said, would be the signal that Bitcoin was ready for bigger things once more.

Few would have thought that the phenomenon would play out “out of hours,” however, and suspicions over the rally’s real strength are naturally pervasive on social media as the week gets underway, just as they were as the rally itself began.

“Risk-on/Risk-off correlations to equities is a short term effect. BTC trades this correlation due to short term speculators,” Woo explained in a recent dedicated Twitter thread on the topic.

“Bitcoin’s internal demand fundamentals powered by its adoption curve is more powerful. Eventually the market decouples; the last time was Oct 2020.”

Should speculators have been ruling the roost so far this year, then a return of interest in Bitcoin futures could be a trigger to watch going forward. Open interest in Bitcoin futures is now at its highest since December, data from Coinglass shows.

Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Bitcoin futures open interest chart. Source: Coinglass

Who wants their money back?

There is another side to the $46,000 story, making it more than just a symbolic level from the New Year.

As noted by on-chain analytics firm Glassnode this weekend, the area around $45,900 is one with a giant amount of prior buyer activity.

Market entrants bought in on the way down from all-time highs, and have been underwater since thanks to it providing the ceiling for Bitcoin’s 2022 trading range.

A return, Glassnode warned, may ruin the mood as a rush for the exit from those buyers plays out.

“The next major on-chain resistance for Bitcoin is the Short-Term Holder Realized Price, trading at $45.9k. This metric is the average price paid for BTC by investors who purchased after the October ATH,” it explained Friday alongside a chart of its long- and short-term holder realized cap indicator.

“Bearish resistance comes from STHs seeking to ‘get their money back.’”

Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Bitcoin long- and short-term holder realized cap chart. Source: Glassnode/ Twitter

So far, short-term holders — defined as entities holding coins for 155 days or less — have not triggered a reversal of direction. The start of Wall Street trading, however, could still produce surprises.

Difficulty should see a new all-time high in days

Bitcoin’s network fundamentals are certainly determined not to disappoint this year.

The coming week will be no exception, as Bitcoin’s network difficulty climbs to new record highs of approximately 28.67 trillion.

The move will follow a month of losses, which as Cointelegraph reported accompanied the results of upheaval for miners operating in Kazakhstan.

Difficulty’s next automated readjustment, however, will not only cancel out those losses but add 4.4% to the existing tally, making difficulty greater than ever before.

Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Bitcoin difficulty 7-day average chart. Source: Blockchain

The implication of increasing difficulty is essentially that mining for block subsidies has never been more competitive, as evidenced by Bitcoin’s equally bullish hash rate data.

In turn, Bitcoin becomes more resistant to network attacks as an increasing miner presence dedicates more and more resources to competing for the same fixed reward — and thus protecting network participants in the process.

Last year’s 50% hash rate drop, sparked by a crackdown in China which was previously the world’s mining stronghold, now seems nothing more than a distant memory.

Some of them, however, remain clearly excited to see what happens next.

“The crypto markets on a steady uptrend while the supply shock kicks in. It will only take one bullish event to send this back to all-time highs,” JRNY Crypto argued Sunday.

“Watch how crazy things get when the sentiment goes from fear to greed while supply is limited.”

Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

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