It is stated that February for BTC failed to match last month’s gains and appears to be moving on thin ice. As Kriptokoin.com, we have compiled for you the developments that may be effective this week.
BTC price disappoints with weekly close
When it comes to analyzing BTC price action this week, it’s a tale of two Bitcoins. BTC/USD has managed to retain most of its extraordinary January gains, almost 40% overall. At the same time, signs of a turnaround are on the cards. Despite being relatively strong at just under $23,000, the weekly close failed to beat the previous one and meant a rejection at a key resistance level from mid-2022.
Popular trader and analyst Rekt Capital summed up the issue on Feb. 5 as ‘BTC is currently failing its ~$23400 retest’. The accompanying weekly chart highlighted the support and resistance zones in the game. “Significant BTC could Close Weekly above this level for a chance to the upside. “August 2022 shows that a failed retest shows that BTC could drop deeper into the blue-blue range,” he continued.
Traders are already betting on where a potential pullback could end and which levels could act as definitive support to further Bitcoin’s new-found bullish momentum. These are currently around $20,000, which is a psychologically significant figure and also where Bitcoin hit an all-time high in 2017.
‘Some bids have been filled (green box) in this last drop, but most of the remaining bids below have been withdrawn (red box),’ Trader Credible Crypto said on the order book activity on Feb. Meanwhile, for a quietly confident Il Capo of Crypto, it’s already a troubling time when it comes to trend reversal. The trader and social media expert, who was a supporter of new macro bottoms throughout the January gains, argued that a break below $22,500 would be a ‘bearish confirmation’.
Fed officials will speak as the eye of the market CPI
In the macro, the week looks absolutely calm compared to the start of February, with less data and more set of comments to describe mood. This comment will come with any hint of policy change by Fed officials, including Chairman Jerome Powell, in their own language to potentially changing markets.
Just the previous week, just such a phenomenon emerged, as Powell used the word ‘fall in inflation’ at least fifteen times during a speaking and question-and-answer session accompanying the Fed’s move to raise a 0.25% rate. seen. Ahead of new key data next week, analytics circles talk about how and when the Fed might move from a restrictive economic policy to a coherent one.
Not everyone believes the US will ‘soft landing’ when it comes to reducing inflation and instead experience a recession. While recession is not a suitable description for the US economy at the moment, Franzen acknowledged that conditions could worsen going forward, citing three such cases over the past years.
Closer to home, next week’s CPI release is already on the radar for many. The extent to which the January data support the narrative of declining inflation should be the key point. ‘We have a pile of tier 2 data releases, including post FOMC, key ISM services and NFP,’ trading firm QCP Capital wrote in forward-looking guidance sent to Telegram channel subscribers last week.
Miner ‘relief’ conflicts with BTC sales
Returning to Bitcoin, its network fundamentals currently offer some stability in a turbulent environment. The difficulty is stable at all-time highs, with only a modest estimate of negative realignment within six days, according to current estimates from BTC.com. This could turn out to be positive depending on Bitcoin price action, and a glance at hash rate data shows that miners are in fierce competition.
A counter-trend is emerging in the form of the economic behavior of miners. The latest data from on-chain analytics firm Glassnode shows that miners’ BTC sales continue to rise, with their reserves falling faster over 30-day periods. In contrast, reserves hit a one-month low on February 6, with miners’ balance of 1,822,605,594 BTC.
However, Philip Swift, co-founder of trading package Decentrader, generally said that the current price action has provided ‘relief’ for miners. In a tweet last week, Swift referred to the Puell Multiple, a measure of the relative value of mined BTC, leaving the ‘surrender zone’ to reflect better profitability.
“After 191 days in the capitulation zone, the Puell Multiple has recovered. It shows relief for miners with increased revenue and possibly reduced selling pressure.”
NVT suggests volatility will kick in
Some on-chain data is still bullish despite the slowdown in BTC price increases. Of interest this week is Bitcoin’s network-to-process (NVT) signal, which is currently at levels not seen in nearly two years.
The NVT signal measures the value of BTC transferred on-chain relative to the Bitcoin market value. It is an adaptation of the NVT rate indicator, but uses the 90-day moving average trading volume instead of raw data. NVT at perennial peaks can be a cause for concern. Network value is relatively high compared to transferred value, this scenario could be ‘unsustainable’ in the words of its creator, Willy Woo.
However, there are many nuances that cause NVT to separate its various incarnations to provide a complex picture of on-chain value at a given price.
“Bitcoin’s NVT shows signs of value normalization and the beginning of a new market regime,” Charles Edwards, CEO of crypto investment firm Capriole, said on Feb.
Tiny Bitcoin wallet shows ‘Trader optimism’
As a beacon of hope, on-chain research firm Santiment notes that the number of smaller Bitcoin wallets has increased this year. As BTC/USD once again crossed $20,000 on Jan. 13, 620,000 wallets with a maximum of 0.1 BTC resurfaced.
According to Santiment, this event marks the moment when ‘FOMO returns to the market’ meaning the subsequent growth in wallet numbers has reached the highest level since November 19, 2022.
“There are ~620,000 small Bitcoin addresses that have resurfaced on the network since the price regained $20,000 on Jan 13 when FOMO returned,” the Twitter comment said on Feb.
Meanwhile, a look at the Crypto Fear and Greed Index shows that ‘greed’ is still the primary definition of market sentiment. The index hit its ‘most greedy’ level since November 2021, when Bitcoin hit an all-time high on January 30.
Critical developments of the week
The developments that will take place this week are as follows:
- Monday, February 6, 21:00
- President of the European Central Bank to Give a Speech
- Tuesday, February 7 at 20:40 and 22:00
- Fed Chairman Powell and Fed/Barr to Speech
- Wednesday, February 8 at 17:45, 18:00 and 21:45
- Fed/Williams, Fed/Barr, and Fed/Waller to Speech
- AVAX and Amazon Blockchain Webinar to Take place
- Thursday, February 9
- US Unemployment Benefit Applications Will Be Submitted (194K If Expected 183K If Previous)
- Friday, February 10 13:00 and 20:30
- European Leaders’ Summit will take place
- Fed/Waller to Speech
- Saturday, February 11 00:00
- Fed/Harket Will Speech
- Sunday, February 12
- APT Unlock Will Take Place ($75.5 Million)
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