According to professional analysts, Bitcoin (BTC) is at a ‘critical juncture’ as it hovers around $40,000. Here are the factors that will make or break the crypto market in the coming weeks
What is happening in the crypto market?
Bitcoin has been on a long wait for months since 2022 started. The extreme volatility of 2021 seems to have evaporated to some extent. Investors seem unable to collectively decide whether prices have recovered enough to sustain the long-term uptrend or whether another sharp decline is needed to reset the market.
Wherever Bitcoin goes, the broader crypto-asset market tends to broadly follow. There are divergence spells and movements in other cryptocurrencies tend to be more dramatic, but the direction of travel is generally the same. For example, Bitcoin has dropped about 16% this year to hold around $40,000, while smaller, well-traded altcoins like Solana (SOL), Cardano (ADA) and Avalanche (AVAX) have lost 30-40% over that time.
Another interesting aspect of the situation is that crypto is now more positively correlated with traditional markets than in previous cycles, as we have covered in Cryptokoin.com news. Given the prospects for asset prices, it has become important to take into account how stocks are performing, especially in the tech sector. Since the start of this year, Bitcoin has gone completely out of step with the S&P 500. Last year, the two acted together half the time.
“Geopolitics is affecting crypto to an unprecedented degree”
As one of the ten largest crypto exchanges in the world by volume, analysis by the Huobi Research Institute identified some key factors driving the market and where the price goes from here. He tried to measure how far he could go. Lead researcher William Lee says:
The falling price of Bitcoin (BTC), currently below $40,000, makes one wonder if the cryptocurrency bull market that started in early March is really over. The market is at a critical juncture and this will determine the future price direction of Bitcoin.
From a macro perspective, according to William Lee, the currency that led to a surge in the price of BTC in March, as many citizens traded the Russian Ruble for BTC to mitigate the effects of the Ruble’s devaluation and US and EU sanctions. substitution effect.
“Bitcoin and cryptocurrency market is at a critical crossroads right now”
Stating that techniques for Bitcoin also paint a complex picture with the possibility of forming a ‘triple peak’ pattern, William Lee explains:
From a technical analysis point of view, it can be observed that BTC has experienced two peaks since starting its third bull run in the second half of 2020 and is currently positioned to turn into a third peak in line with the triple top.
However, the analyst says that this wave, often referred to as the B wave, was mainly caused by the Russia/Ukraine war. “This wave is often referred to as the last ‘escape wave’,” he said, so if the price continues to develop and form this third peak, the market will likely see a sharp decline after the price changes from wave B to wave C.
William Lee also points to the Relative Strength Index, which offers clues as to where things could go. Reminding that the general price of BTC is still increasing, despite the recent price drop, which shows that the market has not created an effective breakthrough to the bottom line, the analyst says:
The current RSI index is below 50, indicating a weak market. However, this figure has not yet fallen below 30. This means that the market is not yet in an oversold status. First of all, the cryptocurrency market is at a critical crossroads right now. If the price continues in the channel, wave B will continue; Otherwise, the market will fall even harder.
Whales’ Bitcoin sales are alarming, according to Marcus Sotiriou
, analyst at UK-based digital asset broker GlobalBlock, that crypto is currently in the US. states that it reacts to inflation readings. If that’s the case, it offers a much more structured and consistent way to measure conditions in crypto markets, more like the stock market. The analyst makes the following assessment:
Bitcoin and the S&P 500 fell after the US CPI data for March was released. Annual CPI increased by 8.5%, which is above the expected 8.4% and another record high CPI data in the last 40 years. This is what made the headlines and thus further fueled concerns about a recession looming this year. However, I think the CPI data is bullish.
But Sotiriou also identified some reasons to fear the current range could be broken down as ‘whales’ sell. “Although Bitcoin rose yesterday as it consolidated above $41,000, on-chain metrics show some cause for concern,” the analyst said, adding that data from Glassnode shows that the number of whale addresses has decreased significantly over the past week. The analyst points out:
During this period, at least four whales sold their Bitcoins. This may seem trivial, but each of these addresses has sold more than $400 million in Bitcoin. This is an important metric to look at, because whales typically have the power to control the direction of the market
However, Marcus Sotiriou is still optimistic for the crypto market in the short-term given the extreme fear and negative emotions have been reached.
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