‘Up Only’ BTC Basics – 5 Things to Watch in Bitcoin This Week

Bitcoin (BTCThe week begins with a slow decline towards the pivotal support at $40,000.

After the bulls had something to celebrate last week, the current environment looks like a fresh dose of reality as BTC battles nervous stock markets, a bullish US dollar and more.

The picture, as always, is mixed – while the spot price may not look impressive, under the hood, Bitcoin is stronger than ever and network participants are redoubling their long-term commitments.

Add to that a slow reversal of risky behavior in the derivatives markets, and the stage could be set for some sustainable price growth. Will it happen this week?

Cointelegraph presents five factors to consider in the coming days for BTC/USD.

Bitcoin Tests New 50-Day Moving Average Support

After ten days of recovery, Bitcoin is now calculating resistance levels that have been absent from the bulls’ radar since mid-January.

After topping out at $45,500 late last week, the weekend saw relatively calm conditions as the daily chart nonetheless saw a series of lower bottoms.

The weekly close, the subject of interest on Sunday as price action remained virtually identical to last weekend’s, ultimately disappointed – BTC/USD put a close just below $42,000.

However, the potential for a short-term upside move to “gap” CME futures contracts now comes in above the spot near $42,400.

“Bitcoin is still standing between support and resistance,” famous commentator Matthew Hyland said Summarization Monday, adding that he was “relaxed” in the face of current price movements.

With support and resistance levels approaching, trader and analyst Rekt Capital simultaneously reiterated BTC’s relative weakness when it comes to reclaiming broad support levels.

Previously, he had specified Two moving averages should be reconfirmed as support in order for Bitcoin to get to all-time highs from November.

Near the house, the 50-day moving average faces a challenge as the new week begins after a week of the above movement, data from Cointelegraph Markets Pro And TradingView offers.

BTC/USD 1-day candlestick chart (Bitstamp) with a 50-day moving average. Source: TradingView

DXY turbulent risky assets

A rally in the US dollar may not help the reversal of Bitcoin towards $ 40,000.

Since February 4, the US Dollar Currency Index (DXY) has been on the recoverycanceling the sharp downtrend that had characterized the previous week.

This traditionally portends troubles for risky assets, and as of Monday, DXY was once again trading above the 96 mark.

US Dollar Index (DXY) 1-day candlestick chart. Source: TradingView

For stocks, already uninspired by the prospect of a Fed rate hike in March, the geopolitical situation in Ukraine and Russia remains a stressful factor this week.

Meanwhile, analyst Lynn Alden said, “Over the course of the past century, there have only been four years in which both stocks and bonds have had a negative year.” pointed.

It’s obviously too early, but so far both stocks and bonds have delivered negative returns in 2022.”

Meanwhile, oil continued its journey to the $100 mark under the same tensions, with Brent crude futures exceeding $96 a barrel on Monday.

As Cointelegraph mentionedOil and Bitcoin remain a big pick this year.

The spot price begins to lead the futures contract

Amid the rally and a return to local highs, there has been interesting activity happening in the bitcoin derivatives markets.

As Twitter watchers including lead analyst Glassnode Checkmate have noted, open leverage is disappearing from the futures markets — and with it the risk of debt rollbacks or “liquidations.”

But this time, the reduction does not come from an overall change in price exiting the positions. Instead, investors themselves choose to change their strategy.

“Bitcoin futures leverage has dropped significantly this week, dropping from 2.0% market cap to 1.75%,” Checkmate chirp Sunday along with the chart showing no risk.

“However, this was not the liquidation series we all know and love. This is caused by traders choosing to close their positions, in much better health. I expect the spot to be the leader now.”

Open Leverage Ratio for Bitcoin Futures vs BTC/USD Annotated Chart. Source: Checkmate / Twitter

Regarding the relationship between spot prices and futures contracts, the Byzantine general commentator added that there is now a possibility to start trading futures contracts below, rather than above the spot price.

He added in his post overnight that the disparity between the basis of futures and spot contracts is “very significant”.

At the time of writing, futures contracts on the Chicago Mercantile Exchange are trading about $200 below the spot price at exactly $42,000.

Hash rate follows difficulty to an all-time high

It’s been a winning year in a row for Bitcoin network fundamentals so far, and this week is no exception.

Over the weekend, the hash rate charts — an estimate of the processing power dedicated to mining — rose to All-new heights.

While knowing the exact level of active hash power on the Bitcoin network is impossible, hash rate estimates have shown a clear upward trend since the middle of last year, and it took the ecosystem a few months to undo the impact of the forced migration of miners in China. .

Now, with the United States taking the lead in mining, it appears to be a race to the top for the participants.

It is easy to measure the difficulty of Bitcoin mining, which also fully recovered afterwards Diving To account for the decline in retail activity after China.

As of Monday, difficulty It stood at $26.69 trillionbut on top of that, the following automated mod will send it to a higher level – More than 27 trillion for the first time.

Modification will begin in about three days, representing an increase of approximately 2.2%.

Bitcoin difficulty chart. Source: Blockchain

stay on hodlin’

There is a well-established sense of conviction among bitcoin providers, and while this is public knowledge, the extent of their determination is more evident than ever.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, XRP, CRO, FTT, THETA

As noted by the popular Twitter account known as PlanC, portfolios believed to belong to long-term scammers are growing exponentially – and recent price action has only helped in that direction.

Citing Glassnode data, PlanC notes that these entities, defined as wallets with at least one significant incoming transaction and zero outgoing transactions, have now reached their highest level in nearly five years.

The last days of January seemed to be particularly attractive for those seeking a position as BTC/USD returned to $40,000 after a two-week absence.

The data excludes exchange addresses and those over seven years old to reduce the possibility that the target wallets will contain “lost” BTC that the owner can no longer access.