The new week begins in the shadows of a new geopolitical conflict. What are the major hurdles investors face?
Bitcoin is feeling the pressure in an environment that has been hard to recognize compared to just a few days ago.
Global markets are being affected by the situation in Ukraine. It is possible for developments to cause panic within minutes or hours.
Bitcoin’s timing is also a problem — investors are looking for safety, while fiat holders are looking for exits.
Cointelegraph, the dominant influence this week examines what Bitcoin might face in the near term in light of complex and surreal macro events.
Below are five topics that will interest Bitcoin investors this week.
Ukraine war dominates
It is obvious that this week’s main driver of market performance was the Russia-Ukraine war.
Even though the current situation was only created five days ago in its current form, it is still in flux. Sanctions keep coming, both sides continue to play down, and markets react to new threats or probabilities.
Russia’s economy is the most prominent. It is currently in turmoil and is expected to go into chaos on Monday. Stock trading was cancelled on Monday, and the outlook is grim for Russia’s currency, the ruble. It is currently trading at record lows.
Talks are set to start Monday. Any glimmering hope could lead to a shift in the short-term outlook, which could change the market’s face.
Uncertainty is a constant, but everyone will seek the ultimate safe haven. Bitcoin’s use — by ordinary Russians, Ukrainians, or their governments — has already been a hot topic.
Cointelegraph reported that Ukraine has already raised millions in crypto aid. Additionally, Mykhailo Fedorov (deputy president of Ukraine) called for the blocking of funds from Russian and Belarusian users on exchanges.
“Bitcoin’s like a knife for a surgeon or a weapon for a criminal,” Preston Pysh , podcast host, said over the weekend. He summarized the situation.
“Like all valuable technologies throughout history, their value comes down to the intent behind their use.”
Markets will be driven by changes in the ground and any knock-on effects for government.
Urals med crude (russian oil) vs brent pic.twitter.com/ePk6V7cSCu
— Zhu Su (@zhusu)
February 28, 2022
Oil, but not Russian oil, has been one of few beneficiaries of this war. Bitcoin, however, has managed to stay relatively stable — unlike gold which gained quickly and then lost all of its gains.
The correlation between Bitcoin and altcoins and traditional stock markets is. However, traders will find it difficult to trade in short time frames, regardless of how the war turns out.
Spot price action faces macro force majeure
Traditional markets are expected to be volatile on Mondays, making it difficult for anyone to predict how Bitcoin will perform in the shortest timeframes.
Bitcoin is still in a tight range despite the correlations. $40,000 is an obvious resistance zone for bulls.
However, any further dramatic movements could be a result major macro changes, and therefore may not be reliable long-term signals.
“Bitcoin is down about 4% on Sunday at 5:00 EST (Feb. 27),” Mike McGlone, chief commodity strategist, Bloomberg Intelligence, warned.
Popular Twitter account Decodejar noted that the current levels are the “point of control” for the past 15-months, with $38,000 seeing large volumes relative other price points within the current range.
“When it comes Bitcoin, the playing fields seem quite simple,” said Michael van de Poppe .
“Consolidation occurs after a bullish movement during the last week. If you want to see more momentum, the corrections should not be too deep. $38.1-38.2K must remain. We could then be moving to $44K.”
The United States markets are still closed at the time this article was written. This could change before Monday.
It may be helpful to compare March 2020 to that date. At that time, Bitcoin fell in line with global market prices, but then rebounded as an asymmetric wager that took hodlers on an unprecedented bull run for the next nine month.
Do you remember the March 2020 Bitcoin Crash. (-82% compared to 2017 high). It is unlikely that this will happen again, but it could happen if there is another macro shock. Psychologically, I prepare by visualizing myself completely ignoring the market while it repeatedly punches my face in the face. https://t.co/X8l699B4w1
— Tuur Demeester (@TuurDemeester)
February 27, 2022
Another month, another red candle
For Bitcoin market observers, Sunday’s closing did not go as planned.
Last-minute diving eliminated the chance of closing the week or the month above $38,500 and gave the history books the first four consecutive monthly red candles since 2018.
It’s already an unexpected turn of events, and last week’s events seem to be only making matters worse for Bitcoiners. They have yet to see cryptocurrency grow independently from traditional assets.
Analysts also have to be concerned about the monthly chart relative its 21-month exponentially moving average (EMA). This could cause problems and support may disappear if losses continue.
Breaking the 21 EMA has been a feature of Bitcoin’s macro bear trends. February avoided a repeat performance.
“Tomorrow’s Monthly Close will be critical. Analyst Kevin Svenson warns against charts showing this level if we close below $37,000 (purple21m/EMA).
Bitcoin previously failed to reclaim the two moving averages, which was used as a pretext to retake higher resistance levels at all-time highs in November. Analyst Rekt Capital said that the result could lead to a reversal of the range low at $28,000.
Positive news: Bitcoin’s 200-week moving mean, which is a benchmark few believe will be challenged for support, reached $20,000 this weekend.
Difficulty keeps the ship steady
Investors have every reason not to lose faith in the strength and stability of the Bitcoin network, despite the fact that they are turning their backs on geopolitics.
Despite uncertainty and price pressures, miners continue to mine, and the difficulty and hash rate have remained constant despite all of this.
This week could see some changes to the status quo. The hash rate remains steady, but difficulty will decrease for the first-time in 12 weeks. This is to account for the most recent changes.
While this is a “bad” phenomenon, the 1.25% drop is still quite manageable. It likely reflects changes in the participation of miners and not the beginning of a new trend.
According monitoring resource MiningPoolStats hash rate remains at over 200 exahashes per sec, which is a significant improvement from months ago, when Bitcoin reached its highest point.
has extensively covered the divergence between fundamentals and price over the past year.
Now, the question is whether price will follow the hashrate like in years past.
Sentiment predicts the worst
Bitcoin, true as its motto, doesn’t seem to have liked the emergence in Europe of a new armed conflict.
The potential roles of the largest cryptocurrency aside, it isn’t feeling any sentimental boost from recent events.
According to the Crypto Fear & Greed Index (a sentiment indicator that has received increasing attention since 2022), the market is becoming more nervous.
BTC/USD experienced a small drop overnight into Monday. However, that was enough to push the Index back into “extreme fear” territory, from 26/100 on Sunday, to 20/100 on Monday, its lowest level since February 22.
This is to give you an idea of what the local lows of January of $32,800 were like. It gave rise to a reading 11/100 for Fear & Greed. This level has been regarded as a macro low in recent years.
Commentators reacted and suggested that Monday’s price drop could be an indication that the TradFi market will see doom and gloom.
— jeroen blokland (@jsblokland)
February 27, 2022
The Fear & Greed Index was in the same “extreme fear” mode as crypto, but it recovered last week.