As Bitcoin bulls anticipate for a journey above $50,000 this week, the annual open remains in focus as support.
Bitcoin (BTC) begins a new week and a new quarter at slightly over $46,000, as if it were a new year.
BTC/USD is almost at the same level it was on January 1, 2022, which may look like a terrible déjà vu for hodlers.
Price activity has been calm — maybe too quiet — in recent days, but there are indicators that the market is busily determining its future course behind the lowering volatility.
From macro to on-chain, there are a plethora of indicators to keep an eye on in April, despite Bitcoin keeping its annual open price as support – at least for the time being.
Cointelegraph examines five of these aspects in relation to BTC price performance in the next week.
Inflation collides with new money printing.
There has been significant discussion about the conclusion of the post-COVID “easy money” period and the implications for risk assets such as Bitcoin.
As the Federal Reserve of the United States commits to decrease its record-high balance sheet while continuing to raise key interest rates, analysts have warned of a potential tsunami in crypto investment.
So yet, though, there is no evidence of a major change in the works, while in Asia this week, it seems to be the reverse.
The Bank of Japan (BoJ), as noted by market observer Holger Zschaepitz, has contributed to its balance sheet, printing even more liquidity.
The Bank of Japan already had the highest balance sheet relative to GDP, and that trend is continuing, with the balance sheet currently accounting for 136 percent of GDP.
This, according to Zschaepitz, is not just a surprise, but also “the largest monetary experiment in history.”
“By contrast, the ECB and the Fed seem to be amateurs,” he claimed.
If more printing equals more good times for risk assets, not everyone believes the much-touted balance-sheet reductions will endure. They argue that central banks will soon be forced to resume liquidity injections.
“There has never been a government that has refused to create money in order to pay its debts and appease its constituents.” The government will never become bankrupt on its own will. This is self-evident. “I dare you to provide proof to refute me,” Arthur Hayes, ex-CEO of derivatives behemoth BitMEX, said in a March blog post.
“As a result, if your time horizon is in years, it’s time.” You get the horns if you tamper with the bull. Remember, it’s not the price of gold or Bitcoin that’s rising; it’s the value of the fiat currency in which they’re priced.”
The opposing perspective, as foreshadowed by last week’s yield curve inversion, puts rate increases against the now-high probability of a U.S. recession — a combination that should put pressure on Bitcoin and equities alike.
Spot bulls are aiming for $50,000.
As April 4 approaches, the absence of volatility is the major topic of discussion among Bitcoin traders and experts.
Data from Futureassets Markets Pro and TradingView reveal that some traditional but fleeting enthusiasm around the weekly close evaporated within hours, with bears still unable to take the annual open away as support.
With that, BTC/USD is precisely where it was three months ago, but short-term price signs are already pointing to a continued upward.
Among them is well-known analyst TechDev, who pointed out Bitcoin’s first “volatility squeeze” since January on the 12-hour chart.
TechDev employed indicators such as the Bollinger Bands volatility measure, which has resulted in BTC/USD surfing the channel’s midsection with a bias to the upside.
As Cointelegraph previously revealed, the odds are already stacked in favor of a $50,000 assault, which would be Bitcoin’s first of the year.
Meanwhile, April has a lot to live up to, since this month has traditionally been “excellent” for Bitcoin.
In March, buyers push cryptocurrencies off of exchanges.
It’s no news that a lot of Bitcoin has been leaving exchanges this year, but new data reveals how the supply crunch is manifesting itself.
According to Glassnode, an on-chain analytics service, last month experienced exchange outflows unlike many others – exchangers are down by the equivalent of over 100,000 BTC.
Historically, there have only been two times in Bitcoin’s history when outflows have exceeded 100,000 BTC, making March’s one of the largest.
“Aggregate exchange outflows of this scale have only been observed a couple of times in history, with the majority occurring after the March 2020 liquidity crisis,” Glassnode wrote in Twitter comments beside an annotated graphic.
If investors revert to bottom-buying behavior after the COVID-19 disaster, the ramifications should be obvious, but may take some time to play out. While BTC/USD recovered after plummeting 60% in a matter of days in 2020, it wasn’t until Q4 that price performance truly started to alter.
Meanwhile, according to CryptoQuant, which measures the balances of 21 major exchanges, total BTC stockpiles are currently at their lowest since August 1, 2018, at 2.303 million BTC.
In March, a meandering fall in 2022 gained traction, with 77,000 BTC removed to private wallets.
Forget about the other season.
When it comes to Bitcoin’s interaction with altcoins, an uncommon incident has happened. For the first time in over a year, combined open interest and volume on altcoin futures markets have topped those of Bitcoin.
The change was spotted by the crypto analytics firm Coinalyze, which publicly speculated that the legendary “altseason” has arrived.
“Could be altseason, money is flowing into alts right now,” creator Gabriel Dodan told Cointelegraph in private.
This viewpoint is consistent with statistics showing significant inflows into cryptocurrencies last week, which one observer suggested indicated increased risk appetite among investors.
Taking the spotlight away from BTC may not be a detriment to performance per se, according to Dodan, since volatility is also draining away.
“On the other side, since it is not excessively leveraged, it makes BTC very steady; it’s a nice floor for BTC,” he stated.
The hash rate has reached an all-time high.
Following the Bitcoin network’s record difficulty, hash rate reached new all-time highs.
While the hash rate is merely an estimate of the processing power allocated by miners, it has never been greater. Proponents believe that Bitcoin will continue to expand despite of external efforts to “reign in.”
“Bitcoin mining is very much the most anti-fragile machine devised by man,” asserted Francis Pouliot, CEO of payment processor Bull Bitcoin, in a well-known blog post last year on Bitcoin hash rate and energy usage.
“Any Bitcoin assault is sure to make Bitcoin stronger, which means a higher price, a greater hashrate, and a larger energy usage.”
The question of Bitcoin vs energy remains very contentious, with some well-known experts attempting to explain what they regard as a logical mistake – that Bitcoin requires “too much.” They argue that Bitcoin does not waste energy, but rather changes it into something more valuable as the most sound money ever produced.
Regardless of the story, the hash rate continues to rise, reinforcing the fundamentally positive foundation for investing in Bitcoin.