Bitcoin (BTC) enters the last week of February in a volatile mood as it fails to break a key resistance area.
After a classic “fakeout” during low-volume weekend trading, BTC/USD is back below $25,000 with bulls still lacking momentum.
The largest cryptocurrency saw what looked like the next phase of its recovery in 2023 last week, making quick gains and even hitting fresh six-month highs.
The good times weren’t to last, however, and February’s progress was much slower and harder-fought than January’s 40% gains. How will the rest of the month go?
A critical monthly close is due, along with a potential external price trigger in the form of Federal Reserve minutes.
Meanwhile, Bitcoin network fundamentals are likely to jump to another all-time high, with miners in full recovery mode.
Cointelegraph takes a look at these factors and more in an overview of the BTC price outlook for the last week of February.
The RSI’s “bearish divergence” is triggering an alarm
After a largely quiet start to the weekend after days of macro data reactions, Bitcoin woke up late Sunday to revisit above $25,000.
This was not to last, however, and as Cointelegraph reported, signs in stock order books pointed to manipulative moves by wholesalers.
A subsequent drop after the weekly close took BTC/USD below $24,000 before returning to the same levels seen on Saturday, where the pair was still trading at the time of writing, according to data from Cointelegraph Markets Pro and TradingView.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
There was a natural reason for traders to be cautious.
“The weekend PA doesn’t get much attention wrote Part of a Twitter summary.
Monitoring resource material indicators first showed order book activity and asked how long the phenomenon could last if bulls are unable to make higher advances.
An additional diagram of the Binance order book confirmed that key bid support, known as the ‘bid wall’, had fallen to $23,460, giving the spot price room to drift lower.
BTC/USD order book data (Binance). Source: Material Indicators/ Twitter
Colleague and analyst Matthew Hyland admitted that it’s “really hard to tell” whether Bitcoin could break out higher in short timeframes.
However, holding the $22,800 area in the event of a pullback followed by a key breakout “wouldn’t surprise me,” he said called on that day.
Annotated BTC/USD chart. Source: Matthew Hyland/Twitter
More concerned about the strength of the rally was Venturefounder, a contributor to on-chain analytics platform CryptoQuant.
In a Twitter thread, he warned that external factors such as “macro weakness” could have an immediate bearish impact on crypto markets.
“Bitcoin bearish RSI divergence continues… Almost exactly opposite of May-July 2021 period. I think any macro weakness can see BTC bounce back to $19k-$20k very quickly,” is some of the comments specified.
Venturefounder pointed to the Relative Strength Index (RSI) metric, which measures how overbought or oversold an asset is at a given price. In 2021, the RSI rose against a BTC price correction and ended in November of the same year at a recent all-time high of $69,000.
All eyes on FOMC minutes and US dollar
What form this “weakness” might take in the macro markets remains to be seen.
The coming week holds significantly fewer potential macro triggers than last, with a slew of US data releases including personal spending in the form of the Personal Consumption Expenditure Index (PCE).
However, the event on the radar of most crypto pundits is the release of minutes from the February Federal Open Market Committee (FOMC) meeting at the Fed.
Here was the latest benchmark A rate hike was approved, with the expectation that Fed Chair Jerome Powell would refrain from talk of a moratorium on rate hikes, albeit in theory.
“We also have FOMC minutes that will be released on Wednesday where Powell will describe what a hike pause might look like,” Crypto Chase said of the event.
“In the middle of next week I’ll start thinking about swing entries.”
However, not everyone is convinced that the FOMC protocol will be easy. Among them is financial market research resource Capital Hungry, which this week warned that “sneaky hawk revisions” could be uncovered.
“Feds smuggle hawkish revisions out of the spotlight (no active FOMC) with market already adjusted to CPI revisions and Jan report. PCE data contributes to heightened inflationary sentiment,” it said argued in part of the Twitter comment.
US Dollar Index (DXY) 1 hour candlestick chart. Source: TradingView
Any return of inflationary tendencies would boost US dollar strength, which spent the previous week’s final macro trading day erasing earlier gains.
Matthew Dixon, founder and CEO of crypto ratings platform Evai, outlined the bearish scenario for the US Dollar Index (DXY) in a bullish tailwind for risky assets, including crypto.
Analyst: The moving average “cloud” is there to be broken
As Cointelegraph continues to report, bitcoin bulls have a problem that is becoming increasingly apparent over short timeframes — the 200-week moving average (WMA).
A classic “bear market” trendline, the 200WMA has been acting as resistance since mid-2022, with BTC/USD spending more time than ever below the level.
Reclaiming the level would be a striking achievement, but all attempts so far have met with flat rejection.
“If Bitcoin manages to break the 200-week MA cloud, which is becoming increasingly likely, we will see a lot more TradFi coverage of crypto again,” said Caleb Franzen, senior market analyst at Cubic Analytics. summarized on the weekend.
Franzen also showed the near-term levels at stake, with $25,200 being the ceiling that required a breakout.
The “cloud” he was referring to encompasses more than just the 200WMA — Bitcoin’s 50WMA currently sits at $24,462, which coincides with the current spot price focus.
Additionally, demand is piling up in the stock market order books around the 200WMA, adding to the challenges of switching from resistance to support.
In a study published Feb. 18, Franzen described the WMA cloud as one of “two key signals to add more bullish fuel to the fire,” alongside price attainment.
“BTC first rejected at this dynamic range in August 2022 and was briefly rejected at this level earlier in the week. Will it be able to break through on this second try?” he asked.
BTC/USD 1-week candlestick chart (Bitstamp) with 50, 200MA. Source: TradingView
Hash rate, difficulty in line with new record highs
In a well-known silver lining, the fundamentals of the Bitcoin network are keeping bullish sentiment firmly intact as the month draws to a close.
At the next automatic rebalance, it will be difficult to add an estimated 10% to their current balance sheet. This will offset the modest pullback from the previous readjustment to send the difficulties to new all-time highs.
Overview of the basics of the Bitcoin network (screenshot). Source: BTC.com
This is a crucial metric for gauging Bitcoin miner sentiment, as such significant increases indicate corresponding advances in block subsidy competition.
It comes on the back increasing coverage of so-called “ordinal” fees, with miners’ profitability recovering significantly after months of pressure.
Bitcoin miner net position change chart. Source: Glassnode
Data from on-chain analytics firm Glassnode confirms this. Miners have started holding more BTC than they sell on rolling monthly timeframes, reversing a trend in net sales that has been in place since mid-January.
Meanwhile, raw data from MiningPoolStats shows that the Bitcoin network hash rate is also maintaining its upward trend, remaining above 300 exahashes per second (EH/s).
Raw data chart of bitcoin hashrate (screenshot). Source: MiningPoolStats
“Unstoppable!” commented Economist and analyst Jan Wuestenfeld on the phenomenon as the 30-day moving average climbed to new all-time highs last week.
Joe Burnett, Principal Analyst at Blockware, described Hash rate growth as “really unrelenting”.
“The 14-day moving average of the total global hash rate is now ~290 EH/s. Bitcoin miners are scouring the earth for cheap, wasted, excess energy,” he added alongside Glassnode figures.
Longtime Bitcoin market participants will remember the once-popular phrase “price follows hash rate,” which posits that a large enough hash rate uptrend will have inevitable bullish implications for BTC price action.
Biggest “greed” since bitcoin all-time highs
$25,000 is a headache for reasons beyond solid resistance – a break above it could be an unsustainable move for Bitcoin.
Related: Bitcoin bullish price action continues to power rallies in FIL, OKB, VET and RPL
The latest findings from research firm Santiment suggest that crypto market sentiment is becoming too greedy around these multi-month highs.
“Bitcoin’s 8-month high yesterday came with a lot of euphoria,” it said commented on a chart showing social media activity.
“Perhaps a bit too much as the positive comments on social platforms may have created a local spike. Just as the negative comment on February 13 probably contributed to the bottom.”
Bitcoin sentiment annotated chart. Source: Santiment/Twitter
The phenomenon is also visible in altcoins, with Santiment highlighting Dogecoin (DOGE) as a key example this month.
“This pattern of social volume and extremely positive sentiment towards Dogecoin perfectly illustrates how euphoria creates price spikes. Regardless of your take on DOGE, historically, the hype around this asset foreshadows market corrections completed.
The well-loved Crypto Fear & Greed Index, meanwhile, shows “greed” as the dominant sentiment in crypto this week.
The push to the highs for Bitcoin coincided with a 62/100 score for the index, marking new highs since November 2021’s push to $69,000 in BTC/USD.
Crypto Fear & Greed Index (Screenshot). Source: Alternative.me
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