FOMC meets half of the ‘danger zone’ – 5 things to know in Bitcoin this week
After an unusually volatile weekend that resulted in heavy losses, Bitcoin (BTC) is starting a new week in recovery mode.
BTC Price Action Struggles To Regain Old Highs After Days Of Selling Pressure – Can Bulls Turn The Tide?
A key macroeconomic week ensures that unpredictable trading conditions will continue as both crypto and risk assets await cues from the United States Federal Reserve. The fight against inflation continues, and the latest evidence suggests that the forces of inflation are not giving up without a fight.
BTC/USD has everything to play for this week, with BTC/USD working in a critical zone that it needs to return to in order to continue its gains.
Bitcoin is now just one month away from the next block subsidy halving and could repeat history with the classic pre-halving retracement.
Cointelegraph takes a detailed look at these issues and others that may impact BTC price action in the coming days and beyond in its weekly listing.
BTC price “protection” below key resistance.
A brutal weekend for bulls hoping for a break left Bitcoin at its lowest level since March 6.
Near $64,500, BTC/USD staged a strong recovery, reaching the $69,000 mark before experiencing fresh losses at the close of the week.
At the time of writing, the pair circled $68,000, according to data from Cointelegraph Markets Pro and TradingView, still unable to crack the area known as the old all-time high from 2021.
Analyzing the current setup, popular trader Skew suggests that the 21-period moving average (EMA) on the four-hour chart should be picked for further recovery.[populartraderSkewflaggedthe21-periodexponentialmovingaverage(EMA)onthefour-hourchartasalinetoreclaimnextBitcoin'srelativestrengthindex(RSI)readingsonfour-hourtimeframescurrentlyat482shouldalsoreturnabove50[ታዋቂውነጋዴSkewየ21-ጊዜገላጭአማካኝ(EMA)ንበአራትሰአታትገበታላይቀጣዩንመልሶለማግኘትእንደመስመርጠቁሟል።የቢትኮይንአንጻራዊጥንካሬመረጃጠቋሚ(RSI)የአራትሰአታትየጊዜገደብንባቦች፣አሁንበ482ላይ፣እንዲሁምከ50በላይመመለስአለባቸው።[populartraderSkewflaggedthe21-periodexponentialmovingaverage(EMA)onthefour-hourchartasalinetoreclaimnextBitcoin’srelativestrengthindex(RSI)readingsonfour-hourtimeframescurrentlyat482shouldalsoreturnabove50
“Still looking for a strong close above 50 from the 4H 21EMA and RSI associated with a $69K-70K retracement,” wrote a recent piece on X Reading.
“These are the most important proofs, until then, a little protection.”
Bitcoin selling pressure was heavy due to an unusually lack of institutional trading for the weekend.
A theory circulating online puts the trend down to a hedge fund position. Here, the legal entity can be long-term BTC. During this liquidation, the fund had no choice but to sell about $1 billion worth of BTC to cover its losses.
“They also sell shrimp, crabs and fish all week long,” investor Fred Krueger added in part of his commentary on X, citing additional loading by small BTC holders.
Despite the setback, Bitcoin managed its second-highest weekly close ever. Just below $68,400, the largest cryptocurrency ended the week down just $600.
“A new week, with Bitcoin above the highest resistance level on the chart,” wrote the famous trader Gel in a bright post.
“Don't shake.”
Liquidity and cash flow reset
Some of the latest market data captures the amount of “drain” that has occurred on equities following two-week lows.
Tracking source numbers show CoinGlass has long liquidity days totaling more than $300 million.
On the largest global exchange, Binance, Perpetual Exchanges now have little liquidity around the price, with a bid support wall available at just $66,266. Sellers are expecting over $69,000.
A side effect of the weekend came in the form of a reset in both open interest and funds rates, the latter still overly positive but a fraction of recent highs.
“Too much stress on my schedule. Bitcoin is trading $5k below ATH,” responded James Van Straten, research and data analyst at CryptoSlate firm.
“Each climb is important to get us up for the next leg.”
Van Straten said funding rates haven't been negative since September 2023, and he's “very skeptical” that those will return.
“We have been and are in a strong structure since October, so positive funding will continue, with occasional restarts when we get very bubble-like,” he commented.
Classic time for a “pre-half rematch”.
Bitcoin miners are gearing up to enjoy the last month of subsidies of 6.25 BTC before the decrease in April.
The debate continues as to how the event will affect BTC's price behavior – a new all-time high, after all, did not come before the decline, but instead came months later.
As Cointelegraph reports, some believe the current run to the top may end sooner than other price cycles. Around the halving, however, Bitcoin may still stick to the classic playbook – low, then high.
In a recent piece on the topic, prominent trader and analyst Rect Capital expressed concern for carriers going forward.
“Within 2 days, Bitcoin will officially enter the “danger zone” (orange) where historical pre-half recoveries have started,” he warned on March 17 with a chart.
“Historically, Bitcoin has done pre-halvings 14-28 days before the split.”
Over the past half-year, this “danger zone” has produced corrections of up to 40% – far greater than the recent highs of $73,700.
“Bitcoin is slowly transitioning out of the ‘pre-halving rally' phase and into the ‘pre-halving pullback' phase,” Rect Capital added.
Although Bitcoin exchange-traded funds (ETFs) have been steadily buying in the US space, normal cyclical events are still at play, he noted.
Focus on the Fed's Powell after the FOMC
A tumultuous week for risk assets will focus on the Fed's next interest rate decision and comments from Chairman Jerome Powell.
The next Federal Open Market Committee (FOMC) meeting ends on March 20 and will produce a classic risk-asset volatility trigger.
That said, markets are expecting few surprises at this point – persistent inflation has eliminated the possibility of a slowdown, and even subsequent FOMC meetings are unlikely to reverse the trend.
The latest estimates from CME Group's FedWatch Tool put the odds of a rate cut at the FOMC meeting at just 8%.
“It's official: For the first time this year, markets see only 3 interest rate cuts in 2024,” trading resource The Kobeissi Letter wrote in an extensive analysis of FedWatch data.
“This will be the first time that markets have been aligned with recent federal guidance.”
Powell will make two speaking appearances this week, the second on March 22. Market watchers will be closely watching the language as an indication of future policy moves.
“All eyes are on federal guidance at this week's federal meeting. The Fed should be concerned with the 2-month CPI inflation rate rising, Kobeisi continued.
Rate cuts are all but certain in 2024 as the fight against inflation continues.
Bitcoin diamond hands use an all-time high
Although sentiment remains in the “extremely greedy” zone, market sentiment gauge, Crypto fear and greed index, some hoarders vote with their wallets.
Related: How Low Can BTC Price Go? Bitcoin analysis points to 45 thousand dollars
Profit-taking on long-held coins has increased significantly, the latest data from on-chain analytics platform CryptoQuant confirms.
Long-term holders (LTHs) — entities that hold coins for at least 155 days — distributed about 600,000 BTC, or about $40 billion, last month.
Discussing the event on X, CryptoQuant contributors donated a portion of the sale to the Greyscale Bitcoin Trust.
According to Cointelegraph, Bitcoin miners have also increased their sales in 2024.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
