Why are BTC traders carrying more than $64K? 5 things to know in Bitcoin this week
Bitcoin (BTC) starts the new week with bulls shooting to all-time highs as the February BTC price move continues.
After a strong monthly close, March's first weekly candle ended comfortably above $60,000.
As anticipation of what might come next rises, sellers tacitly accept that there is nothing standing in the way of Bitcoin's path to price discovery.
The situation marks one of the best results for 2024 and is much better than many traders and analysts expected.
That said, there remain plenty of flexibility hurdles between now and the end of the month – and the April block subsidy halving is itself a critical moment.
Action begins immediately with the United States Federal Reserve to provide guidance on the state of the economy.
If this doesn't come as a surprise to risk-asset traders, crypto already has enough to deal with – exchange-traded funds (ETFs) may continue to buy BTC. Even so, the average investor is operating out of “extreme greed.”
Can the market direction continue the recent trend or is a more significant period of correction and consolidation possible?
Cointelegraph looks at the state of Bitcoin markets during what could be a watershed moment for the current BTC price cycle.
Bitcoin Approaches Breaks All-Time High Zone
Bitcoin began the week on March 4 with a bang, as the weekly close triggered an hourly price swing of $2,000, setting a new multi-year high.
Data from Cointelegraph Markets Pro and TradingView confirmed that $64,282 was hit by Bitstamp, while BTC/USD is now doing even higher – near $65,000.
Barely $5,000 separates the bulls from a new all-time high, recording gains of more than 50% year-to-date, confirms on-chain statistics source CoinGlass.
Across social media, marketers and analysts are divided between optimism and disbelief, and calls for a major overhaul remain.
An interesting schedule to read today. 50% very high call, 50% market call. Normally this happens every week tbh, but this is more spread out than usual,” wrote popular trader Skew in his latest post on X.
“Current prices for big swings around major psychological sensitivity points. The reason this is important is because this equilibrium leads to more motivation and consensus on the next big move in the market – where the mean reversion trade might actually be.”
Skew cited a consensus to remain at a sensitive all-time high from 2021. So far, other domestic highs from that year have failed to hold for long.
On the more cautious side is Venturefounder, promoter of on-chain analytics platform CryptoQuant.
In his latest analysis, he suggested that BTC/USD could still form a top-level “cup and handle” pattern, which was followed by a brutal test of bulls and bears as low as $40,000.
“Would you be ready for this? After BTC goes up to the old ATH rally to take out all the bears, it has a correction of about $50k or 40k bitcoins to take out the bulls,” he wrote.
“Then back to ATH to get all the bears out… We'll stay in this range until Q4 2024.
Contrary to popular belief, the argument is that crypto investing is still not on the mainstream radar.
If this changes, a new wave of viral demand for Bitcoin and altcoins could materialize, accelerating an increasingly parabolic market.
“Bulls in absolute control heading into the weekly close,” concluded analyst Matthew Hyland over the weekend.
“Many of them were out of action and still are. Maybe it feels too good to be true in the Crypto Twitter Bubble, but in the real world most people have no exposure. The shock has not yet set in, but it will.”
An analyst warns of a “bubble” in the crypto market
Weighing in on the correction opportunities is Charles Edwards, founder of quant bitcoin and digital asset fund Capriole Investments.
Acknowledging the lackluster sentiment this week, Edwards – who placed a premium on the impact of next month's halving – was unconvinced about the recent move.
Even if a quick turnaround doesn't happen immediately, he argues, the enthusiasm left over from last month may take longer to fade.
It can last for 2-3 weeks before blistering. This could mean mid-March,” he warned.
Edwards emphasized that he is not complacent from a long-term perspective. As an investor, risk management is important – especially with markets at such critical historical levels.
“Prices can always go up, the only risk is mgmt and probabilities. The risk profile here is very different (worse) than when, for example, Bitcoin was $16K. Just something to keep in mind for portfolio mgmt,” he continued.
“The volatility in these zones[up and down]will increase by orders of magnitude. Look at early 2021 to compare to today. I still think this bull market has a long way to go.”
In the year A similar period of euphoria was seen in early 2021 before taking the lead at the start of Q2, followed by a correction that pushed Bitcoin to new all-time highs off the charts until November.
Bitcoin market price resistance for overheated derivatives
Concerns about overheated markets are some of the highest volume in history.
According to the current data of CoinGlass, some platforms are seeing more than 0.1%, the largest international exchange Binance itself is about 0.05%.
Open demand – a key factor for BTC price volatility – tells its own story, hitting a whopping $27.7 billion on March 4.
Even so, one analyst pointed out last week that Bitcoin has a large market cap, meaning open interest has plenty of room to grow.
“Bitcoin is approaching a peak in open demand for notional value. However, when you divide it by current market value, it's sitting at just 2.25%, which is the historical average,” James Van Straten, research and data analyst at crypto insights firm CryptoSlate, said in a post on X. Partly.
An accompanying chart from on-chain analysis firm Glassnode showed a similar trend in both Bitcoin and the major altcoin Ether (ETH).
Meanwhile, CME Group's Bitcoin futures were initially trading several hundred dollars higher than spot markets.
The Fed's Powell is set to convey his “hawkish stance” in testimony.
The Fed – and especially Chairman Jerome Powell – is the focus of the upcoming macro week in the United States.
Over the course of two days starting March 6, Powell will testify before a House committee and a Senate panel, giving policymakers an update on the economy.
The annual event is expected to hold Powell's now-familiar narrative on inflation and interest rates.
The latter is particularly useful for crypto and risk assets, ideal for increasing the long-awaited rate performance. So far, this has yet to happen, and recent macro data has pushed the markets back into the year.
“Powell is expected to take a dovish stance in his mid-year testimony to Congress, signaling to markets that he is in no rush to cut the Fed's pace,” Bloomberg analysts said later this week.
If this leads to tighter financial conditions, it will keep pressure on the economy and increase the possibility of further distortionary effects from monetary policy.
While markets saw the possibility of more rate hikes to come, the likelihood of a rate cut was nil as of March 4, according to data from CME Group's FedWatch Tool.
In a weekly detailed report of upcoming macro events, trading inputs indicated that the Kobayashi letter, however, hinted at more volatility ahead of the Fed's decision on March 20.
“We are currently 17 days away from the long awaited March Federation meeting. There's a lot going on before that,” concludes X.
Payment data for the coming days includes off-farm payments at the end of the week.
Sentiment data shows price adjustment
For the average crypto investor, the lure of all-time high prices is having a familiar effect on sentiment.
RELATED: Bitcoin Daily Withdrawal Challenges Records As $2B Leaves Exchanges
According to the Crypto Fear and Greed Index, “Extreme Greed” levels are at multi-year highs.
At 82/100, these unsustainable trends are increasing at levels that have historically marked market changes.
The sentiment company analyzed social media events last week and indicated that an increased focus on value may be contributing to the coolness level.
“After February, which was filled with some of the biggest monthly market cap gains in crypto history, discussions have increasingly moved to value-related topics. Mainly, Bitcoin, AI tokens and $PEPE,” it was quoted after the monthly close.
“As a result, markets may be a little flat.”
The accompanying chart showed the changing frequency of certain topics appearing on social media platforms over time.
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.
