Bitcoin (BTC) enters a new week with bullish momentum as it continues its transformation in February. After a strong monthly close, the first weekly candle of March closed comfortably above $60,000. Sellers are starting to accept that there may be no obstacles in the way of Bitcoin as it heads towards price discovery. This optimistic scenario for 2024 is better than what many traders and analysts had anticipated. However, there are still volatility hurdles to overcome before the end of the month, and the block subsidy halving in April is a crucial moment. The action begins immediately with the United States Federal Reserve providing guidance on the state of the economy. If this offers no surprises, crypto may face challenges from ETFs that continue to buy BTC, although the average investor is currently driven by extreme greed. The market trajectory may sustain its recent trend, but a more significant correction and consolidation period is also possible. This article examines the current state of Bitcoin markets, which could be a pivotal moment for the BTC price cycle.
Bitcoin started the week with a strong move on March 4, with a $2,000 hourly price swing that led to a new multiyear high. The price reached $64,282 on Bitstamp, and BTC/USD is now trading near $65,000. Bulls are just $5,000 away from reaching new all-time highs, which would result in year-to-date gains of over 50%. Traders and analysts on social media are divided between optimism and disbelief, with some calling for a major reversal. On the cautious side, there are suggestions that BTC/USD may form a “cup and handle” pattern at the all-time highs, potentially correcting to as low as $40,000. However, others argue that crypto investing is still not mainstream, and a new wave of viral interest in Bitcoin and altcoins could drive the market even higher. Analysts note that bulls are in control and heading into the weekly close.
Charles Edwards, founder of Capriole Investments, cautions about a possible correction in the price of BTC. He believes that the current market may be frothy and that a flush could occur in mid-late March. However, he emphasizes that he is not bearish in the long term, but risk management is crucial at these historical levels. Concerns about overheated markets are also accompanied by high funding rates, with some platforms experiencing rates above 0.1%. Despite this, Bitcoin’s larger market cap means that the open interest tally has room to grow. Analysts note that the open interest divided by the current market cap is still at a historical average. The week began with CME Group’s Bitcoin futures trading higher than spot markets.
The highlight of the upcoming macro week in the United States is the testimony of Fed Chair Jerome Powell. Over two days, Powell will update policymakers on the economy. His stance on inflation and interest rates is especially important for crypto and risk assets. A rate cut could boost performance, but the odds have been pushed back to later in the year. Powell is expected to maintain a hawkish stance, signaling that the Fed is not in a hurry to cut rates. The market sees little chance of a rate hike but expects volatility before the Fed’s decision. The Crypto Fear and Greed Index shows that sentiment is at multiyear highs of extreme greed, which historically indicates unsustainable trajectory. Social media discussions have increasingly focused on price-related topics, signaling a cooling-off phase may be on the horizon.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.