Bitcoin (BTC) has started the new week positively: As the stock markets lost value, BTC managed to close over $ 50,000 last week. So what’s next?
Cointelegraph took a look at five factors that could affect Bitcoin price action in the coming days.
The dollar is getting stronger as the stock markets crash
In the past weeks, things have changed in the stock markets that broke record after record. While a decrease is observed in stock market indices all over the world, warnings are made that this situation is not over yet.
While the shares of technology companies, including Tesla and MicroStrategy, suffered significant losses, Asian stock exchanges started the week with a loss of more than 1 percent.
Although the US stock markets closed strongly last week, expectations started to turn negative hours before Wall Street opened. According to Morgan Stanley analysts, the Nasdaq 100 could drop to its 200-day moving average, which is 800 points below its current level of 12,642 points.
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“You will see high volatility in the markets,” explained Kim Stafford, President of Pacific Investment Management Asia Pacific.
“We think confidence in the market is getting better, especially with vaccines coming online, so we will see an upswing around the world. There are many reasons to trust the market, but most of those reasons have already been priced. “
On the other hand, the US Dollar Index (DXY) continued its rise, which it started at the end of February, and reached 92.19 points over the weekend. DXY also managed to stay above 92 points on Monday.
The BTC / USD pair is generally inversely correlated with DXY.
Huge incentive package accepted
The main reason behind the strengthening of the dollar is the US Parliament’s adoption of the $ 1.9 trillion coronavirus stimulus package and the further inflation of the dollar supply.
The stimulus package, adopted by the Senate on Sunday, will be distributed to US citizens in the form of payments of $ 1,400, while adding a new debt to the country’s summit debt.
Considering that Bitcoin’s popularity has increased substantially compared to last year, some of this money is expected to be transferred to BTC as well.
Tracking source Bitcoin Stimulus, if two previous checks worth $ 1,200 and $ 600 were deposited in Bitcoin, their total value as of March 4 Announced that it will be over $ 10,250.
In the long run, investors are worried about the dollar’s depreciation, both due to increased supply and the highly controversial economic response to the virus.
Famous investor Peter Brandt says Bitcoin’s current policy in the long run suggested that it would benefit.
Brandt, “The depreciation of the dollar’s purchasing power has just begun” he warned.
“So Bitcoin, real estate, stock markets and commodities will continue to rise in dollar terms.”
Bitcoin makes its second biggest weekly close
Bitcoin bulls, on the other hand, found hope with the BTC / USD parity rising above $ 50,000 over the weekend.
BTC soared to $ 51,177 following the announcement that the incentive package was accepted. Positive investment news from China also brought the rhetoric of lack of supply back to the agenda.
Although Bitcoin could not start the week at over $ 50K, it managed to close the previous week at this level and make its second largest weekly close ever.
Glassnode Co-Founder and CTO Rafael Schultze-Kraft, who analyzed investor behavior, said it was unlikely to drop below $ 46,600.
Schultze-Kraft said, “BTC is holding onto this support well and getting stronger. Now we have a wall of 1.2 million BTC moved on the chain between $ 46,600- $ 48,600 ” he stated and added.
“This is 6.5 percent of the circulating supply! I will be surprised if we see a fall soon. “
Nobody is selling
On-chain data shows that miners are reluctant to sell at $ 50,000, as well as decreasing the amount sent to exchanges and stock market reserves.
Statistics Specialist Willy Woo said that the sales pressure mostly comes from corporate players who should have prepared the first quarter report and that this is not a signal to indicate a decline.
Woo said, “Who’s selling? Apart from the long positions that are liquidated, I think there are hedge funds that should prepare the first quarter report. ” he explained.
“When they dedicate too much percentage to an asset, they may have to be rebalanced.”
Woo also said that while large whales are selling, smaller whales with savings ranging from 10 to 100 BTC buy.
The needle turned to extreme greed again
The Crypto Fear & Ambition Index started to give signals of “excessive ambition” again after falling into the “fear” zone for a short time.
About: What is the Crypto Fear & Ambition Index?
The index, which indicates that the price increases may take a short time, rose from 76 points to 81 points on Monday. The index showed 38 points just a week ago.
Still, Glassnode’s Network Value / Transaction Ratio (NVT) data show that price increases are largely accompanied by volume.
Glassnode Co-Founders Yann Allemann and Jan Happel said, “What about a healthy rise in the bitcoin price? Supported by the volume on the chain of course! ” commented.