‘No More 4-Year Cycles’ – 5 Things to Know in Bitcoin This Week

Bitcoin (BTC) is starting another week on a stronger footing for now as macro indications stabilize curiously.

After a quieter weekend than most recently, BTC/USD managed to seal its highest weekly close since February, allaying concerns that an impending attack below $40,000 could be coming in.

Instead, conditions are starting to favor a more bullish, shorter-term perspective, but as always, nothing is certain – bulls need to tackle resistance and flip to support, starting with levels just north of $42,000, a case of “so close.” yet so far” for the market this month.

Signs that belief is heating up again, nevertheless, come from increasing activity in stablecoin markets, and as such there is little sign of a truly bearish view of what lies ahead.

As global markets show a miraculous recovery after weeks of war-based nerves, Coin-Crypto takes a look at what could affect Bitcoin in the coming week.

Stocks pretend they no longer care about war

It may seem “crazy,” says commentator Holger Zschaepitz said this weekend, but it seems that in just a month, the markets are beginning to forget the ongoing war between Russia and Ukraine.

What has been the main trigger for volatility in recent weeks has been that the market has become increasingly impotent after the shock of sanctions came and went, he says.

While its implications are far from completely clear, the current geopolitical reality is nevertheless becoming increasingly imperceptible in stock markets, which are now trending towards a focus on policy changes in China.

Chinese equities took a beating this year, led by technology stocks under government pressure, but an apparent turnaround to bolster stability in Beijing is already having the desired effect.

Where Asia leads the way, Europe and the United States follow this week – markets are moving up and in the case of the Stoxx in Europe, 600 have already wiped out the losses from the war.

“Global equities gained ~$5 trillion in Mkt cap this week due to the potential for a wave of stimulus in China and oversold stock prices,” Zschaepitz noted Monday.

“Investors shrugged their shoulders at the ongoing war in Ukraine and rising interest rates. The US 10-year yield rose by 10 basis points to 2.15%. All stocks are now worth $112.4tn, equivalent to 133% of global GDP.”

If the good news continues, attention will return to Bitcoin’s correlation with the stock markets, especially those in the US, as a possible pretext for price strength.

As noted last week by trading suite Decentrader, the correlation paradigm has yet to be broken.

“Price action has been in step with legacy markets since the Russia-Ukraine conflict began with a high correlation seen throughout the period, demonstrating that Bitcoin remains a risky asset in uncertain times,” analyst Filbfilb wrote in a market report.

What would it take to break the spell? Investors may have to wait longer than next week to find out, but breaking it should, according to former BitMEX CEO Arthur Hayes.

“As you can see, Bitcoin is currently tied at the hip with large technical risk assets,” he wrote in a statement Medium message released last week.

“If we think that nominal interest rates will go higher and cause a bear market for stocks and an economic recession, Bitcoin will follow big technology into the latrine. The only way to break this correlation is to shift the narrative of what makes Bitcoin valuable. A roaring bull market in gold in the face of rising nominal rates and global stagflation will sever this relationship.”

Which cross wins?

Bitcoin managed to close out the week with an impressive “engulfing candle,” pushing the weekly chart to a month-long high.

Thus, despite last-minute attempts to steer the market south, still around $41,000, the largest cryptocurrency is more firmly on the ground as March progresses.

However, everything is not as simple as it seems, and nervous analysts are still concerned about a possible wave of weakness coming.

For example, despite the strong close, the weekly chart saw some form of so-called “death cross” last week, data from Coin-Crypto Markets Pro and Trading Display show.

Formed when a shorter time frame moving average crosses under a longer one – normally the 50 period below the 200 period but in this case the 20 period below the 50 period – such chart phenomena tend to signal emerging weakness.

BTC/USD 1-week candle chart with 20 and 50WMA (bit stamp). Source: TradingView

Be that as it may, lower time frames are not without their positive signals, however.

Such as noted by the popular Twitter account BTCfuel, BTC/USD attacking the 100-period moving average on the daily chart is cause for optimism and mimics a structure from way back in 2012.

“Having fallen below the MAs, Bitcoin is now challenging the 100D MA (red),” he explained alongside comparative charts.

“This is 33 bars after the bearish cross occurred, similar to 2012. A bullish cross should follow soon after.”

BTC/USD 1-day candle chart with 100DMA (bit stamp). Source: TradingView

However, the “soft-soft” approach is highly beneficial for a market that is still moving within a range with well-defined resistance levels, and these need to be squashed firmly before a true trend change is confirmed.

That was the view of analyst Matthew Hyland this weekend, with $42,600 beating first for bulls.

Stop waiting for the blow-off top, analyst says

As Coin-Crypto reported, the popular consensus claims that Bitcoin has, in fact, gone sideways not just this year, but all of last year.

So with $29,000 and $69,000 as the limits of the range, price action in between is just consolidation, several well-known commentators argue.

Nevertheless, after 15 months, questions are now being raised about whether Bitcoin should be re-evaluated in the context of one of its best-known features: the four-year price cycle.

Based on the block subsidy halving that occurs once every 210,000 blocks – roughly every four years – past halvings have predictably impacted price performance.

Bull market spikes, for example, have occurred in the year after a halving, followed by bearish corrections, before the process slowly repeats itself.

This time it was decisively different, as the same eruption stop was not seen in 2013 and 2017 at the end of 2021.

“We’re probably seeing the first signs of ‘The Last Cycle’ thesis,” popular analyst and statistician Willy Woo announced this week.

“There have already been three relatively short bull and bear markets since the 2019 bottom i.e. no more 4-year cycles.”

Woo’s dissertation revolves around blow-off tip disintegration as a feature of each halving cycle. But far from being a bearish trait, he says price action will simply become less predictable as supply and demand increase.

As such, measuring BTC/USD at its latest all-time high – and the potential to beat it – can no longer accurately reflect market strength or capacity.

While similar to the so-called “supercycle” championed by names like Kraken growth leader Dan Held, not everyone agrees that the cycle-based price phases are no more.

‘I don’t quite agree. If we get a parabolic 5th wave, an equally aggressive decline will follow. But overall, yes, of course we can expect higher lows and higher highs over time,” popular Twitter account Credible Crypto responded to Woo when he unveiled the idea in October.

Tether activity gets bulls excited

Look no further than behind-the-scenes movements of stablecoins to assess the chances of a bullish continuation in crypto markets.

In particular, the interaction with US dollar stablecoins, which hold the lion’s share of the market, is a key indicator of widespread interest in crypto, and their trajectory is now clearly pointing upwards.

Such as explained by on-chain analytics firm Santiment, saw two days more active Tether (USDT) addresses last week than at any time this year or last year.

“While Bitcoin teeters around $41k, Tether signals big moves for crypto could be coming,” it noted.

“Thursday (83k) and Saturday (74k) had the two biggest days of 2022, in terms of addresses interacting on the network. Keep an eye on this waning stagnation.”

Tether network interaction annotated chart. Source: Saniment/Twitter

The largest USD stablecoin, Tether’s market cap now exceeds $83 billion.

Sentiment leaves weeks of “extreme fear”

There is a hint of good news emerging in crypto market sentiment this week.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, LUNA, AVAX, ETC, EGLD

After another plunge into “extreme fear” that lasted most of March, Crypto Fear & Greed Index has returned to his “fear” zone.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

At 31/100 on Sunday, the Index measures its highest since March 4, pointing to the worst of the macro-based investor cold feet being alleviated – at least temporarily.

Last week, on the other hand, the picture was much bleaker, with research showing that sentiment could hardly be much lower than it was.

Discussing the market composition, meanwhile, the dedicated Fear & Greed Index Newsletter last week highlighted the ongoing battle between bulls and bears at the current level.

“The bears built a fortress between $40,100 and $42,600,” it read, assessing the need for an “incremental” reaffirmation of bull violence to $42,600.

“This breach would completely wipe out the bears and break their spirits. It’s not an easy task, but if the bulls intend to regain their momentum, it should,” it added.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Coin-Crypto.com. Every investment and trading move involves risks, you should do your own research when making a decision.

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