War puts BTC price to the test – 5 things to watch in Bitcoin this week

Bitcoin (BTC) Begins Another Week In The Shadow Of A New Geopolitical Conflict – What Are The Major Hurdles Investors Face?

In what has become an unrecognizable macro environment compared to even days ago, Bitcoin, like many other assets, is feeling the pressure.

The Russian invasion of and ensuing war against Ukraine is wreaking havoc on global markets, and developments can overturn sentiment in hours or minutes.

The timing has also hit Bitcoin – the quality of the “safe haven” is being seriously tested as investors look for safety and fiat bag holders look for an exit.

As the dominant influence this week, Coin-Crypto looks at what awaits Bitcoin in the near term as it withstands complex and almost surreal macro events.

Below are five topics for BTC investors this week.

Ukraine war dominates

It goes without saying that the conflict between Russia and Ukraine has been the main driver of market performance this week.

The situation, which emerged in its current form only five days ago, remains in a state of constant change – sanctions keep coming, both sides and their allies keep fighting, markets respond to new threats and opportunities.

Chief among these is the Russian economy, which is bracing itself for Monday’s turmoil. Stock trading has pushed back to at least 3:00 p.m. local time and the outlook is bleak for its currency, the ruble, which is already trading at record lows.

Talks were set to begin Monday and any glimmer of hope could turn the short-term outlook and change the face of markets.

However, while there is uncertainty, everyone will be looking for the ultimate safe haven, and the use of Bitcoin – be it by ordinary Russians and Ukrainians or their governments – is already a matter of debate.

As Coin-Crypto reported, the Ukrainian military has already raised millions of dollars in crypto aid, and far-reaching sanctions against Moscow could still ease the switch to Bitcoin as an economic tool.

The idea has not passed the establishment – Mykhailo Fedorov, the vice president of Ukraine, called on exchanges to block money from Russian and Belarusian users.

“Bitcoin is like a surgeon’s knife or a criminal’s knife,” podcast host Preston Pysh wrote at the weekend, summarizing the situation.

“Like any valuable technology over time, its value comes from the intent behind its use.”

The markets, meanwhile, are likely to be driven, subject to shifts in events on the ground and knock-on effects for governments.

So far, oil – but not Russian oil – has been one of the few beneficiaries of the war, while Bitcoin has managed to remain fairly stable – unlike gold, which gained quickly at first and then lost all of its newly gained ground.

However, Bitcoin and altcoins’ correlation with traditional stock markets persists, and low timeframes thus tend to be a real headache for traders no matter what twists and turns the war takes.

Spot price action faces macro force majeure

With traditional markets poised to be extremely volatile on their respective Monday openings, guessing how Bitcoin will fare in the shortest time frames is a real problem.

Correlation aside, Bitcoin has managed to stay within a fairly tight range so far, and $40,000 is a clear resistance zone for bulls to beat.

The problem, however, is that a more dramatic move could ultimately result from major macro changes and thus be an unreliable longer-term signal.

“Dropped about 4% on Sunday at 5:00 AM EST (February 27) from Friday, Bitcoin signals a tough week for risky assets,” Mike McGlone, chief commodity strategist at Bloomberg Intelligence warned

Meanwhile a popular Twitter account noted that current levels represent the so-called point of control (PoC) of the past 15 months, with $38,000 seeing high volumes relative to other price points in the current range.

“When it comes to Bitcoin, the playing field seems pretty simple,” says a more hopeful Michael van de Poppe argued

“Consolidation is taking place after a bullish move over the past week. If you really want to see more momentum then the corrections shouldn’t be that deep so $38.1-38.2K should hold. Then we could go to $44K.”

With US markets yet to be open at the time of writing, the picture could change completely for Monday.

A comparison to March 2020 may be helpful – at that point Bitcoin first fell in line with global markets, then bounced back as an asymmetric gamble that took hodlers on an unprecedented bull for the next nine months.

Another month, another red candle

Sunday’s close didn’t quite go according to plan for Bitcoin market observers.

A last-minute plunge took away the chances of closing the week and month above $38,500, giving the history books their first four straight monthly red candles since the 2018 bear market.

Already an unexpected comedown, last week’s events seem to make things worse so far for Bitcoiners, who have not yet seen the cryptocurrency branch out on its own, away from traditional assets.

Also giving analysts a headache is the monthly chart against the 21-month exponential moving average (EMA), which could disappear if support were to remain if losses continue.

Breaking the 21 EMA is a common feature of Bitcoin macro bear trends, with February thankfully avoiding a repeat performance.

“Tomorrow’s Monthly Close is crucial. If we close below $37,000 (purple 21 million/EMA), it will give us the same bearish signal as all other previous macro down trends,” analyst Kevin Svenson warned against a graph indicating the level.

BTC/USD 1-month candlestick chart (bit stamp) with 21EMA. Source: TradingView

Bitcoin previously failed to regain two key moving averages as a pretext to push higher resistance levels closer to all-time highs from November. The result, analyst Rekt Capital warned at the time, could be a possible revision to the low of $28,000.

On the upside, Bitcoin’s 200-week moving average, a benchmark few believe will be challenged as a support, crossed $20,000 for the first time this weekend.

Difficulty keeps the ship stable

Investors are turning away from geopolitics and have every reason to trust the power of the Bitcoin network.

Despite price pressure and uncertainty over virtually every time frame, miners continue to mine, and the hash rate and difficulty have continued to climb.

This week may be challenging for the status quo – the hash rate is stable, but difficulty will decrease for the first time in 12 weeks to account for the latest changes.

This is nothing “bad” as a phenomenon – the 1.25% drop is modest by Bitcoin’s standards and likely reflects indirect changes in miner participation, rather than the start of a new trend.

According to surveillance source: MiningPoolStatisticsFor its part, the hash rate remains above 200 exahashes per second (EH/s), a sea change from even a matter of months ago when Bitcoin hit its all-time high.

Bitcoin hash rate chart (screenshot). Source: MiningPoolStats

The difference between fundamentals and price has been discussed extensively over the past year.

The question now is whether the price will follow the hash rate as it has in years past.

Sentiment predicts the worst

True to its mantra, Bitcoin does not seem to have “liked” the rise of a new armed conflict in Europe.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, LUNA, AVAX, ATOM, FTM

Potential roles aside, the largest cryptocurrency is not enjoying a sentiment boost due to recent events.

According to the Crypto Fear & Greed Indexa sentiment indicator that has received increasing attention in 2022, the market is quickly becoming more nervous.

BTC/USD saw a relatively small dip overnight on Monday, but that was still enough to drag the index back into its “extreme fear” territory – from 26/100 on Sunday to 20/100, its lowest since 22 February.

For context, the local lows of $32,800 in January yielded a reading of 11/100 for Fear & Greed, which level has often been macro lows in recent years.

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

In response, commentators nevertheless argued that the price drop through Monday could be a warning from the free market that doom and gloom will reign as trading begins on the TradFi market.

Crypto’s traditional counterpart, the Index of fear and greedwas also in “extreme fear” mode for a recovery last week.

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