Users large and small alike are seizing the opportunity to buy bitcoin, figures show, as on-chain data hints that the coin has bottomed out at the $38,000 level.

Bitcoin ( BTC ) enters the last week of February down but showing signs of strength as it holds a key support level.

After a few days of nervousness in both the macro and crypto markets, the BTC/USD pair is below $40,000, but there are already signs that a comeback could be what starts the week in the right direction.

The situation is far from easy: concerns about inflation, US monetary policy and geopolitical tensions are at play, and with them the possibility that stocks will continue to suffer.

The new signals from the Federal Reserve will be a hot topic in the short term, as the first rate hike is expected to be announced and implemented in March.

Could it all be a storm in a cup of tea for Bitcoin , which on a technical basis is  stronger than ever ?

Cointelegraph lays out five factors that could influence its price action in the coming days as dark clouds linger over the global economy.

Stocks lead a gloomy macro week

The main story for bitcoin traders this week comes from outside: the post-covid economic landscape and concerns about relations with Russia.

The first comes in the form of how the Fed will respond to rising inflation and, more specifically, whether its hinted interest rate hikes will kick off in March as anticipated.

Such gains are bad news for burgeoning equities, which have enjoyed two years of runaway gains thanks to the Fed’s massive liquidity program to counter yet another Covid-era demon: lockdowns and unprecedented controls on economic activity. .

With the “easy money” soon to start running dry, there could be a kind of reality check for everyone.

As for rate hikes, too many too soon risk causing a recession – an issue that  is already being discussed  as a possible “necessary evil” for other countries – while a light touch might, on the contrary, not reduce the highest inflation of the last 40 years.

In addition, the situation with Russia and its alleged plans for the Ukraine worries equities even more.

Conversely, commodities such as oil have benefited from fears of all-out war, which have so far been unfounded as diplomacy is weak this week.

Overall, however, the short-term view is one of considerable uncertainty, while  optimism remains for the recovery of risk assets, such as cryptocurrencies, and traditional stocks by the end of 2022.

However, the figures cannot be hidden.

“Global equities have lost another $1.3m in market cap this week on increased Russia/Ukraine risk and the possibility of the Fed raising rates further this year,” market commentator Holger Zschaepitz  summed up  on Sunday.

“The latter is expected to stall growth and trigger a recession by 2023H1 in the US. The shares are now worth $114 million, equivalent to 134% of global GDP.”

S&P 500 1-day candlestick chart
S&P 500 1-day candlestick chart

Trading on Wall Street begins on Tuesday this week due to a US holiday.

BTC Price Considers CME Futures Gap

With this, it has been tough for the average bitcoin day trader this month.

The month of February has only allowed for about two weeks of easy gains, with macro influences ending the party the week before.

Since then, the BTC/USD pair has lost support at $40,000 and has threatened a full pullback from the ground it just gained this month.

However, the $38,000 level – a level that  had previously been highlighted  as essential for the bulls – remained untouched.

The weekly close, although the lowest in several weeks, was accompanied by a new RSI breakout on the 4-hour chart, a classic signal that precedes short-term price rebounds.

True to form, the price of bitcoin rose, hovering around $39,200 at the time of writing.

Bitcoin’s 4-hour RSI broke through the close. Waiting for the MACD to confirm it:

Experienced traders tend to ignore the BTC/USD pair on the weekends due to the lack of volume that exacerbates any given move. As such, the drop to $38,000 could itself be something of an exaggeration of market sentiment.

Also, a bounce has clear targets: $40,000 as support/resistance, but also Friday’s CME futures closing price of $39,860 , which is above the main part of the drop that occurred on Saturday.

Observing this. Clearing the lows and returning to the CME closing price. #bitcoin

Bitcoin has a habit of closing these “gaps” on the CME chart, often within days or even hours once the new trading week gets underway.

CME Bitcoin futures 1 hour candlestick chart
CME Bitcoin futures 1 hour candlestick chart

Who is buying while you are selling?

Amid disbelief that some are choosing to sell their BTC now after hanging on for several months in the downside, data shows that the big players are smelling a bargain.

Some of the biggest bitcoin wallets are putting their money where their mouth is, and have been doing  so throughout 2022  and  even before .

There are many examples; the BitInfoCharts on-chain monitoring resource shows the “up only” trend of a particular entity.

Monday alone saw his balance increase by 150 BTC , and he’s not the only one: others have been collecting coins during this weekend’s local low.

https://twitter.com/Capital15C/status/1495503439656280067

When you panic sell your bitcoin, this guy buys it all. Today this guy bought 6 times already, $20 million worth of BTC.

However, small volume holders are not necessarily weak hands. The  latest figures  from on-chain analytics firm Glassnode show that the number of wallets holding at least 0.01 BTC ($393) has reached an all-time high of 9.4 million.

The last peak was, in fact, at the end of January, before Bitcoin’s last rally to $45,500.

As Cointelegraph  reported over the weekend, BTC supply is increasingly illiquid overall, with its share inactive for at least a year approaching all-time highs.

Destroyed Coin Days Hint at Possible Bottom

Those looking for signs that the $38,000 level was the local low need not look too far.

Thanks to on-chain data analysis, it can now be seen that long-term bitcoin investors repeated the behavior over the weekend that accompanied the July 2021 and September 2021 BTC price lows.

The dataset , this time from  CryptoQuant, governs “coin days destroyed” (CDD), that is, the cumulative number of days since each BTC last moved on a given day.

The weekend saw a significant number of “older” coins on the move , thereby “destroying” the largest number of inactive days since the July 2021 bottom below $30,000.

In terms of raw numbers, the CDD was the highest since July 2019, although the event at the time was accompanied by a local high, rather than a low.

The phenomenon was noted by CryptoQuant contributor IT Tech, who also highlighted another on-chain metric that governs hodlers signaling downward price movement.

 

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