‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

Bitcoin
(BTC)
starts
a
new
week
in
a
strange
place

one
that
is
eerily
similar
to
where
it
was
this
time
last
year.

After
what
various
sources
have
described
as
an
entire
12
months
of
“consolidation,”
BTC/USD
is
around
$42,000

almost
exactly
where
it
was
in
week
two
of
January
2021.

The
ups
and
downs
in
between
have
been
significant,
but
essentially,
Bitcoin
remains
in
the
midst
of
a
now-familiar
range.

The
outlook
varies
depending
on
the
perspective

some
believe
that
new
all-time
highs
are
more
than
possible
this
year,
while
others
are
calling
for
many
more
consolidatory
months.

With
crypto
sentiment
at
some
of
its
lowest
levels
in
history,
Cointelegraph
takes
a
look
at
what
could
change
the
status
quo
on
shorter
timeframes
in
the
coming
days.

Will
$40,700
hold?

Bitcoin
saw
a
trying
weekend
as
the
latest
in
a
series
of
abrupt
downward
moves
saw
$40,000
support
inch
closer.

Data
from

Cointelegraph
Markets
Pro

and

TradingView

showed
BTC/USD

hitting
$40,700

on
major
exchanges
before
bouncing,
a
correction
that
has
since
held.

Ironically,
it
was
that
very
level
that
was
in
focus
on
the
same
day
in
2021,
which
nonetheless
came
during
what
turned
out
to
be
the
more
vertical
phase
of
Bitcoin’s
recent
bull
run.

Last
September
also
returned
the
focus
to
$40,700,
which
acted
as
a
turning
point
after
several
weeks
of
correction,
and
ultimately
saw
BTC/USD
climb
to
$69,000
all-time
highs.

Now,
however,
the
chances
of
a
breakdown
to
the
$30,000
zone
are
unreservedly
higher
among
analysts.

“Weekly
Close
is
just
around
the
corner,”
Rekt
Capital

summarized

alongside
a
chart
with
target
levels.

“Theoretically,
there
is
a
chance
that
$BTC
could
perform
a
Weekly
Close
above
~$43200
(black)
to
enjoy
a
green
week
next
week.
Weekly
Close
under
~$43200
however
&
BTC
could
revisit
the
red
area
below.”


BTC/USD
annotated
candle
chart.
Source:
Rekt
Capital/Twitter

Bitcoin
ultimately
closed
at
$42,000,
since
hovering
at
around
that
level
in
what
could
turn
out
to
be
some
temporary
relief
for
bulls.

“I
think
market
puts
in
a
lower
high,”
fellow
trader
and
analyst
Pentoshi

forecast
,
adding
that
he
believes
$40,700
will
ultimately
fall.

An
increasingly
alluring
target,
meanwhile,
lies
at
last
summer’s
$30,000
floor.

Consensus
forms
over
dire
outlook
for
cash

The
macro
picture
this
week
is
particularly
complicated
for
risk
asset
fans,
with
Bitcoin
and
altcoins
no
exception.

What
the
future
holds,
however,
varies
considerably
from
one
pundit
to
another.

The
United
States
Federal
Reserve
is
broadly
seen
to
start
raising
interest
rates
in
the
coming
months,
this
making
investors
de-risk
and
causing
a
headache
for
crypto
bulls.
“Easy
money,”
which
began
flowing
in
March
2020,
will
now
be
much
harder
to
come
by.

The
bearish
viewpoint
was
summarized
neatly
by
ex-BitMEX
CEO
Arthur
Hayes
in
his
latest
blog
post
last
week.

“Let’s
forget
what
non-crypto
investors
believe;
my
read
on
the
sentiment
of
crypto
investors
is
that
they
naively
believe
network
and
user
growth
fundamentals
of
the
entire
complex
will
allow
crypto
assets
to
continue
their
upward
trajectory
unabated,”
he
wrote.

“To
me,
this
presents
the
setup
for
a
severe
washout,
as
the
pernicious
effects
of
rising
interest
rates
on
future
cash
flows
will
likely
prompt
speculators
and
investors
at
the
margin
to
dump
or
severely
reduce
their
crypto
holdings.”

This
week
sees
the

U.S.
consumer
price
index
(CPI)
data

for
December
released,
numbers
that
will
likely
feed
into
the
story
of
surprise
inflation
gains.

Hayes
is
far
from
alone
in
worrying
over
what
the
Fed
may
bring
to
crypto
this
year,
with
Pentoshi,
among
others,
likewise
calling
a
temporary
end
to
the
bull
run.

“And
the
final
question
is,
can
crypto
ignore
the
Fed
if
it
decides
to
go
all
out
wielding
a
deflationary
machete?
I
doubt
it,”
analyst
Alex
Krüeger

concluded

in
a
series
of
tweets
on
the
issue
this
weekend.

“‘Don’t
fight
the
Fed’
applies
both
ways,
up
and
down.
If
the
Fed
is
*too
hawkish*
then
Houston,
we
have
a
problem.”

There
were
some
optimists
left
in
the
room.
Dan
Tapiero,
founder
and
CEO
of
10T
Holdings,
told
followers
to
“ignore”
the
recent
rout
and
focus
on
an
unchanged
long-term
investment
opportunity.

“Most
bullish
macro
backdrop
in
75
years,”
he

said
.

“Booming
economy
supported
by
massive
negative
real
rates.
Fed
will
never
equalize
rates
with
inflation.
Stay
long
stocks
and
Bitcoin
and
ETH.
Hodl
through
short
term
volatility.
Real
Dollar
cash
savings
will
continue
to
lose
value.”

Tapiero
highlighted
data
compiled
by
Charlie
Bilello,
founder
and
CEO
of
Compound
Capital
Advisors.

RSI
hits
two-year
lows

Amid
the
gloom,
not
everything
is
pointing
to
a
protracted
bearish
phase
for
Bitcoin
specifically.

As
Cointelegraph
has
been
reporting,
on-chain
indicators
are

calling
for
upside
in
droves


and
historical
context
serves
to
support
those
demands.

This
week,
it’s
Bitcoin’s
relative
strength
index
(RSI)
that
continues
to
headline,
reaching
its
lowest
levels
in
two
years.

RSI
is
a
key
metric
used
to
determine
whether
an
asset
is
“overbought”
or
“oversold”
at
a
given
price
point.

Plumbing
the
depths
at
$42,000
suggests
that
such
a
level
really
is
considered
too
extreme
by
the
market,
and
a
rebound
should
occur
to
balance
it.

By
contrast,
last
January,
RSI
was
sky-high
and,
conversely,
well
within
“overbought”
territory,
while
BTC/USD
traded
at
the
same
price.

“The
Bitcoin
RSI
is
on
the
lowest
point
in
2
years
on
the
daily.
March
2020
&
May
2021
were
the
last
ones.
And
people
flip
bearish
here
/
want
to
short,”
a
hopeful
Cointelegraph
contributor
Michaël
van
de
Poppe

commented
.


BTC/USD
1-day
candle
chart
(Bitstamp)
with
RSI.
Source:
TradingView

Cointelegraph
noted
similarly
bullish
hints
on
the

monthly
RSI
chart

last
week.

Hash
rate
recoups
Kazakhstan
losses

Another
blip
from
last
week
already
“curing
itself”
comes
from
the
realm
of
Bitcoin
fundamentals.

After
hitting
new
all-time
highs
throughout
recent
weeks,
Bitcoin’s
network
hash
rate

took
a
hit

when
turbulence
in
Kazakhstan
compromised
internet
availability.

Kazakhstan,
home
to
around
18%
of
Bitcoin’s
hash
rate,
has
since
stabilized,
allowing
the
hash
rate
to
mostly

return

to
prior
levels
of
192
exahashes
per
second
(EH/s).

At
one
point
down
to
171
EH/s,
responses
to
what
may
have
reminded
some
of
last
May’s
China
mining
ban
appear
to
have
lifted
the
hash
rate
and
preserved
record-breaking
miner
participation.

Bitcoin’s

network
difficulty
,
despite
the
upheaval,
still
managed
to
put
in
a
modest
increase
this
weekend
and
is
currently
on
track
to
do
so
again
at
its
next
automated
readjustment
in
just
under
two
weeks.


Live
Bitcoin
hash
rate
chart
screenshot.
Source:
MiningPoolStats

“Going
up
forever,”
on-chain
analyst
Dylan
LeClair

commented

about
the

classic
mantra
: “price
follows
hash
rate.”

For
context,
China’s
mining
rout
caused
the
hash
rate
to
decline
by
50%.
It
took
around
six
months
to
recoup
the
losses.

“What
if…?”

Someone
who
has
long
been
saying
that
it’s
high
time
for
a
Bitcoin
trend
reversal
is
quant
analyst
PlanB,
creator
of
the
stock-to-flow-based
BTC
price
models.



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ONE

Currently
weathering
a
test
of
his
creations

and
the
accompanying
storm
of
social
media
criticism

PlanB
nonetheless
remains
more
optimistic
than
most
when
it
comes
to
mid-to-long-term
price
action.

“I
know
some
people
have
lost
faith
in
this
bitcoin
bull
market,”
he

acknowledged

this
weekend.

“However
we
are
only
halfway
into
the
cycle
(2020-2024).
And
although
BTC
experiences
some
turbulence
at
$1T,
the
yellow
gold
cluster
at
S2F60/$10T
(small
black
dots
are
2009-2021
gold
data)
is
still
the
target
IMO.”


Stock-to-flow
cross-asset
(S2FX)
chart.
Source:
PlanB/Twitter

He
was
referring
to
the
stock-to-flow
value
for
Bitcoin,
gold
and
other
assets
as
part
of
his
stock-to-flow
cross-asset
(S2FX)
model,
which
calls
for
an
average
BTC/USD
price
of
$288,000
during
the
current
halving
cycle.

Closer
to
home,
however,
a
more
simplified
comparison
between
Bitcoin
this
cycle
and
its
two
previous
ones
saw
a
feasible
trajectory
beginning
with
a
U-turn
now.

A
separate
model,
the
floor
model,
which
demanded
$135,000
per
Bitcoin
by
the
end
of
December,
has
now
been

discarded

after
failing
to
hit
its
target
for
the
first
time
ever
in
November.

read original article here