Inflation

Bitcoin price hits $28.5K on PCE data as macro ‘accumulation zone’ ends

Bitcoin is up $1,000 on the day as bets on $30,000 hitting soon reappear in advance of the BTC price monthly close.

Bitcoin (BTC) recovered recent losses at the March 31 Wall Street open as traders looked for a strong monthly close.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

PCE delights risk assets as with BTC price up $1,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD heading to $28,556 on Bitstamp after the opening bell, up $1,000 from the day’s lows.

The fresh gains followed encouraging macroeconomic data from the United States, with the February Personal Consumption Expenditures (PCE) index modestly beating expectations in some areas.

“We are making progress in the fight against inflation,” an official White House statement about the PCE numbers read.

“Today’s report shows annual inflation down by nearly 30 percent from this summer, against a backdrop of low unemployment and steady growth.”

With inflation sticky yet seemingly not troubling markets, these appeared to increase bets on Federal Reserve interest rate hikes pausing in May, data from CME Group’s FedWatch Tool showed.

Risk assets thus traded higher in anticipation. The S&P 500 and Nasdaq Composite Index were both up around 0.5% higher at the time of writing.

Fed target rate probabilities chart. Source: CME Group

Related: US enforcement agencies are turning up the heat on crypto-related crime

The mood around Bitcoin was equally buoyant, countering reservations among some traders who had warned of a significant retracement at or near the monthly close.

To the upside, data from monitoring resource Material Indicators showed the bulk of ask liquidity stacked at $29,000 prior to the PCE release.

BTC/USD order book data (Binance). Source: Material Indicators/Twitter

Popular trader Crypto Tony entertained the idea of Bitcoin hitting $30,000 in the short term, with the price having held a key support level at $27,700.

Analytics account Skew, meanwhile, argued that spot buying pressure needed to hold to preserve current levels above $28,000.

Bitcoin “leaving” buy-the-dip territory

Moving to higher timeframes, optimism was no less in evidence.

Related: BTC price to $22K? Watch these key levels into Bitcoin monthly close

“Bitcoin is leaving another accumulation zone!” Caleb Franzen, senior market analyst at Cubic Analytics, announced on the day.

“Bitcoin’s 24-month Williams%R Oscillator is set to close above the ‘oversold’ threshold for March, which has marked an end to prior bear markets. Bullish long-term probabilities are improving, so long as we stay above the lower-bound.”

Franzen had previously covered the evolving status quo for the Bitcoin Williams %R oscillator across various timeframes as the 2023 uptrend began.

BTC/USD annotated chart. Source: Caleb Franzen/Twitter

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

3 reasons why Bitcoin bulls are well positioned to profit from this week’s $4.2B options expiry

$4.2 billion in BTC options expire on March 31, and despite weeks of harsh regulatory action against the crypto sector, bulls are well positioned to profit.

Regulation continues to be the primary concern for Bitcoin bulls, especially after the Commodity Futures Trading Commission (CFTC) sued Binance for trading and derivatives law violations. The regulator wants Binance to repay the trading profits, revenues, salaries, commissions, loans and fees it received from United States citizens, as well as paying civil penalties for the violations.

Bitcoin’s (BTC) rise was also fueled by a shift in sentiment toward risk assets after U.S. Federal Reserve Chair Jerome Powell said interest rate hikes are no longer the default move to curb inflation. The central bank understood that the current situation will likely “result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.”

Fixed-income investors earn more when interest rates rise, so buying stocks and commodities becomes less appealing. As a result, by reversing the strategy and adding $339 billion in liabilities in two weeks, the Fed chose to contain the banking crisis, which may cause inflation to spiral out of control.

Given the accretive scenario for risk assets, Bitcoin bulls can profit up to $1.4 billion in Friday’s monthly options expiry.

Bitcoin bears were caught completely off-guard

The open interest for the March 31 options expiry is $4.2 billion, but the actual figure will be lower since bears were expecting sub-$26,500 price levels. These traders were caught by surprise as Bitcoin gained 32% between March 12 and March 17.

Bitcoin options aggregate open interest for March 31. Source: CoinGlass

The 1.34 call-to-put ratio reflects the imbalance between the $2.4 billion call (buy) open interest and the $1.8 billion put (sell) options. However, if Bitcoin’s price remains near $28,000 at 8:00 am UTC on March 31, only $25 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $26,000 or $27,000 is useless if BTC trades above that level on expiry.

Bulls aim for $29,000 to secure a record-breaking $1.4 billion profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on March 31 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

  • Between $25,000 and $26,000: 27,200 calls vs. 12,700 puts. The net result favors the call (bull) instruments by $360 million.
  • Between $26,000 and $27,000: 32,300 calls vs. 8,500 puts. The net result favors the call (bull) instruments by $620 million.
  • Between $27,000 and $28,000: 38,100 calls vs. 3,000 puts. Bulls increase their advantage to $1.2 billion.
  • Between $28,000 and $30,000: 48,300 calls vs. 400 puts. Bulls dominate by profiting $1.4 billion.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Related: ‘Definitely not bullish’ — 7% Bitcoin price gains fail to convince traders

The bears best hope relies on regulatory FUD

Bitcoin bulls must push the price above $29,000 by March 31 to secure a potential $1.4 billion profit. Bear’s best shot, on the other hand, is more regulatory FUD about stablecoins or major crypto exchanges — which has so far been fruitless.

Considering the bullish momentum created by the Fed’s inability to continue raising interest rates, bulls are well positioned for the March BTC monthly options expiry. Most likely, those profits will be used to further strengthen the $28,000 support, so the expected outcome is especially concerning for bears.

Bitcoin has been hovering around $28,000 for the past ten days, but the cryptocurrency has gained 70.5% year to date. Until March 17, Bitcoin was trading below $25,000 and this explains why most bearish bets for March’s $4.2 billion options expiry were placed at $26,500 or lower.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Crypto market rally stalls at the $1.2T level, but bulls are getting positioned

The total crypto market cap has stalled at the $1.2 trillion level, but derivatives data shows bulls are preparing for the next breakout.

After gaining 11% between March 16 and March 18, the total crypto market capitalization has been battling resistance at the $1.2 trillion level. This same level was reached on August 14, 2022 and was followed by a 19.7% decline to $960 billion over the next two weeks. During the lateralization period between March 20 and March 27, Bitcoin (BTC) gained 0.3% while Ether (ETH) posted modest gains of 1.6%.

Total crypto market cap in USD, 12-hour. Source: TradingView

One source of favorable short-term momentum is a change in the Federal Reserve’s monetary policy. The U.S. Federal Reserve was forced to increase its balance sheet by $393 billion between March 9 and March 23 in order to provide short-term loans to failing banks. The objective of the plan was to reduce inflation, which has significantly impacted the cost of living and ultimately hampered economic expansion in the United States.

The balance sheet reduction runs counter to the central bank’s previous nine-month trend of offloading some of its debt instruments, exchange-traded funds and mortgage-backed securities. The reversion of this strategy is initially bullish for risk assets because the Fed is acting as a lifeline for struggling banks and hedge funds.

On the other hand, the sector’s regulatory risks were exacerbated on March 22 when Coinbase received a Wells notice from the U.S. Securities and Exchange Commission. The exchange’s staking program, some of its digital asset listings and its wallet services could all be targeted by the regulator. Again, the uncertainty stems from not knowing which assets qualify as securities.

These competing forces may have been the primary reason for cryptocurrencies’ narrow trading range near $1.18 trillion between March 17 and March 27. However, derivatives data presents compelling arguments for a rally toward $1.35 trillion and a retest of the $1 trillion threshold.

The total crypto market capitalization has remained stable since March 20, with XRP (XRP) rallying 22% and Litecoin (LTC) gaining 17%. XRP’s gains are likely attributable to investors’ expectations that Ripple will prevail in its ongoing legal battle against the SEC. As for Litecoin, analysts point to its upcoming halving in August, when the rewards for mining new blocks will be cut in half.

Options traders are reasonably confident above $1 trillion

Traders can gauge the market’s sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A put-to-call ratio of 0.70 indicates that put option open interest lags behind the greater number of call options. In contrast, a 1.40 indicator favors put options, which is a bearish sign.

BTC options volume put-to-call ratio. Source: Laevitas

Since March 10, Bitcoin’s put-to-call ratio has been either balanced or favoring neutral-to-bullish call options. Even though Bitcoin’s price has risen by 41% in the past two weeks, options traders indicate they are not increasingly concerned about a price correction.

Related: Will BTC ditch the bear market? 5 things to know in Bitcoin this week

Leverage demand is balanced despite the resistance at $1.2 trillion

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on March 27. Source: Coinglass

In the past week, the seven-day funding rate for the majority of the leading cryptocurrencies has been neutral, indicating that no excessive buying leverage has been used to support prices. This translates to firepower for bulls, if necessary, and a significant reduction in liquidation risks.

The only exception was BNB (BNB), where short sellers paid 1.25% per week to maintain their positions. Regulatory uncertainty surrounding the Binance exchange is likely behind whales’ interest in shorting BNB.

The recent rally appears sustainable from a derivative perspective, and bulls are well positioned to defend against future declines. However, given that the crypto price gains may have been fueled by the Fed’s emergency action to avoid a banking crisis, the odds favor further lateral price movement.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

How does the economy work?

The economy is a system of producing and exchanging goods and services in a society.

The economy is a complex system of production, distribution, and consumption of goods and services. Understanding how the economy works can be challenging, but it is essential for making informed decisions about personal finance, investing and public policy.

This article will explore the fundamental concepts of how the economy works, including the factors that influence it and the various components that make up the economy.

Factors that influence the economy

The economy is a dynamic system that is constantly changing and evolving. It is a vast network of people, organizations and governments; each involved in creating, moving, and using commodities and services. The economy is influenced by a wide range of factors, including macroeconomic factors like government policies, interest rates and international trade, as well as microeconomic factors such as individual decisions about spending and saving.

Government policies

Through its policies, the government significantly impacts how the economy develops. Fiscal policy, for instance, describes how the government uses spending and taxation to affect the economy. The government can stimulate the economy or deflate an overheated one using its purchasing power. Taxation is another tool the government can employ to manage the money supply and affect the level of economic activity.

Interest rates

The cost of borrowing money is represented by interest rates, which impact both consumer spending and company investment. Borrowing money is less expensive when interest rates are low, which can promote economic growth. High interest rates make borrowing more costly, which can stifle economic growth.

International trade

International trade also plays a crucial role in the economy. Trade between countries allows for the exchange of goods and services, which can increase economic growth and efficiency. However, trade can also lead to job losses in certain industries and countries, and imbalances in the trade deficit.

Components of the economy

The economy comprises three primary components: households, businesses and government. Each of these components plays a vital role in the economy and interacts with the others in complex ways.

Households

Households are the consumers of goods and services. People use the money they earn from employment or investments to pay for goods and services from companies. Due to the fact that household spending makes up a sizable share of the demand for goods and services, it has a considerable impact on economic growth.

Businesses

Businesses are the producers of goods and services. To create items and services sold to consumers or other businesses, they employ staff and invest in inputs like raw materials, equipment and technology. Business investment is critical to economic growth since it boosts productivity and creates jobs.

Government

The government plays a crucial economic role through its policies and spending. The government provides essential public goods and services such as education, healthcare and infrastructure, and it also regulates the economy to ensure fair competition and protect consumers.

Economic indicators

Several economic indicators are used to measure the health of the economy. These indicators provide insight into the level of economic activity, and can help individuals and policymakers make informed decisions.

Gross domestic product (GDP)

GDP is the total value of goods and services produced in a country over a specified period — usually a year. GDP is one of the most widely used economic indicators and provides a broad measure of economic activity.

Unemployment rate

The unemployment rate is the proportion of the labor force that is unemployed but actively looking for work. It is an important indicator of the labor market’s health and sheds light on the level of economic activity. High unemployment rates indicate a low labor market and a low level of economic activity. In contrast, low unemployment rates indicate a strong labor market and a high level of economic activity.

Inflation rate

The inflation rate gauges how quickly the average cost of goods and services is rising across an economy. Several causes, like a growth in the amount of money in circulation or a rise in the demand for goods and services, can contribute to inflation. Low inflation rates might signal sluggish economic growth, whereas high inflation rates can signal an overheated economy.

Related: How to preserve capital during inflation using cryptocurrencies?

Consumer Price Index (CPI)

The CPI measures the average price of a basket of household goods and services. It is used to track inflation over time and to adjust for changes in the cost of living. The CPI is an important indicator of consumer spending patterns, providing insight into the economy’s health.

Retail sales

Retail sales are a measure of the total amount of goods sold by retailers over a specified period. Retail sales can be a good indicator of consumer spending patterns. High retail sales indicate a strong economy, while low retail sales suggest weak economic activity.

Industrial production

Industrial production measures the total output of the industrial sector of the economy, including manufacturing, mining and utilities. It is an important indicator of the health of the manufacturing industry — a critical component of many economies.

Housing starts

The number of new residential construction projects that have started over a specific period is called housing starts. They are a crucial gauge of the housing market’s health and the state of the overall economy. Low numbers of home starts can signify sluggish economic activity, while high levels can suggest significant economic growth.

How does blockchain affect economic growth?

Blockchain technology has the potential to significantly impact economic growth in several ways. By enabling secure and efficient transactions, reducing costs, and increasing transparency and trust, blockchain can promote innovation, productivity and financial inclusion. 

Related: How blockchain empowers women in developing economies

In addition, blockchain-based apps can produce fresh company models and sources of income, stimulating the economy and opening up job prospects. Because blockchain technology is still in its early stages of development and adoption, the total influence of this technology on economic growth has not yet been realized.

Yet, the ability of blockchain to revolutionize many businesses and sectors — from logistics and supply chains to finance and healthcare — makes it a viable tool for promoting economic growth in years to come.

What is fiscal policy, and why does it matter?

Fiscal policy shapes economies through government spending, taxation and borrowing.

Fiscal policy is a tool used by governments to regulate economic activities in their country. It involves the use of government spending, taxation and borrowing to influence economic growth, stabilize inflation and maintain a stable economy. This article will explain what fiscal policy is, how it works, and why it is important.

What is fiscal policy?

Fiscal policy is a tool used by governments to regulate economic activities in their country. It is one of the two main categories of economic policy, along with monetary policy. The main goal of fiscal policy is to control the economy through government spending and taxation.

How does fiscal policy work?

The government has a number of ways to affect the economy through fiscal policy. One of the primary methods used is government spending. The government may boost economic activity and create jobs by raising spending, which will add more money to the economy.

Another way that fiscal policy works is through taxation. The government can boost disposable income, which in turn can boost consumer spending, by decreasing taxes. This could encourage economic expansion and boost activity.

Finally, fiscal policy is also used for controlling inflation. If the government considers inflation to be a concern, it may raise taxes or cut spending, both of which could help to lower demand and limit inflation.

Why is fiscal policy important?

Fiscal policy is important because it can have a significant impact on the economy. By adjusting government spending and taxation, the government can influence economic growth, inflation and employment levels.

Stimulating economic growth

The promotion of economic growth is one of fiscal policy’s main goals. The government can promote economic activity and employment by raising spending. As a result, there may be an increase in tax collections and corporate and individual chances for growth in the economy.

Regulating inflation

Inflation control is another key responsibility of fiscal policy. When there is an excess of money chasing an insufficient amount of goods, inflation can result in price increases. The government can lower demand by altering expenditure and taxation, which can aid in reducing inflation.

Related: Bitcoin and inflation: Everything you need to know

Reducing employment

Furthermore, fiscal policy can be used to reduce unemployment. The government can promote economic activity and employment by raising spending. As a result, there may be less unemployment and more options for employment.

Managing debt

Fiscal policy can also be used to manage government debt. By adjusting government spending and taxation, the government can influence the amount of money it borrows. This can help manage the government’s debt levels and ensure that it is able to meet its financial obligations.

Do cryptocurrencies have a fiscal policy?

Due to their decentralization and lack of centralized management, cryptocurrencies do not have a fiscal policy in the conventional sense. Yet the supply and demand of some cryptocurrencies may be impacted by the fact that they may have their own distinct monetary policies and rules written into their code.

Related: Ethereum as a deflationary asset, explained

For example, Bitcoin (BTC) has a fixed maximum supply of 21 million coins, which is hardcoded into its blockchain protocol. This means that no more than 21 million BTC can ever be created, and this limit helps to regulate its supply and demand.

Even though cryptocurrencies lack a traditional fiscal policy, the rules and protocols incorporated into their coding can nonetheless significantly affect their adoption and value. For instance, alterations to the supply or consensus algorithm of a cryptocurrency may have an impact on its security and scarcity, which may have an impact on its price and market demand.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Fed balance sheet adds $393B in two weeks — Will this send Bitcoin price to $40K?

The U.S. central bank’s liabilities may increase if more regional banks fail, creating an upside scenario for the price of Bitcoin.

As of March 22, the United States Federal Reserve’s balance sheet has surged by nearly $94.5 billion — a $297 billion increase from the last week when the banking crisis started.

New QE hopes boost Bitcoin’s price

Overall, the U.S. central bank’s liabilities have increased by $393 billion in the last two weeks to $8.734 trillion. That is closer to the all-time high of $8.95 trillion a year ago when the Fed started its quantitative tightening program and reduced its assets by $600 billion.

Federal Reserve balance sheet as on March 24. Source: FRED

The Fed released the data on March 23, coinciding with Bitcoin’s (BTC) price rallying 5.5% toward $29,000. The rise occurred amid speculations that the Fed’s expanding balance sheet results from quantitative easing (QE).

BTC/USD daily price chart. Source: TradingView

But the Fed did not use new dollar reserves to purchase long-term Treasurys. Instead, the central bank dropped its U.S. Treasury holdings by $3.5 billion to $7.937 trillion, suggesting that quantitative tightening is still in place to curb inflation.

On the other hand, the Fed’s balance sheet grew because it dispatched short-term loans to the ailing banking sector.

Notably, as of March 22, the Fed slashed the usage of its “discount window,” which helps commercial banks manage short-term liquidity needs, by $42 billion. Instead, it allocated the same $42 billion to its brand new Bank Term Funding Program (BTFP).

Federal Reserve BTFP funding reserves. Source: FRED

The other $60 billion went to the Fed’s swaps facility that provides liquidity to offshore banks.

Foreign official repo agreements at the Fed. Source: FRED

The Fed’s tightening policy and lending facilities to regional and offshore banks risk drying up cash liquidity. This may boost the dollar’s valuation versus other top foreign currencies, which, in turn, could push Bitcoin’s price lower in the short term.

Interestingly, the U.S. dollar index has gained 1.5% since the Fed’s balance sheet update.

DXY daily price chart. Source: TradingView

Has the banking crisis peaked?

The ongoing credit crisis may not have peaked, despite Fed’s $393 billion emergency lending to banks, if one considers Janet Yellen’s blurred outlook on depositors’ insurance.

On March 21, the U.S. Treasury Secretary confirmed protecting uninsured depositors over $250,000 “if smaller institutions suffer deposit runs” such as those witnessed with Silicon Valley Bank and Signature Bank. 

But Yellen did a U-turn the next day in her statements to the Senate, saying she had not considered “blanket insurance or guarantees of deposits.” Bank stocks tanked in response to her statement, resulting in another U-turn.

KBW Nasdaq Bank Index weekly performance chart. Source: TradingView

Yellen then told the House on March 23 that the authorities “would be prepared to take additional actions if warranted.”

In any case, the market will need to wait for the balance sheet data next week to determine whether or not the Fed’s liabilities are declining.

But if these emergency lending facilities keep rising after more bank collapses, then QE will be inevitable, similar to what happened after the 2008 global financial crisis.

BTC price technicals hint at $40,000

An expanding balance sheet — with or without QE — has proven bullish for Bitcoin in the past. This correlation will continue if the banking crisis deepens, according to Stack Hodler, the author of the crypto-focused Stack Macro newsletter.

Fed balance sheet vs. Bitcoin price performance. Source: TradingView

“BTFP, Swap Lines, TPI – It’s All QE,” the analyst noted, adding:

“It all leads to balance sheet expansion and fiat currency dilution despite plenty of Central Bank fans that will tell you otherwise.”

From a technical perspective, Bitcoin price is well positioned for a run up to $40,000 by June, or 50% higher than today’s price.

BTC/USD weekly price chart. Source: TradingView

As illustrated above, the upside target originates from Bitcoin’s inverse head-and-shoulders breakout setup on the weekly chart.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin $30K bets greet FOMC as analyst warns over long liquidations

Bitcoin may celebrate no matter what the Fed decides on interest rates, but one analyst worries about the extent of longs that would be liquidated below $20,000.

Bitcoin (BTC) may “take out shorts” to crack $30,000 during the day’s key United States macroeconomic policy updates, analysis says.

As bets pile up over how BTC’s price will react to the Federal Reserve’s decision on interest rates, $30,000 is in sight — but a drop to below $20,000 is not off the table.

Trader plans $30,000 profit-taking

Bitcoin is hours away from what popular trader Crypto Tony calls “one of the most anticipated” Fed meetings ever.

The Federal Open Market Committee (FOMC) will decide how to tweak baseline interest rates on March 22, amid suspicions that the ongoing U.S. banking crisis has disrupted policy.

From ongoing rate hikes forecast just last month, markets are now considering the chances that the Fed will pause the cycle, data from CME Group’s FedWatch Tool shows.

Fed target rate probabilities chart. Source: CME Group

This would be a key boon for risk assets, as the Fed would be tacitly implying that the eighteen months it has spent removing liquidity from the economy has not been the silver bullet to recovery.

Liquidity is already on the up thanks to the failure of several banks, Cointelegraph reported, with a chunk of the quantitative tightening (QT) removals undone in a single week.

“So FOMC today which means one thing, VOLATALITY. No doubt we will trend sideways util the meeting, which means tread cautiously,” Crypto Tony told Twitter followers in comments on the day.

“My main play is to take profit at $30,000 if it comes.”

BTC/USD annotated chart. Source: Crypto Tony/Twitter

Markets commentator Tedtalksmacro meanwhile laid out the probabilities of each Fed path and the likely impact on risk assets.

“Slow grind upwards on Bitcoin, which means that my eyes are still focused on $28,700,” Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, continued.

“I’m expecting us to sweep into that high around FOMC and then we’ll have some consolidation. CME gap at $28,700 too.”

BTC/USD annotated chart. Source: Michaël van de Poppe/Twitter

Van de Poppe referred to a so-called “gap” in CME Group’s Bitcoin futures markets formed when the price began a new trading week in a different position than it finished the week prior. Historically, the spot price has gone up or down to “fill” such gaps.

The gap in focus was created in June 2022, data from TradingView confirms.

CME Group Bitcoin futures 1-day candle chart. Source: TradingView

“Do you really want to get bullish?”

Adopting a more conservative view, however, popular analyst Justin Bennett warned that the current spot price trading range represents significant historical resistance.

Related: Bitcoin hits new 9-month highs above $28K as markets flipflop over FOMC

A “squeeze” of shorts could result in $30,000 appearing, he acknowledged, but a sudden dive could have the opposite effect, with longs betting that $20,000, at least, will hold.

“Look, maybe we see BTC take out short liquidations up to $30k,” Bennett summarized.

“But do you really want to get bullish at macro resistance with a massive block of long liquidations sub $20k? I don’t.”

An accompanying chart showed the extent of liquidations triggered by such a move below the $20,000 mark.

Bitcoin liquidation levels annotated chart. Source: Justin Bennett/ Twitter

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Holding Bitcoin: A profitable affair 88.5% of days

Bitcoin’s historical price performance confirms that a hard limit on total supply and seamless global usability is critical to becoming a store of value.

Of the 4,593 days of Bitcoin’s existence as a tradable asset, BTC hodlers experienced 4,065 profitable days — challenging the historical narrative of depreciating volatility in crypto. As a result, holding Bitcoin (BTC) is provably profitable in the long run. 

Bitcoin’s historical price performance confirms that a hard limit on total supply and seamless global usability is critical to becoming a store of value. Data from Blockchain.com shows that Bitcoiners enjoyed 88.50% of profitable days relative to the current market price at the time of writing.

Number of days in which holding bitcoin has been profitable, relative to current price. Source: Blockchain.com

As shown above, just 531 or 11.56% of the 4,593 days were unprofitable for long-term holders. The unprofitable days are between Dec. 28, 2022, and June 12, 2022, a time when Bitcoin was priced above the $26,246.58 and $28,344.5 range.

The revelation highlights the importance of understanding Bitcoin’s market cycles and why investors should avoid buying the tops and selling the dips. However, some traders prefer making daily trades on crypto exchanges for much smaller but consistent profits.

In a recent publication, Cointelegraph detailed the different types of crypto investors and categorized them based on their investment mindset. As mentioned, there are four main categories of mindsets of crypto bag holders: maximalists, hodlers, fomoers and traders. Read more to find out which one you are.

Related: Crypto Fear and Greed Index hits highest level since Bitcoin’s all-time high

In the Bitcoin ATM ecosystem, manufacturer General Bytes closed down its cloud services after discovering a “security vulnerability” that allowed an attacker to access users’ hot wallets and gain sensitive information.

“We’ve concluded multiple security audits since 2021, and none of them identified this vulnerability,” General Byes founder Karel Kyovsky concluded as he made the announcement.

Will the Fed stop rate hikes? 5 things to know in Bitcoin this week

Bitcoin targets $30,000 as a new week of macro surprises gets going — what might happen next?

Bitcoin (BTC) starts a new week in an unmistakably bullish position as it passes $28,000.

Crypto markets continue to climb on the back of the banking crisis, which still rages in the United States and abroad — where will they go next?

After a week of chaos for macro markets and solid gains as a result, Bitcoin and altcoins are circling levels, which some have not seen for nine months.

The 2022 bear market is feeling like an increasingly distant memory as old resistance levels tumble and bulls attempt to cement newly-reclaimed support.

This week, as last, there are all sorts of potential hurdles to overcome — the Federal Reserve will decide on its next interest rate changes and new macroeconomic data will drop.

Markets will likely stay volatile as a result, and any further unexpected events from the banking sector will only add to the instability.

At the same time, Bitcoin’s own ecosystem is set to become stronger than ever as network fundamentals launch to fresh all-time highs.

Cointelegraph takes a look at five of the key phenomena to keep an eye on when it comes to BTC price action in the coming week.

Fed rate hike cycle in doubt

The macro event of the week is undeniably the March 22 Fed decision on interest rate hikes — or lack of them.

The Federal Open Market Committee (FOMC) faces a stark challenge to its current quantitative tightening (QT) policy in place for the past eighteen months.

The unfolding banking crisis has put into doubt the Fed’s ability to keep raising interest rates, a policy which commentators argue was the death knell for struggling regional banks.

The Fed is nonetheless caught between a rock and a hard place. Raising rates would keep inflation in check but further punish the economy, possibly unleashing a new wave of bank failures.

“Next week’s FOMC is gearing up to be one of the most interesting ones in a while, with no one really agreeing on what’s gonna happen,” engineer and trader Tree of Alpha summarized.

“Odds at leaning towards 25bps, but it’s a wildcard. Planning on longing =50 bps as the safe play.”

According to CME Group’s FedWatch Tool, consensus as of March 20 favored the Fed hiking by 25 basis points, rather than pausing hikes altogether. The week prior, Goldman Sachs had predicted that rates would plateau, while Nomura even forecast a rate cut.

Fed target rate probabilities chart. Source: CME Group

“This week, the long anticipated March Fed interest rate decision comes out. Currently, markets are pricing in a 62% chance of a 25 bps rate hike. However, markets also see 100 bps of rate cuts by December,” financial commentary resource, The Kobeissi Letter, wrote in part of analysis about the long-term rate hike roadmap.

Kobeissi and others also queried how struggling bank stocks would react at the next Wall Street open, given the latest government moves over the weekend.

These included a buyout of Credit Suisse, the European banking giant, which saw a particularly violent reaction to the U.S. meltdown.

“Credit Suisse, $CS, was worth $10 billion a month ago and sold for pennies on the Dollar,” Kobeissi continued about fellow bank UBS purchasing Credit Suisse and getting $100 billion in government liquidity.

“The government said $CS had ‘serious risk of bankruptcy.’ A shareholder vote was bypassed. Regulators knew it was a matter of hours for bankruptcy. This deal was made out of desperation.”

Bitcoin spot price eyes $30,000

With that, the mood on Bitcoin and crypto markets has understandably taken a fresh turn for the better as the week begins.

At the time of writing, BTC/USD traded above $28,400, according to data from Cointelegraph Markets Pro and TradingView.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Already at nine-month highs, the pair managed to beat out bears during a consolidation period last week to return to target levels not seen in almost a year.

Chief among these is $30,000, a psychologically significant level surrounded by considerable historical liquidity. For monitoring resource Material Indicators and others, meanwhile, a key support level to hold is the 200-week moving average (MA).

Popular trader Crypto Tony focused on $27,700 to support the bull case and potential for an attack on $30,000.

“$27,700 ensured we are now in the next range between $27,700 – $31,000. Using $27,700 as a level that bulls need to hold to sustain a move up to $30,000 level,” he tweeted.

“Interesting week for sure. My stop loss on my main long remains at $25,500.”

BTC/USD annotated chart. Source: Crypto Tony/ Twitter

In fresh analysis, meanwhile, fellow trader Crypto Chase highlighted $28,500 as a potential short entry, while also entertaining a “somewhat likely” bull case in which selling only kicks in above $33,000.

“Please note that I am not abandoning the idea of 28.5K~ shorts. These may still present a great opportunity around FOMC this Wednesday. At the moment though, I cannot imagine an immediate local top,” he explained.

“I think a rejection could occur there and I’ll still look for the trade, but for those who attempt to hold a 28.5K short back to 12K may end up stopped out in that 33K liquidity pool.”

BTC/USD annotated chart. Source: Crypto Chase/ Twitter

Analyst heralds end of bear market

For some analyzing the long-term picture, however, Bitcoin has already broken out of a bear market in place since the comedown from its all-time highs and the start of Fed tightening in late 2021.

The weekly close came in at just above $28,000, making it Bitcoin’s highest since early June, 2022.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

For trader, analyst and podcast host Scott Melker, known as “The Wolf of All Streets,” this has clear implications.

“The bear market is officially over,” he proclaimed on the basis of the weekly chart data.

“$BTC made it’s first higher high ($25,212) since the all time high . That confirms a new bullish trend. Price can still go down, but that would be a new trend, not a continuation of the previous bear market. Congrats everyone.”

BTC/USD annotated chart. Source: Scott Melker/ Twitter

Melker linked to a similar post from August 2019, just after BTC/USD had passed $13,000 in a comeback from the pit of its previous bear market.

Equally buoyant about weekly timeframes is trader and analyst Rekt Capital, who continues to eye a disintegration of Bitcoin’s “macro downtrend.”

On quarterly timeframes, Rekt Capital is monitoring a “bullish engulfing” event in the making, something which has triggered significant upside in and of itself in the past.

New all-time highs due for Bitcoin difficulty

In a classic move, Bitcoin’s network fundamentals are refusing to abandon their trip to the moon.

The latest estimates from BTC.com and MiningPoolStats show that both hash rate and difficulty are in “up only” mode this month.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

Difficulty is set to adjust upwards 3.26% in the coming days, making it almost 45 trillion.

Hash rate hit a local peak on March 13, but is now trending upwards once again as miners respond to the latest price action.

Among miners, however, a divergence is playing out. On a rolling 30-day basis, miners’ BTC balances continue to decline, according to data from on-chain analytics firm Glassnode.

Bitcoin miner net position change chart. Source: Glassnode

The most greed since Bitcoin price was $69,000

There may still be reason to be afraid of the current bullish surge in Bitcoin and crypto more broadly.

Related: Bitcoin levels to watch as BTC price eyes highest weekly close in 9 months

A look at sentiment data suggests that the majority of the market is becoming overly confident in the good times continuing.

The Crypto Fear & Greed Index, which uses a basket of factors to produce a normalized sentiment score for crypto, is now at 66/100, firmly in its “greed” zone and its highest since November 2021.

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

Its warnings are being corroborated by social media users. A survey from research firm Santiment, which has garnered almost 15,000 responses, shows that most believe that BTC/USD will break $30,000 as the next major crypto market event.

Santiment Twitter survey (screenshot). Source: Santiment/ Twitter

“Crowd bullishness is doubling up bearishness for crypto’s top 2 assets,” Santiment commented about the results.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin price sees new 2023 high as CPI sends BTC price above $26K

Bitcoin sees a major new lift-off thanks to CPI numbers conforming to expectations — reducing the chances of the Fed tightening financial conditions.

Bitcoin (BTC) spiked above $26,000 on March 14 as United States Consumer Price Index (CPI) data showed mixed inflation signals.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

CPI fuels 9-month BTC price highs

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as sudden volatility kicked in on the release of February’s CPI numbers.

Inflation climbed 6% year-on-year, while the month-on-month figure was 0.4% — both in line with expectations. Items excluding food and energy increased by 0.5%, slightly higher than forecast.

Bitcoin appeared to react positively to the data, which allowed the Federal Reserve to avoid being trapped between stickier inflation and avoiding interest rate hikes amid an ongoing banking crisis.

Reacting, Venturefounder, a contributing analyst at on-chain analytics platform CryptoQuant, suggested that the market was now anticipating a “pivot” on hikes — a key boon for risk assets more broadly.

“The market: oh yes big victory on fighting inflation! No more rate hikes and Fed is gonna cut rate by 50 BPS before EoY 2023,” he tweeted.

“If Powell changes the 2% inflation target it will be the biggest rug move by the Fed since the 1970s taking USD off gold standards.“

Trading resource Game of Trades nonetheless argued that CPI was not yet low enough for the Fed to “aggressively” change its stance and echo actions that followed the March 2020 COVID-19 crash.

“Consensus gets it spot on as CPI comes in at 6%. But it’s not low enough to give the Fed room to aggressively step in during the ongoing crisis, as it did during C19,” a tweet read.

Volatility ongoing as BTC price eyes $26,000

CPI is notorious for sparking unpredictable BTC price moves, and as such, the picture remained unclear at the time of writing as to where BTC/USD would head next.

Related: Bitcoin price nears $25K as analysts place bets on CPI impact

Before the CPI release, significant sell-side liquidity was parked at $25,000 and beyond; the main target of bulls on low timeframes.

BTC/USD order book data (Binance). Source; Material Indicators/ Twitter

Bitcoin’s local highs of $26,150 marked a new record for 2023 — its best performance since June last year.

BTC/USD took out the key 200-period moving average, acting as resistance on weekly timeframes.

BTC/USD 1-week candle chart (Bitstamp) with 200MA. Source: TradingView

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.