In the outgoing week, Bitcoin traded mostly sideways with an increase to $52,985 and a decrease to $50,521. On Friday, February 23, at the end of the day, the BTC/USD pair decreased by 1.06%, to $50,744. For seven days the price was at $51,800 , but from February 22, buyers began to retreat amid a rebound in the dollar index and a correction in the S&P 500. Between January 23 and February 23, the price of Bitcoin rose sharply by 37%, forming a “double top.” Fundamentally, further institutional support for Bitcoin is expected, as well as a high probability of updating the historical maximum within six months. Support for the main cryptocurrency continues to be the $50,500 – $50,600 zone. One of the main factors that pushed the price up was the influx of funds after the SEC approved spot Bitcoin ETFs. The emergence of such investment funds in the United States has expanded access to Bitcoin, increasing interest in cryptocurrencies in general. Increasing demand for Bitcoin from institutional investors could encourage other tokens to grow.
Another significant factor is the upcoming Bitcoin halving, scheduled for April. Past decreases in rewards to miners were accompanied by a subsequent increase in the Bitcoin rate, but not immediately. However, it is unclear whether similar dynamics will continue this time after the early rally. In addition to the impact of the halving on the balance of supply and demand, the Bitcoin price can also be affected by market changes and international events. Another catalyst for growth could be the expected possible interest rate cut by the US Federal Reserve (Fed) in May, but due to the latest statistical data, a rate cut is now expected no earlier than June. The upcoming US presidential election may also affect Bitcoin’s performance in the second half of the year, although its impact on the cryptocurrency market may be indirect through the dollar and stock indices.
At the time of writing the review, the BTC/USD pair is trading at $51,075. According to BitRiver estimates, the $50,500 – $50,600 zone is still good support. But we must admit that sales have increased since February 18, and the inability of buyers on February 20 to maintain a defense above $52,300 has increased pressure on Bitcoin through fixing long positions. This price behavior was expected, since buyers too quickly reached the level of $45 thousand, then to $50 thousand. The faster the price rises, the more it falls when the demand for cryptocurrency sharply decreases. If market participants are further frightened by stock exchange “horror stories”, then investors who jumped on the train after the launch of ETFs, driven by the emerging fear of losing money, will themselves collapse the market through manual or forced closure of long positions (long positions) if the margin runs out on them.
If sellers take down their protective stops below the $50,000 level, then after breaking through they will have two targets: $46,850 and $42,800. In general, on the daily and weekly charts, the overall picture remains on the side of the buyers. Many altcoins show good profitability. Increased activity on the part of buyers is expected after March 3. A bad scenario for buyers is a sharp drop to $43,300 by March 3. We do not take this scenario into account, but it is better to know the plans of the sellers in order to understand how to act.
Last week, the role of the protagonist switched from Bitcoin to Ethereum (ETH). BTC failed to break through $52k despite attempting to break through resistance mid-week. By the weekend the rate dropped to $51 thousand, which is 1.7% lower than the price at the beginning of the week. Meanwhile, ETH rose in price by 6% over the week with local breakouts above the psychological mark of $3,000. Ethereum is growing in anticipation of the approval of the first spot ETFs in the US, not for Bitcoin, but for ETH, and the first of them may be approved in May. In addition, Ethereum is moving higher due to the anticipation of the upcoming Dencun update, which will be another step towards scaling and improving the efficiency of the Ethereum blockchain. ETH has every chance to attract the attention of market participants in the next couple of weeks until mid-March. If BTC is currently trading at 75% of its all-time high, ETH is lagging behind in this indicator, being at 61% of its price peak. Another indicator indicates a shift in interest from BTC to ETH. Since the beginning of 2023, the ETH to BTC rate has been declining, but now there has been a reversal of this trend – the ETH to BTC rate curve shows a reversal towards growth. If ETH added 5.7% to the dollar over the past week, then the growth to Bitcoin was higher – 7.6%.
Along with ETH, other cryptocurrencies associated with solutions for decentralized applications and protocols are growing – Solana (SOL), Polkadot (DOT), Avalanche (AVAX) and Cosmos (ATOM). Interestingly, over the past 4 months, the number of active crypto wallets for MetaMask, the main wallet for ETH, has increased sharply. In September 2023, their number was estimated at 19 million, and in January – already at 30 million. This may also indicate that capital may move into altcoins in the coming weeks, as investor risk appetite is high and they are willing to take risks for the chance of high returns.
ETH will continue to attract investors’ attention next week. Optimistic sentiment regarding the coin dominates, and therefore the rally for ETH may continue. The next significant level for ETH will be $3,500. The upper level of resistance in the next month is seen at $3800, because it is 80% of the historical high. It is unlikely that it will be possible to overtake Bitcoin in terms of the pace of approaching the maximum of Ethereum. Until Bitcoin reaches the final straight to a new historical high, the rest of the crypto market is unlikely to be able to get ahead of it.
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