Bitcoin (BTC) enters the final week of February with a fresh two-year record for its weekly close, surpassing $52,000. The price of BTC continues to show strength and there are little signs of a downward reversal as bulls drive the market closer to all-time highs. Traders and market observers are divided on the timing, but consensus is increasingly leaning towards further upside. Bitcoin has successfully weathered the turbulence caused by major events this year, and with the block subsidy halving just two months away, many are expecting a rally in classic fashion. However, the future beyond that is less predictable. Analysis warns that BTC/USD may peak later in 2024 and enter a “secular” bear market. The impact of the halving on price action is also under scrutiny. Additionally, the volatile macroeconomic and geopolitical conditions in the US and beyond suggest that crypto volatility catalysts are lurking at every turn. This article provides a fresh perspective on the major factors affecting BTC price action and speculates on how they might unfold as February comes to a close.
Bitcoin closed the week at around $52,100, the highest since November 2021, symbolically nearing the peak of the euphoria experienced back then when BTC reached $69,000. Predictions for the week’s end varied, but the market saw little volatility, allowing $52,000 to hold during the Asia trading session. Traders anticipate another leg up before retracing recent gains. The resistance at $52,000 has been a focal point, keeping spot markets relatively unchanged. Venturefounder, a contributor to on-chain analytics platform CryptoQuant, agrees with the $58,000 target based on the relative strength index (RSI) behavior. Despite the lack of spot Bitcoin exchange-traded fund (ETF) purchases over the weekend, BTC’s performance has remained strong.
The debate over the halving and its impact on price is intensifying as the event draws closer. Some argue that recent price performance, particularly with the emergence of institutional access through US spot ETFs, challenges the traditional Bitcoin market cycles that revolve around the halving. Others believe that the current cycles are in line with previous ones, with the cycle top expected to come months after the halving or even later. Popular trader and analyst Credible Crypto questions whether this time is really different or if people mistakenly believe it is because they have been using the halving as the sole reference point for BTC cycles. He envisions a top in late 2024, followed by a major bear market. However, before the halving in April, there is still plenty of opportunity for gains. Rekt Capital, another trader and analyst, notes that previous cycles experienced a pre-halving rally starting two months in advance.
Global liquidity conditions are currently favorable for cryptocurrencies, despite macro analysts expressing caution due to recent US inflation data. The data showed that prices advanced more than expected in January, causing uncertainty about the Federal Reserve’s interest rate policy and quantitative tightening. This dampens the tone for risk assets, but there is still a divergence between market performance and macro reality. Bitcoin statistics platform Look Into Bitcoin creator Philip Swift notes that global liquidity conditions are better than ever, which could be a catalyst for crypto. In the US, there are still factors that could unsettle the markets and lead to a more hawkish stance by the Fed, such as jobless claims, the Fed’s January meeting minutes, and the S&P Purchasing Managers’ Index.
Open interest (OI) for CME Group’s Bitcoin futures reached an all-time high of $6.8 billion, driven by ETF inflows and BTC price action. Total exchange OI also hit its highest levels since Bitcoin’s all-time high of $69,000, reaching $22.8 billion on Feb. 19. OI spikes have historically preceded periods of BTC price upside, but the volatility can work in both directions. Analysts warn that fresh positioning in Bitcoin is risky, as the OI levels on all coins are similar to the highs seen in 2021. However, the levels of both open interest and funding rates suggest that there is no “irrational exuberance” among traders.
Cross-crypto sentiment is showing signs of euphoria, with the Crypto Fear and Greed Index reaching its highest levels since the 2021 Bitcoin all-time high. The index, which is a lagging indicator, briefly reached a score of 79/100, corresponding to “extreme greed.” However, at the time of writing, the index stood at 75/100. Historically, a reading of 90 or higher indicates an incoming long-term market correction, but this has not happened since the first quarter of 2021.
Disclaimer: This article is for informational purposes only and should not be considered investment advice or a recommendation. Every investment and trading move involves risk, and readers should conduct their own research and due diligence before making any investment decisions.