Bitcoin (BTC) kicks off the new week with bulls aiming for all-time highs as the positive price momentum from February continues. The first weekly candle of March closed above $60,000, indicating strong support. Sellers are starting to accept that there may be no barriers preventing Bitcoin from entering price discovery mode. This scenario is more optimistic than what many traders and analysts initially expected for 2021. However, there are still potential hurdles and volatility that could affect the market in the coming weeks, including the block subsidy halving in April. The United States Federal Reserve’s guidance on the state of the economy, set to be released soon, could also impact the crypto market. Despite the current bullish sentiment, some caution that a substantial correction and consolidation period may still be possible. The current state of Bitcoin markets is being closely watched as it may mark a significant moment in the BTC price cycle.
Bitcoin’s price started the week on a strong note, with a $2,000 hourly price swing that led to a new multiyear high. The price reached $64,282 on Bitstamp, and BTC/USD is now trading near $65,000. This puts Bitcoin just a few thousand dollars away from reaching new all-time highs. Year-to-date gains for BTC are now over 50%. Traders and analysts on social media are divided between optimism and skepticism, with some predicting a major reversal. The consensus seems to be that Bitcoin may continue its upward trajectory and break through the sensitive all-time high level from 2021. However, there are concerns that BTC/USD may form a “cup and handle” pattern at the all-time highs, potentially leading to a correction towards $40,000. Despite the differing opinions, many analysts believe that bulls are currently in control of the market.
Charles Edwards, founder of Capriole Investments, warns that the market may experience a correction in the coming weeks. He believes that the recent price movements may be due to “froth” in the market, which could take a few weeks to fade. However, he emphasizes that he is not bearish in the long term and that risk management is crucial, especially at historic price levels. The high funding rates in the market are also a cause for concern, indicating potential overheating. Open interest in Bitcoin has reached $27.7 billion, suggesting increased price volatility. However, analysts argue that when compared to the current market cap, the open interest is still relatively low. They believe that there is still room for open interest to grow, which could fuel further price increases.
The upcoming testimony of Federal Reserve Chair Jerome Powell before Congress is expected to have an impact on the crypto and risk asset markets. Powell is expected to maintain a hawkish stance and signal that the Fed is not in a hurry to cut rates. This could lead to tighter financial conditions and potentially affect the economy. The market currently sees little chance of a rate hike but has pushed back the odds of a rate cut to later in the year. Volatility is expected before the Fed’s decision is announced on March 20.
Sentiment among crypto investors is currently driven by the lure of all-time highs. The Crypto Fear and Greed Index is at multiyear highs, indicating extreme greed in the market. This level of sentiment has historically preceded market turnarounds. Social media discussions are increasingly focused on price-related topics, indicating a cooling-off phase may be on the horizon. Overall, the state of the Bitcoin market is being closely monitored as it could signal a significant moment in the BTC price cycle. However, caution is advised as there are still potential risks and hurdles that could impact the market in the coming weeks.