Bitcoin (BTC) is preparing for the end of February with uncertainty surrounding its price action. Despite remaining above $50,000, the cryptocurrency has lost its bullish momentum in recent weeks. While some are hopeful for a surge in prices, it seems that reality is catching up with market sentiment as sellers continue to outweigh buyers. The next few days will bring key macroeconomic data from the United States, as well as the monthly candle close, which is expected to bring volatility to the market. This timing is crucial for Bitcoin, considering its internal dynamics and the upcoming halving event. Let’s take a closer look at these factors and more to consider when analyzing the BTC market in the coming days.
Bitcoin’s price remains within a narrow range after the weekly close, which has been the case for the second half of February. The latest close at $51,700 didn’t offer much inspiration to bullish investors, as it was $450 lower than the previous close. Material Indicators, a trading resource, has already identified a downward trend for BTC based on its proprietary trading tools. However, some market observers are more optimistic, including Bitcoin Munger, who believes that market makers are targeting $53,000 shorts.
The week in macro markets will be dominated by U.S. jobs and spending data, with the latter being the preferred inflation gauge for the Federal Reserve. Both data points will be released on February 29, potentially bringing volatility to risk assets at the end of the month. The current inflation data has exceeded expectations, raising questions about the Fed’s future actions and the possibility of an interest rate cut. The market has already adjusted its expectations, with a low probability of rate cuts in March according to CME Group’s FedWatch Tool. Despite this uncertainty, U.S. stocks are near all-time highs, reflecting optimism in the market.
Bitcoin’s network fundamentals are also experiencing a cooldown as its price action stabilizes. The latest estimates suggest that Bitcoin mining difficulty will decrease by around 2% in the upcoming readjustment on February 29. This is in contrast to the previous adjustments, which saw significant increases in difficulty. Some believe that miners are taking advantage of the current supply rules before the block subsidy halving in April. However, there has been a decrease in the BTC balance of known miner wallets, indicating a distribution trend among miners. Nonetheless, overall accumulation is compensating for the current new supply.
Analysts are considering the impact of the upcoming halving event on Bitcoin’s price. Historically, halvings have provided investors with a buying opportunity at the beginning of an uptrend. Rekt Capital, a popular trader and analyst, has studied price retracements around previous halvings and suggests that a pre-halving top may be near. Other analysts, such as Venturefounder, believe that BTC may experience a correction based on historical reference points, such as the 50-day moving average. Short-term holders of BTC are also likely to take profit, according to CryptoQuant contributor CryptoOnChain, which could lead to a distribution of BTC in the market.
It’s important to note that this article does not offer investment advice or recommendations. Readers should conduct their own research and analysis before making any investment decisions.