Risk assets are looking at a rough few days coming up as a result of a grim cocktail of macro triggers.
A new week begins in the shadow of a nightmare unfolding in Ukranian
As a result of the Ukraine invasion, the macroeconomic consequences are growing, and so is the difficulty in keeping up.
This month there is a curious contradiction. Despite investors and those directly impacted by the war looking for a safe haven, that hasn’t been stable coins.
As a result of sanctions, stocks have taken a hit and now form a major guide for how BTC/USD does.
The trend for Bitcoin is down, all within the same macro range which has characterized all of 2022.
What can we do to change things up? There are a number of factors worth keeping an eye on during the European conflict.
Macro forces signal volatile, “rough” week ahead
The stock market does not like the current European hostilities, according to historical precedent.
Global equities lost over $2.9 trillion of value last week. Adding to that is a warning that the current environment is not good for the stock market.
Some serious issues that would only be felt on longer timelines, should new sanctions against Russia come to fruition, are on the table.
A ban on Russian oil imports will upend the global status quo and cause a major shift in how the economy fuels itself.
“If this happened. I would think there’d be a high probability of stocks limiting down immediately off the news,” The idea dropped over the weekend, and Pentoshi reacted to it.
The idea of a Wall Street Crash-type event triggering a Great Depression was raised by Pentoshi.
While an extreme scenario, there is little to be optimistic about while the conflict is unresolved.
The coming week should be rough for risk assets according to Mike McGlone, chief commodity strategist.
McGlone didn’t have the opinion that the only way is down, when he compared the two.
“Bitcoin faces deflationary forces after 2021 excesses, but the crypto shows divergent strength,” part of Twitter comments read Friday.
“With 2002 losses less than half those for the Nasdaq 100, Bitcoin may be maturing toward global digital collateral.”
CME gap sets up $40,000 rematch
The coming days are going to be choppy if that is the case.
It doesn’t make sense for bullish sentiment to be supported by sensitive stocks and rocketing commodities prices.
On Sunday, BTC/USD went down to $37,592 on Bitstamp, marking its lowest levels since February, and completely wiping out the gains of the previous day.
The move was a repeat of a previous one, cementing the current price range as more definitive support and resistance.
In order to leave the range, a break above the yearly open of $46,200 is needed.
For trader Matthew Hyland, however, the immediate picture suggests that such a move is unlikely.
“Bitcoin has fallen below the crucial support zone,” he warned on Monday that the various price levels show support and resistance.
On Friday, the closing price on the futures market was around $39,600.
The area just below $40,000 could form a focus on Monday, laying the groundwork for a support/resistance flip should the bulls gain traction.
“Great choppy movements of Bitcoin, but in the end it will come back to the price of the CME close of Friday evening,” Cointelegraph contributor Michaël van de Poppe summarized.
Van de Poppe and McGlone predicted a volatile week ahead.
Traders brace for CPI, rate hike double whammy
Where would the current narrative be without inflation?
What began as a temporary phenomenon has become a cornerstone feature of the economic landscape.
The Federal Reserve was criticized for failing to act quickly enough.
The lawmakers are considering a rate hike this month and a decision will be made on March 16. As last-minute bets keep traders guessing about the outcome for risk assets, tension for Bitcoins may increase prior to that.
If a 25 basis point hike is enough to maintain the status quo, it may already be too late.
The consumer price index data for the US is due to be released before the Fed announcement Major deviations from forecast could upend the delicate balance.
After the monthly numbers were released last month, Bitcoin put in multiple fakeout moves in the hours after, making it notorious.
Extreme, but not extreme enough?
A familiar face shows how much of a hit the sentiment has taken. After falling from the top of its range, the Crypto Fear & Greed Index fell back into the “extreme fear” zone.
The bullishness in early March can be seen on the Index, which more than doubled its normalized sentiment score to reach 51/100 before going to lose it all again and reach 22/100.
As the local market bottoms tend to be accompanied by a score of around 10/100, Fear & Greed suggests there is room for further degradation.
“It‘s a short visioned market, meaning that the horizon is maybe a few days, and sentiment switches,” van de Poppe added about the current setup.
A collapse to $20,000 would not constitute a major trend violation, argued popular trader Crypto Daan in a jibe at weak hands.
“A backtest to 20k, technically wouldn‘t be bad at all. Not nice for sentiment, but technically nice back test,” he tweeted Sunday.
Reserve Risk enters the green
Is hodlers really on the edge? There is a clear line to be drawn between long-term and short-term investors, with the latter still riding out the comedown from all-time highs.
Reserve Risk is a key metric that supports the view that there is no match for the price ofBitcoin.
Reserve Risk pits sentiment against price in a way that shows when to invest in order to have a good chance of producing what on-chain analysts call “outsized” returns.
With high confidence and low price, conditions favor long-term investors once more, as evidenced by the fact that BTC/USD is heading back into the green “BUY” zone.
“It is now entering value btfd territory on macro timeframes as price trends down,” LookIntoBitcoin creator Philip Swift commented on the “very useful” Reserve Risk data.
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