Bitcoin (BTC) started the new week at over $ 48k after falling as low as $43,000 over the weekend. So what’s next EarnForex takes a look at five factors that could affect Bitcoin price action in the coming days.
1# Stimulus package passed
Macro markets are likely to wreak havoc on alternative assets, led by the US. The $1.9 trillion coronavirus relief package proposed by US President Joe Biden has been sent to the Senate for approval.
The stimulus package, which includes paying $1,400 to eligible US citizens, is seen as a positive case for Bitcoin as it significantly increases the dollar supply.
The incentive checks, which will be distributed for the third time, may be included in the Bitcoin ecosystem if historic trends repeat themselves in 2021. Last year, exchanges had seen an increase in deposits in the amount of fully paid stimulus checks.
While the cryptocurrency market was a niche phenomenon a year ago, the market has gained great popularity in recent months and prices have boomed.
Combined with the popularity of social
2# Stock markets and DXY are on the rise
Although the global bond sales last week worried regulators, the stock markets started to rally again at the beginning of the week.
The US Dollar Index (DXY), which fell to 89.67 points last week, also continues to gain strength. As of the time of writing, DXY passed 91 points for the first time since February 8. However, the strong DXY means bad news for the BTC/USD pair, a common trait that characterized much of last year.
Nevertheless, the temporary increase triggered by the stimulus package is not expected to stay long according to the statement of Deutsche Bank strategist Jim Reid.
3# Bitcoin investors say “relax”
The recent dip in the price of Bitcoin is still drawing a lot of attention. BTC’s decline to $43,000 over the weekend disappointed the bulls who thought $44,000 would serve as the support level.
The fact that Bitcoin, which has shown an extraordinary performance since March 2020, has lost $15,000 after reaching $58,000, and this drop in price has hardly affected some investors.
Crypto analyst, Michaël van de Poppe, said earlier today that yesterday’s panic was so unnecessary as price dips are part of the game.
The panic of yesterday was so unnecessary.
Welcome to the markets, dips happen.
Part of the game.
We just continue grinding and #Bitcoin is just starting.
— Michaël van de Poppe (@CryptoMichNL) March 1, 2021
Van de Poppe also said in a video update that the BTC net balance in the exchanges continues to decline, indicating that investors are buying at current levels and not selling.
The analyst said the bulls should watch the $42,000 level closely, and if Bitcoin doesn’t drop below this level, then the price is likely to continue the uptrend.
4# Indicators pointing to decline have been reset
For Bitcoin indicators, the recent drop in BTC prices was a positive sign and not a negative one. The Spent Output Profit Ratio (SOPR) indicator has been reset with the BTC/USD returning to the mid-$40,000 range.
If the SOPR indicator — which reveals the mindset of investors — turns negative, it means that BTC sellers are mostly selling at a loss.
The total loss incurred as of February 27 reached $243 million.
In addition to the SOPR indicator, the funding rates of the derivatives market were also reset after Friday, the options expiry day. The current state of both indicators has historically triggered the rise in Bitcoin price.
5# There is a slight fear in the market
Finally, market analysis firm Santiment has said in its latest post that Bitcoin has seen the biggest negative pressure of the past five months on social media.
According to Santiment, while this situation shouldn’t be a cause for concern, investors can take advantage of the overly cautious investor mood to buy into crowd fear and make a profit.
The popular Crypto Fear & Greed Index, which measures investor sentiment when crypto markets are unreasonably bullish or overly bearish, dropped to 38 points, the lowest level since September 2020.
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