Key Points
Bitcoin (BTC), the world’s largest cryptocurrency, is preparing for the February monthly close with its price action at a significant point. Despite remaining above $50,000, Bitcoin has seen a loss in bullish momentum over the past fortnight.
While some still hold hopes of reaching higher levels, the reality appears to be setting in as buyer pressure fails to outweigh certain parties’ desire to sell. The next few days are likely to disrupt the current state of affairs as key U.S. macroeconomic data will coincide with a classic volatility source – the monthly candle close.
Bitcoin’s Price and the Macroeconomic Landscape
The macroeconomic landscape is somewhat unstable, with recent inflation surpassing forecasts. This leaves uncertainty over future Federal Reserve actions and whether risk assets will benefit from a benchmark interest rate cut in the near future.
For Bitcoin, the timing is especially significant given its own internal dynamics, with the next halving drawing ever nearer. Bitcoin continues to trade within a narrow range after the weekly close, a trend that has persisted throughout the second half of February.
The latest close at $51,700 offered little encouragement to bulls, coming in approximately $450 lower than the previous one. However, some market observers remain optimistic despite the sideways action. Bitcoin Munger, a social media pundit, is one of them.
Despite the sideways action, some popular market observers remain optimistic. Among them is social media pundit Bitcoin Munger. He suggests that market makers are now targeting $53k shorts and that Bitcoin bears are likely to be wiped out this week.
The upcoming week in macro markets is dominated by U.S. jobs and spending data, the latter being the Fed’s preferred inflation gauge. Both will be released on Feb. 29, potentially leading to a volatile end to the month for risk assets.
Recent inflation data has exceeded expectations, and markets have significantly adjusted the odds of the Fed cutting rates at its March meeting. Currently, March has just a 4% chance of seeing rates decrease, with May at 25%.
Optimism in U.S. stocks is such that the S&P 500 is near all-time highs. The Kobeissi Letter, a trading resource, questions whether the run into record highs can continue in a recent post.
With Bitcoin’s price action cooling off, network fundamentals are checking their own growth this week. The latest estimates suggest that Bitcoin mining difficulty will decrease at its upcoming automated readjustment on Feb. 29.
On-chain analytics firm Glassnode data shows that from a peak of 1,833,321 BTC on Oct. 23, the BTC balance of known miner wallets has decreased by 1.16%. However, overall, accumulation is more than compensating for the current new supply.
Analyst Rekt Capital suggests that Bitcoin halvings tend to offer investors a “final bargain-buying opportunity” at the beginning of macro uptrends. He studied BTC price retracements seen around both the 2016 and 2020 halving events in one of his latest YouTube Shorts.
Short-term holders (STHs) form another reason to believe that BTC price downside may be on the horizon. CryptoQuant contributor CryptoOnChain warned over potential profit-taking to come in one of its Quicktake market updates on Feb. 25.
