Key Points
- Bitcoin (BTC) begins the new week in recovery mode following a volatile weekend that led to significant losses.
- Investors are anticipating this week’s macroeconomic events, including the U.S. Federal Reserve’s decisions, which could impact both crypto and risk assets.
Bitcoin, the leading cryptocurrency, is starting the week recovering from a particularly turbulent weekend that resulted in heavy losses. The cryptocurrency is struggling to reclaim its old all-time highs due to sustained selling pressure, and investors are eager to see if the situation will improve.
Bitcoin’s Struggle and the Battle Against Inflation
This week is crucial due to key macroeconomic events. Both cryptocurrency and risk assets are waiting for signals from the United States Federal Reserve. The fight against inflation continues, with recent data suggesting that inflationary forces are not backing down.
Bitcoin is now just a month away from its next block subsidy halving, a significant event in the cryptocurrency world. Some investors speculate that the cryptocurrency could be repeating history with a classic pre-halving retracement.
Bitcoin’s Price and Market Conditions
Bitcoin experienced a tough weekend, with its price dropping to its lowest levels since March 6. However, it showed signs of recovery, nearly reaching the $69,000 mark before facing fresh losses at the weekly close. At the time of writing, Bitcoin is hovering around $68,000.
The selling pressure was unusually high for a weekend, typically a period of low institutional trading. One theory suggests that this trend might be due to a single hedge fund’s position unwinding. This entity may have been long on Bitcoin while simultaneously shorting the stock of tech firm MicroStrategy. When the position was liquidated, the fund had to sell around $1 billion in Bitcoin to cover the losses.
Despite this setback, Bitcoin managed to close the week with its second-highest weekly close ever. At just below $68,400, the largest cryptocurrency finished the week down a mere $600 versus its previous close.
Market Data and the “Pre-Halving Retrace”
Some of the latest market data captures the extent of the “flush” which occurred across exchanges in the wake of near two-week lows. Long liquidations over several days totalled more than $300 million.
A side effect of the weekend came in the form of a reset in both open interest and funding rates. The latter is still overly positive but a fraction of the recent peaks.
Bitcoin miners are on course to enjoy its final month of 6.25 BTC block subsidies before April’s halving. The debate around how the event will impact BTC price behavior continues — a new all-time high, after all, has never preceded a halving but instead came months after it.
Federal Reserve’s Decisions and Bitcoin’s Future
A crunch week for risk assets centers around the Fed’s next decision on interest rates and accompanying commentary from Chair Jerome Powell. The next meeting of the Federal Open Market Committee (FOMC) will conclude on March 20, and forms a classic risk-asset volatility catalyst.
While sentiment remains in the “extreme greed” zone, per market sentiment gauge, the Crypto Fear & Greed Index, some hodlers are voting with their wallets. Profit-taking on long-held coins has spiked significantly, with long-term holders (LTHs) — entities hodling coins for at least 155 days — have distributed nearly 600,000 BTC, or around $40B, over the past month.
