What to expect from Bitcoin this week?

Specialists RBC Crypto analyzed the market situation and assessed the prospects for the movement of the Bitcoin exchange rate over the next seven days.

“External positive factors”

BitRiver financial analyst Vladislav Antonov

In the past week, Bitcoin has been trading mainly in growth, starting on Wednesday. On February 5, the price rose 0.3%, to $42,709. On February 6, the growth continued and amounted to 0.9%, closing at $43,099. On February 7, the growth accelerated, Bitcoin rose by 2.9% to $44,350, which was due to the weakening of the US dollar and the growth of American stock indices.

On Thursday, the price continued to move up and reached $44,614 (+2.12%). Over the course of 4 days, short positions worth $88 million were liquidated. On Friday, the price growth accelerated even more and at the end of the day amounted to 4.07%. Bitcoin rose to $48,200. Since the beginning of the week, the overall price increase has been 10.3%. On Friday, February 9, at the end of the day, the BTC/USD pair increased by 4.07%, to $47,133.

Cryptocurrencies are recovering well from the fall 5 weeks ago from the $48,969 high, which was caused by capital outflows from the Grayscale Bitcoin Trust (GBTC) and stops being triggered on long positions on margin trades. From January 11 to February 7, $6.138 billion was withdrawn from the fund. The Grayscale Bitcoin Trust (GBTC), which existed since 2013 as a closed-end trust for accredited investors, became a full-fledged spot exchange-traded fund after approval by the US Securities and Exchange Commission (SEC). (ETF), which triggered selling among investors. Some sold shares due to high fees and moved to other funds with better conditions. The bankrupt FTX exchange also sold its fund shares to pay off obligations to clients.

In less than a month, BlackRock (IBIT) and Fidelity (FBTC) raised the largest amounts of funds. IBIT accumulated 82,515 BTC worth $3.7 billion, and FBTC accumulated 59,380 BTC worth $2.6 billion. The total inflows into the new ETFs were greater than the net outflows from the Graysacle ETF. The net inflow amounted to $22 million. There was a redistribution of funds between funds.

While the dollar index is correcting, and the S&P 500 is exploring the territory above 5000 points, the Bitcoin rate immediately exceeded $48 thousand. I previously wrote that the BTC/USD pair began to grow early against the backdrop of external positive factors (growth of stock indices and correction of the dollar since February 6 ). On the one hand, growth is good, since buyer activity is supported by the upcoming halving, which will take place from April 12 to 21. In addition, the US Federal Reserve is expected to cut rates in May.

Large investors are also awaiting the approval of Ethereum-based spot ETFs. As soon as Graysacle converts its Ethereum fund into an ETF, sales of “ether” will also begin. The psychology of the crowd does not change. Based on the fall in Bitcoin, we can assume that the fall in ETH will be contained and short-lived. There are more positive factors than negative ones.

The fact that the BTC/USD pair rose earlier than February 10th increased the risks of forming a “double top” pattern at $49 thousand. It will be worked out by sellers who use wave, harmonic patterns and graphical analysis. Let's see how sellers behave around the $49 thousand level. According to BitRiver estimates, if there are no sellers, a squeeze to $52 thousand is possible in order to disrupt stops on short positions.

I do not exclude that the increase may be in the form of a complex price model – in triplets, where impulses are 15% each, and corrections are 5-6 days. So buyers can easily reach $55 thousand by March 5th. If, upon reaching the level of $49 thousand, the flat below it continues until March 1, then we can expect a rally to 59,000-60,000. For an example, look at the S&P 500 futures (section from December 28, 2023 to January 22, 2024). The correction model is called “squeeze”. Once resistance is completed and broken, a strong rally begins.

Key points of technical analysis:

• The price broke through the resistance level of $43,500 and remains above it. This speaks of the strength of the bulls.
• There was an increase in buyers, which led to the liquidation of short positions by $141 million in five days. This supported further growth of BTC/USD.
• I note the risk of a “double top” pattern forming at $49 thousand. This could stop the current growth.
• Without a sharp rebound around $49 thousand, there is a possibility of continued growth to $55 thousand ahead of the halving in April, while maintaining a positive mood in the market.
• Through the squeeze model, the target for BTC is at $59-60 thousand.

In general, this week there was a strong growth in Bitcoin, determined by external factors – the weakening of the dollar and the growth of stock indices. If these conditions persist, prices may continue to rise.

“Investor risk appetite”

OKX Commercial Director Lennix Lai

Bitcoin spent the first half of last week in a moderate flat, fluctuating between $42,000 and $43,500. But on February 7, the cryptocurrency sharply changed its behavior and began to grow, reaching peak values ​​of about $48 thousand by Saturday, February 10. A similar upward trend was demonstrated by Ethereum, which managed to overcome the $2,500 mark by the end of the week.

The growth in the crypto market coincided with the rise in the American stock market. The S&P 500 index finished higher for the fifth consecutive week, closing above 5,000 points. This was facilitated by successful quarterly reports from Amazon, Meta (recognized as an extremist organization in Russia and banned), Microsoft and Nvidia. Stock and cryptocurrency investors were also encouraged by the slight revision in the consumer price index for November and December. In December, inflation was 0.1% lower than previously announced.

Encouragement in the stock and crypto markets indicates increased investor appetite for risk. This was not prevented even by the words of the head of the US Federal Reserve, Jerome Powell, making it clear that in March 2024 the regulator is unlikely to lower the key rate, as market participants had previously hoped. Despite the preservation of a high key rate in the near future, the overall assessment of the situation in the American economy remains positive. The near-term outlook for the economy appears better now than it did three months ago, according to a Philadelphia Federal Reserve Bank survey. A survey of 34 professional forecasters released on February 9 shows that fears of an economic downturn in the US are fading. This reflects investor sentiment, which has increased activity in the markets.

Statistics on capital inflows into spot Bitcoin ETFs also played in favor of cryptocurrencies last week. According to BloombergBlackRock's iShares Bitcoin Trust (IBIT) has been the clear leader in inflows since the launch of spot Bitcoin ETFs on January 11, with inflows of nearly $3.23 billion as of February 8. Fidelity's Wise Origin Fund (FBTC) is in second place with $2.8 billion in inflows. As of February 8, the Bitwise Bitcoin ETF (BITB) had total inflows of $696 million, followed by the ARK 21Shares Bitcoin ETF (ARKB) with $695 million. As of February 8, Grayscale Bitcoin Trust (GBTC) had seen outflows of about $6.23 billion, but it remains the leader by asset size with $21.23 billion in assets under management. US spot Bitcoin ETFs now account for only 10-15 % of the total bitcoin spot trading volume on traditional (centralized) crypto exchanges.

In the coming week, Bitcoin will become an arena for struggle between sellers and buyers. The bulls made a strong push last week, but now they need to consolidate their strength to overcome the next resistance level around $50 thousand. This may not be easy. Bitcoin has three scenarios: correction, flat or breakdown.

A month after the launch of spot ETFs, Bitcoin returned to its January peak values. For investors who took positions in January, this means profit and the opportunity to close the position without losses. This creates pressure on the Bitcoin rate and prevents its growth to $50 thousand. If we are guided by technical indicators, Bitcoin is already in the overbought zone, which increases the risks of correction.

In the coming week, we may see a correction in Bitcoin, which will be facilitated by the desire of January investors to take profits. But a significant drop in price will be prevented by a wall of orders to buy cryptocurrency placed around the $40 thousand mark. The scenario of a new period of flat in the area of ​​$47 thousand with periodic breakdowns of the $50 thousand level is not excluded. Whether Bitcoin will be able to gain a foothold above $50 thousand will largely depend on the sentiments of crypto investors.

As for Ethereum, its growth over the past week was strengthened by positive messages about the development of the project – the successful launch of the Dencun update on the test network and the determination of the date for the rollout of the upgrade. These steps gradually bring ETH closer to the transition to so-called sharding, which will make the network more scalable, that is, faster and cheaper to use. The coming week does not foretell any major changes for ETH. Therefore, the price of the coin will be more dependent on the general situation on the crypto market.