Bitcoin (BTC) enters a new week with bulls aiming for all-time highs as the price continues its upward trend in February. After a strong monthly close, the first weekly candle of March closed comfortably above $60,000. Sellers are realizing that there may be no obstacles in the way of Bitcoin reaching price discovery. This scenario is more optimistic than what many traders and analysts had expected for 2024. However, there are still volatility hurdles to overcome before the end of the month, and the block subsidy halving in April is a crucial moment. The action begins immediately with the United States Federal Reserve providing guidance on the state of the economy. If this offers no surprises for risk-asset traders, crypto may continue to see buying pressure from exchange-traded funds (ETFs), although the average investor is now acting out of “extreme greed.” The market trajectory may sustain its recent trend, but a significant correction and consolidation period cannot be ruled out.
Bitcoin started the week with a strong performance on March 4, with an hourly price swing of $2,000 and a new multiyear high. The price reached $64,282 on Bitstamp and is currently trading near $65,000. The bulls are just $5,000 away from reaching new all-time highs, resulting in year-to-date gains of over 50%. Traders and analysts on social media are divided between optimism and disbelief, with calls for a major reversal still present. Some believe that Bitcoin may form a “cup and handle” pattern at the all-time highs, potentially correcting to as low as $40,000. However, others argue that crypto investing is still not mainstream, and a new wave of interest could drive the market higher. Analysts caution that the market may experience a correction in the coming weeks, as the recent price surge may be unsustainable. Risk management is crucial at these historical levels, and investors should consider portfolio management.
Concerns about overheated markets are accompanied by high funding rates, with some platforms experiencing rates of over 0.1%. Open interest, a precursor to price volatility, has reached $27.7 billion. However, the open interest divided by the current market cap is still at a historical average of 2.25%, indicating that there is room for growth. This week, CME Group’s Bitcoin futures initially traded higher than spot markets. In the upcoming macro week in the United States, the focus will be on the Federal Reserve and Chair Jerome Powell. Powell will testify before a House committee and Senate panel, providing an update on the economy. His stance on inflation and interest rates will be closely watched, as it could impact crypto and risk assets. While markets do not expect a rate hike, a rate cut could boost performance. However, the chances of a rate cut in March are low, with expectations pushed back to later in the year. The market anticipates volatility leading up to the Fed’s decision on March 20.
The sentiment among crypto investors is increasingly driven by the lure of all-time highs, with levels of “extreme greed” reaching multiyear highs. This could indicate an unsustainable trajectory and potential market turnarounds. Social media discussions have also shifted towards price-related topics, suggesting a cooling-off phase may be imminent. It is important for readers to conduct their own research and make informed decisions when it comes to investments and trading.