Bitcoin (BTC) starts the week with volatility and new all-time highs as price discovery continues. Despite facing resistance, the cryptocurrency achieved its highest-ever weekly close. The battle between selling pressure at psychological price levels and the demand from spot exchange-traded funds (ETFs) creates uncertainty. ETF buying has had a significant impact on Bitcoin, with even longtime bulls reevaluating their long-term predictions. Some warn that the bull run may lead to a macro price top sooner than expected. The release of US macro data will set the tone for the Federal Reserve’s decision on interest rates. Miners are taking advantage of the profit before the block subsidy halving in April. Bitcoin’s price volatility catalysts for the upcoming week are discussed in more detail below.
Bitcoin achieved its highest weekly close to date but experienced a sharp downside correction shortly after. A relief bounce followed, leading to new all-time highs during the Asia trading session. However, the lack of spot bid lifted large asks, resulting in price suppression around $70,000. Key levels to preserve the current uptrend are between $63,500 and $65,500. Spot order book behavior on Binance suggests considerable bids starting from $60,000. Additionally, on-chain movement data reveals the movement of previously dormant coins, indicating activity in the network.
This week, the release of the Consumer Price Index (CPI) for February will impact short-term trading across risk assets, including Bitcoin. The current narrative surrounding inflation and Fed policy remains uncertain, with markets eager for interest rate cuts while Fed officials attempt to manage expectations. The CPI figures and other data points will serve as a reference point for the upcoming Fed meeting. The odds of a surprise rate cut at this meeting are currently at a mere 3%. Other important data to be released includes the Producer Price Index (PPI) and jobless claims.
The resumption of buying by spot ETFs is eagerly awaited by Bitcoin market observers. The ETF launch has transformed Bitcoin’s price trajectory, leading to optimism among institutions. Major US wirehouses are yet to approve Bitcoin, and their approval could have a significant impact on the price. Industry insiders expect major warehouses, institutional consultants, and large corporations to be the next to add BTC exposure. The first significant flows from these groups are expected in Q2 2024.
Miners have significantly increased their selling around the all-time highs, despite the upcoming halving. Outflows from miner wallets began when the ETFs were launched in January. The increase in Bitcoin’s price has led to a rapid increase in miner revenues. The Puell Multiple, which measures the value of coin issuance against its yearly moving average, has reached some of its highest levels in six years. However, it is not as high as previous cycle peaks.
Long-term Bitcoin hodlers are holding onto their coins and not matching the transfer volumes seen in 2021. The largest spike in transfer volume occurred on February 24, and the current price levels have not generated a larger single-day tally. The net unrealized profit/loss (NUPL) for long-term holders remains strong but not at levels that indicate a blow-off top.
This article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.