Bitcoin (BTC) is preparing for the end of February with uncertain price action. The cryptocurrency has lost bullish momentum in the past two weeks, causing doubts about its ability to sustain its high levels. While some still hope for a surge in price, it seems that reality is catching up with market sentiment as buyers struggle to overcome selling pressure. The upcoming days are expected to bring significant changes, as key macroeconomic data from the United States coincides with the monthly candle close. The macro landscape is precarious, with concerns about inflation and the Federal Reserve’s future actions. This is especially relevant for Bitcoin as it approaches its next halving. Let’s take a closer look at these factors and more in our weekly roundup of BTC price factors.
Bitcoin’s price has been trading within a narrow range since the second half of February. The latest close at $51,700 didn’t provide much inspiration for bullish traders, as it was slightly lower than previous levels. Material Indicators, a trading resource, has already identified a downward trend in BTC price based on its proprietary trading tools. However, some market observers remain optimistic, with social media pundit Bitcoin Munger suggesting that market makers are eyeing $53k shorts.
In the macro market, all eyes are on the upcoming U.S. jobs and spending data, which are known to influence the Federal Reserve’s decision-making. Both reports will be released on February 29 and could bring volatility to risk assets. Inflation data has already exceeded expectations, causing markets to rethink the possibility of a rate cut in March. Currently, the odds of a rate cut in March are low, but optimism in U.S. stocks remains high.
Bitcoin’s network fundamentals are also showing signs of cooling off. Mining difficulty, which has been increasing over the past year, is expected to decrease by around 2% in the upcoming automated readjustment. This decrease is likely due to miners wanting to take advantage of the current supply rules before the block subsidy halving in April.
Analysts are considering the impact of the halving on Bitcoin’s price. Historically, halvings have presented buying opportunities before macro uptrends. Popular trader and analyst Rekt Capital studied BTC price retracements before the 2016 and 2020 halvings, suggesting that a pre-halving top may be approaching soon. Another analyst, Venturefounder, believes that Bitcoin’s price may experience a correction based on historical trends and the 50-day moving average.
Short-term holders (STHs) may also contribute to a potential downside in BTC price. The Short-Term Holders’ Spent Output Profit Ratio (SOPR) metric suggests that speculators may soon distribute their holdings to the market. When the 30-day moving average value of the STH-SOPR metric reaches highs, BTC price retracements have been observed.
It’s important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and make informed decisions.