Bitcoin entered the last week of February with lower lows but has shown signs of strengthening as the key support line holds.

After a few days of jitters in the macro and crypto markets, BTC remains below $40,000, but there are already signs that a return is more likely as the weekend moves in the right direction.

The tense situation will continue as inflation concerns, US monetary policy and geopolitical tensions show no signs of ending. There is also the possibility that stocks will continue to be affected.

Other Federal Reserve (Fed) signals will remain in focus in the near term, with March expected to be time for the first major rate hike.

In the end, however, it could all just be a “big deal” for Bitcoin. Technically, is it stronger now than ever?

Here are 5 factors that could influence price action in the coming days as the global economy remains under threat.

Stocks ushered in a dismal macro week

The main story for bitcoin traders this week comes from outside the industry: the post-COVID economic outlook and concerns over relations with Russia.

The first is how will the Fed react to rising inflation, and more specifically, will its proposed rate hikes start in March as predicted?

Such rallies are bad news for the booming stock sector, which has enjoyed two years of notable gains thanks to a massive Fed liquidity program in response to COVID: unprecedented quarantines and controls.

As the expected “easy money” soon begins to dry up, everyone has a chance to do a reality check.

In terms of rate hikes, there is too much risk of an early recession – the issue has been debated as a potential ‘bad thing’ for other countries. In contrast, a conservative approach may not bring inflation down to a 40-year high.

In addition, the situation in Russia and its alleged plans against Ukraine make stock traders even more worried.

Diagram S&P500 1 day | source: trade view

Commodities such as oil, on the other hand, benefit from fears of war.

Overall, however, the short-term view remains very uncertain, while many are optimistic about the return of both risky assets like cryptocurrencies and traditional stocks through the end of 2022.

Market commentator Holger Zschaepitz summed it up on Sunday:

Global equities gained another $1.3 trillion this week. USD down at mkt cap on heightened Russia/Ukraine risk and potential for steady Fed rate hikes this year. The latter is expected to halt growth and trigger a recession in the US by 2023H1. Stocks are now worth $114 trillion, which is 134% of global GDP pic.twitter.com/FcqHwWXwus

— Holger Zschaepitz (@Schuldensuehner) February 20, 2022

“Global equities lost another $1.3 billion in market cap this week on heightened risks of conflict between Russia and Ukraine and the possibility of more rate hikes by the Fed this year. The latter is expected to dampen growth and trigger a recession for the US stock market, currently worth $114 trillion, or 134% of global GDP, by the first quarter of 2023.”

Wall Street resumes trading this Tuesday due to the US holiday.

Bitcoin Price Targets CME Futures Gap

So the average bitcoin day trader had a rough time this month.

February saw only about 2 weeks of slight gains and macro news ended the party two weeks ago.

Since then, BTC has lost support at $40,000 and threatened a full retrace of its gains this month.

However, $38,000 – the level marked earlier than which the bulls need to hold – remains intact.

The weekly close at a multi-week low was accompanied by a breakout in the 4-hour chart’s Relative Strength Index (RSI), a classic signal ahead of a short-term bounce.

Source: Matthew Hyland

As expected, Bitcoin then inched up and hovered around $39,000 at press time.

On weekends, BTC tends to be overlooked by seasoned traders as a lack of volume makes any movement worse. Therefore, the price drop to $38,000 could be a result of overblown market sentiment.

Furthermore, the rally has clear targets – $40,000 at the support/resistance switch, but also CME futures close at $39,860 on Friday, well above the main part of the decline taking place on Saturday.

Source: Liver Coin

Bitcoin has a habit of closing “gaps” on the CME chart, often within a few days or even hours of the start of the new week’s trading.

CME bitcoin futures candlestick chart 1 hour | Source: TradingView

Who is buying while you are selling?

Amid the skepticism, some are choosing to sell BTC now after holding on to price declines for several months. The data suggests that the big players are getting a bargain.

Some of the biggest bitcoin wallets are bragging about what they’re doing right in 2022 and even before.

BitInfoCharts on-chain monitoring resource shows the “single uptrend” of a particular entity.

On day 2 alone, his balance increased by 150 BTC and wasn’t the only case. Others also increased their purchases during a local low this weekend.

Source: Capital15C

However, small lot holders are not necessarily weak hands. The latest figures from on-chain analytics firm Glassnode show that the number of wallets holding at least 0.01 BTC ($393) is currently hitting an all-time high of 9.4 million.

Bitcoin addresses with a balance of 0.01 BTC or more | Source: Glassnode

In fact, the last high was in late January before the recent rally to $45,500.

As reported over the weekend, overall BTC supply has become increasingly illiquid, with the inactivity rate hitting a record high for at least a year.

The number of days the coin has been destroyed suggests a potential bottom

Indeed, those looking for clues that $38,000 is the local reserve price need not look too far.

Through analysis Data On-chain from CryptoQuant, it can now be seen that long-term Bitcoin investors repeated the behavior over the weekend, accompanied by BTC bottoms in July 2021 and September 2021.

“Coin Destruction Days” (CDD) is the accumulated number of days since the last movement of each BTC on a given date.

Over the weekend, a significant amount of “older” coins moved, “destroying” the largest number of days of inactivity since the July 2021 low below $30,000.

In terms of unissued counts, CDD reached its highest level since July 2019 – although the event at the time was accompanied by a local high rather than a low.

Chart of Bitcoin Destruction Days (CDD) | Source: CryptoQuant

This phenomenon was noticed by an employee of CryptoQuant IT Tech. He also highlighted another on-chain metric showing holders reporting bearish moves.

#Bitcoin I found something really interesting. Before the price decline, some of the long-term HODLers moved their course $BTC because LTH-SOPR rose twice today. Each time after this event, the price decreases. CDD also showed a big spike. ???????? What is CDD and LTH-SOPR – read the tweets below. ???? pic.twitter.com/HaPLgbkUjh

— IT technician (@IT_Tech_PL) February 20, 2022

“Bitcoin: I found something really interesting. Ahead of the price drop, some longtime HODLers were moving BTC as LTH-SOPR surged twice on Feb. 2. Each time after this event, the price decreases. CDD has also increased.”

The famous Twitter account PlanC reply that the two could form a leading indicator for Bitcoin in the future.

“Ultimate Fear” returns

With all the factors at play, it is not surprising that market participants are ambivalent about the prospects.

This is evident in the Crypto Fear & Greed Index, a popular sentiment gauge that attempts to quantify market sentiment.

As the price bounces below $40,000, general sentiment is slowly returning to the “extreme fear” zone even if Bitcoin’s spot price action is indeed moving higher.

On Monday, the index reads 25/100 — the “highest possible” for extreme anxiety, but 50% below the “neutral” level of four days ago.

The Fear & Greed Index has bottomed much deeper this year and a notable reversal took place in January when it was close to hitting an all-time low of 9/100.

Fear and Greed Index | source: alternative.me

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