Bitcoin appears to be walking on thin ice as February failed to match last month’s gains.
The second week of February begins with a new bearish mood, as the several-month high cannot be held.
In what may prove to be the vindication of those who predicted that the BTC price would fall sharply, BTC/USD has once again fallen below $23,000 and is making a lower mark on the hourly time frame.
Trading in Europe and the United States may not yet have started on February 6, but Asian markets are already falling and the US dollar is rising – further hurdles for Bitcoin bulls to overcome.
With some macroeconomic data from the central bank this week, the focus is mainly on controlling inflation in the form of January’s Consumer Price Index (CPI) next week.
In the genesis of this event, the consequences of which are already hotly debated, volatility may gain a new place among risk assets.
Add to that the aforementioned concern that Bitcoin is already overdue for a more significant pullback than it has seen in recent weeks, and the picture is one of underwhelming but potentially profitable trading conditions.
Cointelegraph looks at the Bitcoin trend this week and assesses the factors driving the markets.
BTC price disappointed with weekly close
When it comes to analyzing BTC’s price action this week, it’s a tale of two bitcoins.
BTC/USD managed to hold on to most of January’s extraordinary gains, totaling nearly 40%. At the same time, there are signs of a turnaround on the cards.
Although relatively strong below $23,000, the weekly close failed to beat the previous one and marked a rejection of the key resistance level from mid-2022.
Popular trader and analyst Rekt Capital summarized the issue on February 5th as “BTC is currently unable to retest ~$23,400”.
The accompanying weekly chart highlights areas of support and resistance in play.
“Important BTC can close above this level on a weekly basis to avoid this. August 2022 shows that a failed retest could sink BTC into the blue-blue range,” he continued.
“Technically, the retest is still ongoing.
As Cointelegraph reported over the weekend, traders are already betting on where a potential pullback could end and which level could be the ultimate support to further fuel Bitcoin’s newfound bullish momentum.
It is currently around $20,000, which is a psychologically significant number, with Bitcoin hitting an all-time high in 2017.
According to data from Cointelegraph Markets Pro and TradingView, BTC/USD was trading around $22,700 at the time of writing and continued to decline during Asian trading hours.
“Some bids were filled in this last drop (green box), but most of the remaining bids were removed below (red box),” Trader Credible Crypto said of order book activity in February.
“Continuing here, eyes are still in the 19-21k region as a logical bounce zone.”
Meanwhile, for Il Capo’s quietly confident crypto, it’s a worrying time when it comes to trend reversals. The trader and social media expert, who has been a supporter of new macro bottoms throughout the January gains, argued that a break below $22,500 would be a “defensive confirmation.”
“The current bear market rally has created the perfect environment for people to continue to buy all the dips when the current trend reverses,” he tweeted during the discussion.
“This is the perfect scenario for the capitulation event that will happen in the next few weeks.”
Fed officials will talk as the market keeps an eye on the CPI
In macro, the week looks decidedly quiet compared to early February, with less data and more commentary to describe sentiment.
The comments follow any indication of a change in policy from Fed officials, including Chairman Jerome Powell, in their language about potentially volatile markets.
Just last week, such a phenomenon emerged, as Powell used the word “falling inflation” at least fifteen times during a speech and question-and-answer session accompanying the Fed’s move to raise rates by 0.25%. seen
Ahead of next week’s new key data, analyst circles are talking about how and when the Fed might move from a restrictive economic policy to a more accommodative one.
As Cointelegraph reports, not everyone believes that the US will “land soft” on falling inflation and instead go into recession.
“Until the carpet opens in the third or fourth quarter of this year,” Andy West, co-founder of Longlead Capital Partners and HedgQuarters, said softly.