Despite the fortified macroeconomic headwinds, bitcoin shows resilience hovering around the $21.9-$22k support level. Principle catalyst this week is the uncertainty behind the March FOMC meeting and the pricing of a 50bps rate hike.
Bitcoin faces increased pressure following robust economic data reinforcing Jerome Powell’s hawkish remarks earlier this week.
Sentiment turns cautious as bitcoin fights to hold the $22k support level, the Risk Signal increases, and the market lacks momentum. BTC, Large, Mid, and Small caps impulse signals are at 0.
Explosive moves in altcoins are limited to those that have a higher upward move for the downward move (higher relative beta), and for those breaking resistance levels (breakout). Unlike last week, high volatility and chasing volume are costly.
The lack of liquidity and low open interest suggests an uncertain market. We expect liquidity to build toward the significant ends of the range as investors battle for support and resistance levels.
Open interest shows a small amount of shorts building, yet open interest remains relatively low to force massive liquidations. Furthermore, potential take profits should serve as the first support level around $21.5-$21.8k.
The long-term structure remains bullish for bitcoin and US equities, so this could be a short-term slowdown within the larger cycle. However, rising interest rates will continue to pressure bitcoin’s progress. Caution is advised.
According to drawdowns and returns dynamics, a local top has been confirmed. If more altcoins continue to improve (more number of drawdowns < 10%), we will see signs of a local bottom.