William Suberg
Bitcoin (BTC) starts a new week on a firmly bullish note as stocks tumble and BTC managed to close the week above $50,000. After a mixed performance last week that saw multiple tests of $46,000, buyer support is entering and BTC/USD is within 15% of all-time highs.
Stocks nosedive as USD gains
The tide is turning on the equities miracle of the past year, with indices falling left and right amid warnings that the rout is far from over. On the back of significant losses in tech stocks, including crypto industry favorites Tesla and MicroStrategy, Asian stocks shed over 1% on the open on Monday.
Despite a strong close last week, expectations were for a knock-on effect for the U.S. prior to Wall Street returning. According to analysts at Morgan Stanley, the Nasdaq 100 could even touch its 200-day moving average, lying around 800 points below its current level of 12,642.
“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management, told Bloomberg.
Stimulus checks incoming
The main impetus for dollar strength, however counterintuitive, has been news that lawmakers will inflate its supply to the tune of $1.9 trillion as they pass the latest coronavirus stimulus package.
Passed by the Senate on Sunday, President Joe Biden’s sweeping cash injection piles fresh debt on the country’s existing mountain but will supply eligible Americans with $1,400 payouts.
Given Bitcoin’s increased public profile this year compared to the last major stimulus payout of $1,200 in March 2020, expectations are high that at least some of the money will flow into BTC.
Bitcoin sees 2nd highest weekly close
Within Bitcoin, bulls were buoyed as the weekend came and went as fresh upside took BTC/USD over $50,000.
Coming in step with the stimulus announcement, local highs totalled $51,177 on Bitstamp. At the same time, positive investment news from China extended the supply shortage narrative, this focusing on institutional buy-ins reducing the already dwindling amount of BTC available for purchase on the market.
Despite failing to hold on Monday, the psychologically significant level did manage to remain for the weekly close, providing Bitcoin’s second-largest weekly close on record.
Analyzing trader behavior, Rafael Schultze-Kraft, co-founder and CTO of on-chain analytics resource Glassnode, forecast that a return below $46,600 is unlikely.
No one's selling
Additional on-chain indicators confirmed “business as usual” among market participants. At $50,000, miners are uninterested in selling, while flows to exchanges and exchange reserves continue to decrease, data shows.
For statistician Willy Woo, selling pressure has instead come from institutional players needing to prepare for reporting as Q1 comes to an end — far from a bearish signal.
“Who has been selling? Apart from margin longs liquidating, my guess from the data, it's hedge funds rebalancing for end of Q1 reporting,” he told Twitter followers late last week.
Extreme greed is back
After a brisk drop to “fear” territory, the Crypto Fear & Greed Index is back to signalling “extreme greed” among investors.
Providing an indication that further price rises may be short-lived, the Index hit 81/100 on Monday, up from 76 the day before. Just a week ago, it measured 38/100.
Nevertheless, on-chain analysis has a convincing counterargument, with Glassnode’s Network Value to Transactions (NVT) data showing that volume has broadly accompanied recent price rises.
This Daily Dose was brought to you by Cointelegraph.
