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5 Factors Bitcoin Investors Should Watch This Week

Bitcoin (BTC) started the new week positively as stocks tumble and BTC managed to close above $50,000 last week.

What can Bitcoin traders expect?

EarnForex takes a look at five factors that could affect Bitcoin price action in the coming days.

1. The dollar is getting stronger as the stock markets crash

In the past weeks, things have changed in the stock markets that broke record after record. While a decrease is observed in stock market indices all over the world, warnings are made that this situation is not over yet.

While the shares of technology companies, including Tesla and MicroStrategy, suffered significant losses, Asian stock exchanges started the week with a loss of more than 1%.

Although the US stock markets closed strongly last week, expectations started to turn negative hours before Wall Street opened. According to Morgan Stanley analysts, the Nasdaq 100 could drop to its 200-day moving average, which is 800 points below its current level of 12,642 points.

“You will see high volatility in the markets,” explained Kim Stafford, President of Pacific Investment Management Asia Pacific.

We think confidence in the market is getting better, especially with vaccines coming online, so we will see an uptick in growth around the world. There are many reasons to trust the market, but a lot of this is also priced in.

On the other hand, the US Dollar Index (DXY) continued its rise, which started at the end of February and reached 92.19 points over the weekend. DXY also managed to stay above 92 points on Monday and this is usually bad news for Bitcoin’s price strength.

However, the recent index movements have had less impact than last year as the BTC/USD pair largely ignored sentiment to form an increasingly asymmetrical path.

US Dollar Index, 1-day candlestick chart. Source: Tradingview

2. Stimulus package approved

The main reason behind the strength of the dollar is the US Parliament’s adoption of the $1.9 trillion coronavirus stimulus package and the further inflation of the dollar supply. The stimulus package, adopted by the Senate on Sunday, authorizes $1,400 stimulus checks for eligible Americans.

Considering that Bitcoin’s popularity has increased substantially compared to last year, some of this money is expected to be transferred to BTC.

According to Bitcoin Stimulus watchdog, the total value of the previous two checks of $1,200 and $600 deposited in Bitcoin would be over $10,250 as of March 4 if each recipient immediately bought Bitcoin.

In the long run, investors are worried about the dollar weakness, both due to increased supply and the highly controversial economic response to the covid-19.

Famous investor Peter Brandt suggested that Bitcoin will benefit from the current policy in the long run. “The depreciation of the dollar’s purchasing power has just begun,” Brandt warned.

That’s why Bitcoin, real estate, stock markets and commodities will continue to rise in dollar terms.

3. Bitcoin makes its second-biggest weekly close

Bitcoin bulls, on the other hand, found hope with the BTC/USD rising above $50,000 over the weekend.

BTC soared to $51,177 following the announcement that the stimulus package was approved. Positive investment news from China also brought the rhetoric of lack of supply back to the agenda.

Although Bitcoin could not start the week at over $50K, it managed to close the previous week at this level and make its second-largest weekly close ever.

Glassnode Co-Founder and CTO Rafael Schultze-Kraft, who analyzed investor behavior, said Bitcoin was unlikely to drop below $46,600.

1-hour candlestick chart (Bitfinex) of the BTC/USD pair. Source: Tradingview

4. Nobody is selling

On-chain data shows that miners are reluctant to sell at $50,000, while the amount sent to exchanges and exchange reserves continue to decrease.

According to statistics specialist, Willy Woo, the sales pressure mostly comes from institutional players who are preparing their Q1 report, and that this is not a bearish signal.

Woo also said that while large Bitcoin whales are selling, smaller whales with 10 to 100 bitcoins are buying.

Bitcoin’s average dormant cryptocurrencies chart. Source: Willy Woo / Twitter

5. Extreme greed back again

Finally, the Crypto Fear & Ambition Index, which measures investor sentiment when crypto markets are unreasonably bullish or overly bearish, is indicating that investors are showing “excessive greed.”

The index, which indicates that the price increases may be short-lived, rose from 76 points to 81 points on Monday. The index showed 38 points just a week ago.

Crypto Fear & Ambition Index. Source:

Still, Glassnode’s Network Value/Transaction Ratio (NVT) data show that price increases are largely accompanied by volume.

Referencing Woo, Glassnode Co-Founders Yann Allemann and Jan Happel said, a healthy rise in the price of Bitcoin price can be defined as one supported by on-chains volume!”

Bitcoin’s NVT chart adapted to the formation. Source: Glassnode / Twitter

Prior to the 2017 bull market peak, NVT has risen in a satisfyingly steady fashion.

If you have any questions and comments on Bitcoin today, use the form below to reply.

© MarkStevenson for Commodity News, 2021. | Permalink | No comment |
Published under: Bitcoin

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