BTC price ‘in the chop zone’ — 5 things to know in Bitcoin this week

Bitcoin (BTC) started the new week with consolidation in the air amid some of the most volatile conditions.

Despite losing 5% in an hour last week, Bitcoin lacks volatility in every trader.

The question is what will change in the coming days.

There are many potential catalysts, from macroeconomic data to exchange setups and more, but who will win – and the direction in which the price of BTC will be sent – remains to be seen.

Behind the scenes, it remains business as usual for the foundation of the Bitcoin network, with miners preserving their new buoyancy and ready for a new all-time high in difficulty.

Cointelegraph takes a look at these key market moving factors and summarizes our views on how they could shape BTC price action this week.

Bitcoin price remains paralyzed after weekly close

While anything can and does happen in Bitcoin, the weekend was marked by only one word when it comes to BTC price action – boring.

After a flash of volatility on March 3 due to a combination of Silvergate bank concerns and exchange margin calls, BTC/USD remained relatively quiet.

Data from Cointelegraph Markets Pro and TradingView prove this point, with spot prices moving in an almost imperceptible range.

Bulls however failed to recover much of the lost ground, leading Bitcoin to finish the week down around 5.1% on Bitstamp.

BTC/USD 1 week candlestick chart (Bitstamp). Source: TradingView

For Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading company Eight, there is still reason to believe that the market will soon draw a line according to the current short-term trend.

“We are tired of the price action in Bitcoin since the correction, but it is still acting at the support here,” he said toward Twitter Followers on March 6th.

“The index has bounced and seems to continue to do so. It may have another sweep and then reverse, losing $21.5K = trouble time.

BTC/USD annotated chart. Source: Michael van de Poppe/Twitter

A post more eye target potential bounce to $23,000 if the bull regains some form of strength.

“I just want to see some price action today if I’m honest,” popular Crypto trader Tony along.

“I stayed short a few days ago with a stop at $23,200 to keep it transparent. I want to see a move up to $22,800 before any losses.

BTC/USD annotated chart. Source: Crypto Tony/Twitter

Meanwhile the trading account Daan Crypto Trades notes that BTC/USD has closed a small CME futures gap since the weekend.

$22,000 or $22,650 must be crossed for Bitcoin to provide “clear direction,” he admitted.

For Skew trading resources, the weekly opening around $22,300 should be the “pivot” for close price performance.

“It is possible that this weekly open price will be traded as a pivot for a 1D breakdown to another weekly request ($19K) HL with confirmation above $23K,” a tweet about the mentioned daily chart.

“We are now in the chop zone. (Weakness or strength in the coming days will be the leader of momentum/direction).

BTC/USD annotated chart. Source: Skew/Twitter

All eyes on the Fed’s Powell as the macro signal returns

The macroeconomic scene began to heat up in the coming days after a cool week, with Jerome Powell, Chairman of the Federal Reserve of the United States, due for two rounds of testimony.

A classic source of market volatility, Powell’s words to the House Financial Services Committee of the US Congress could change the overall mood – at least temporarily – depending on the language used when explaining future economic policy.

At stake mainly are interest rates, with the Fed’s next decision on rate hikes two weeks away.

“Expect Bitcoin volatility to pick up in the middle of next week during Powell’s testimony,” trader, analyst and angel investor Crypto Santa confirmed in part of a weekend Twitter post.

The popular analytics account Tedtalksmacro also flagged the nonfarm payrolls data and the statement and press conference from the Bank of Japan at the end of the week as crunch points.

As Cointelegraph reported, liquidity decisions from central banks outside the US are being considered as an important influence on the Bitcoin market.

“US dollar liquidity increased so far in March (~+100bn inflows),” Tedtalksmacro added.

“Liquidity leads, price lags!”

According to CME Group’s FedWatch Tool, the probability of a March Fed rate hike of 50 basis points versus the previous 25 basis points stood at 28.6% on March 6.

Fed target rate probability chart. Source: CME Group

Fundamentals are set to an all-time high

Another adjustment, another all-time high – when it comes to Bitcoin difficulty, it’s only way up.

The latest data from BTC.com confirms that later this week, the difficulty will inch 1% higher for a new record level of 43.5 trillion.

This is by no means an achievement, coming at a time when BTC/USD has been consolidating for weeks and miners’ profit margins continue to be slim.

However, the hash rate shows that the commitment from the mining participants is also in a strong upward trend. Raw data estimates from MiningPoolStats put the hash rate at 320 exahashes per second (EH/s) on March 6.

Analytical company in the chain Glassnode meanwhile shows the profit statistics for Bitcoin miners, it has recovered significantly compared to the second half of 2022.

But additional data shows that the miners have not started a strong accumulation trend in the current price, even though it is 40% higher than the beginning of the year.

On a 30-day basis, miners’ BTC balances were lower in March.

Funding rates give cause for optimism

In the derivatives market, analysts are looking for a potential re-condition that sent BTC/USD to the February high above $25,000.

This is mainly thanks to the level of funding, which since last week’s 5% BTC price dip has flashed negative twice.

“Bitcoin’s Funding Level is the same as Ethereum’s today, going double negative after the nuke a few days ago,” trading suite Decentrader noted on March 6.

“Prior to this, the last Funding Rate was negative before pumping it to $25k on February 12th.”

Bitcoin weighted average funding rate chart. Source: Decentrader/Twitter

In a way, however, the ratio of longs to shorts remains “stubborn,” Decentrader addedwith two longs for each short “usually higher than usual for Bitcoin.”

Bitcoin long/short ratio chart. Source: Decentrader/Twitter

Cointelegraph has published a guide that provides detailed information on funding rates and how they work.

Sentiment index hits 6-week low

In a turnaround that is more clear that price action will be recommended, crypto market sentiment has increased significantly this month.

Related: EOS, STX, IMX and MKR show bullish signs as Bitcoin looks for direction

According to the Crypto Fear & Greed Index, the mood on the ground is now “neutral,” while a return from “fear” is getting closer.

At 47/100, in fact, the Index reached its lowest level since mid-January at the end of the week.

As reported by Cointelegraph, the research even questioned the extent of the crypto’s new cold feet, arguing that the market reaction to the Silvergate episode was disproportionate.

“Traders are more mixed when it comes to shorting or longing the market today,” said research firm Santiment, which published the findings.

Santiment added that sentiment may not be an accurate reflection of market strength due to the aforementioned funding levels.

“So there may be some interesting developments with a lot of negative comments, although the ongoing contract funding rates on the exchange are not always in line with sentiment,” he said.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.