Bitcoin Fundamentals Show Signs Of Fresh Rally, Here Are Things To Consider

Bitcoin has been steadily rising since its January low of $ 32,933.33. Seeing a 28 percent increase in value. However, after forming a “double top” formation near the swing highs of $ 45,500, the price dropped. Bitcoin starts the week with a steady decline to pivotal support at $ 40,000 where it has been for some time.

After a week of bullfighting, the current environment seems to be a harsh dose of reality as BTC faces troubled stock markets, rising US dollar and other factors.

The bullish Bitcoin story was tested this week as geopolitical tensions between Ukraine and Russia, as well as the 50-point probability of a Federal Reserve exchange rate in March, weighed on the world’s largest cryptocurrency. However, Bitcoin bases show that BTC is still in upward momentum. Here are some factors to consider.

Bitcoin Spot Price Outperforms Futures

Interesting activity took place in Bitcoin derivatives markets during the rise to and fall of local highs.

An open leverage has evaporated from future markets, as reported by Twitter observers including Glassnode Checkmate’s chief analyst, and with it the possibility of being lowered or “liquidated”.

Checkmate tweeted Sunday along with a diagram showing the de-risk:

“Bitcoin’s future leverage has declined significantly this week, falling from 2.0% of Market Limit, to 1.75%. However, this was NOT the liquidity cascade we all know and love. This is from traders choosing to close their positions, much healthier. I hope a place will lead now. “

Bitcoin futures open interest leverage ratio vs. BTC/USD annotated chart. Source: Glassnode

As for the relationship between spot and future prices, a Byzantine general, a fellow commentator, stated that futures can now start trading below, rather than above, spot price.

He added in his own article tonight that the difference between the future base and point is already “quite significant”.

CME futures traded at about $ 200 below spot prices at $ 42,000 at the time of issuance.

50-day moving average support Proven

After a ten-day return, Bitcoin is once again facing resistance levels that have been off the bulls ’radar since mid-January.

After spending $ 45,500 late last week, the weekend was fairly quiet, despite a series of lower lows on the daily chart.

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With that, however, comes the opportunity for a short-term high to close the “gap” of CME futures, which is now close to $ 42,400 above the spot price.

BTC/USD trades at $42k. Source: TradingView

“Bitcoin is still just sitting between support and resistance,” noted popular commentator Matthew Hyland on Monday, adding that he was “relaxed” ahead of recent prices.

Meanwhile, trader and analyst Rekt Capital highlighted the relative weakness of BTC when it comes to regaining support levels on a macro scale, despite the fact that support and resistance levels are close.

He had previously identified two moving averages that needed to be reconfirmed as support for Bitcoin to regain its November high.

Hashrate Hovered

So far, Bitcoin’s online basics have had a successful year, and this week is no different.

Hash rates, a measure of the processing power allocated to mining, hovered at new all-time highs over the weekend.

Although it is difficult to know the exact amount of hash power on the Bitcoin network, hash exchange rates have been rising since mid-last year, and the ecosystem has only taken a few months to fully recover from the impact of China’s forced relocation. .

Bitcoin difficulty chart. Source: Blockchain

Now that the U.S. has taken the lead in mining, it looks like participants are in a race to the top.

The mining difficulty of Bitcoin, which has also fully recovered after the collapse to accommodate less hacking activity after China, is more clearly observable.

The difficulty level was 26.69 trillion on Monday, but the next automated adjustment will push it even higher – to more than 27 trillion for the first time.

The modification will take effect in three days and will result in a 2.2% increase.

BTC / USD returned to $ 40,000 after a two-week break, indicating that the last days of January are particularly attractive to investors looking for a position.

BTC / USD then re-entered the zone, which must be broken by high volumes to build a new directional base on the daily chart, after rebounding above $ 45,500 from the January lows. Bitcoin is in a state of relative equilibrium, with clear resistance and support zones above and below.

Related Reading | TA: Bitcoin Breaks Key Support, Why BTC Could Dive Under $ 40K

Featured image from Unsplash, Charts from TradingView.com