Cryptocurrency Market Feb 27 CHK: Bitcoin closes the week above $23,500, altcoins rebound slightly

Bitcoin attempted a weekly close above $23,500 on February 26 following a steep decline over the weekend.

Cryptocurrency Market

Market data shows Bitcoin price hovering around $23,500, up nearly $800 from last week’s low.

The latest move marks a modest rebound after a dismal week for risk assets, as US stocks took a hit on higher-than-expected inflation data.

Even so, there are still analysts who are optimistic about the state of the market, one of which is popular trader Kaleo, who maintained his prediction that $30,000 remains a “magnet” attracting the price of BTC. Altcoins Sherpa and Mags say Bitcoin will need another 4-6 weeks to hit $30,000.

“BTC is still in a bearish-to-bullish transition, only starting to rise when the neckline is broken.”

Mike McGlone, macro strategist at Bloomberg Intelligence, expressed doubts about the bulls’ ability to break through the $25,000 resistance area.

“The headwinds remain strong; The market has recovered; But, ‘Don’t fight the Fed’ – headwinds dominate the market in 2022 and will remain so in Q1″, citing research.

The study itself predicted that “tactically oriented people are likely to focus on taking profits,” while “it may take some time before buying and holding power regains the upper hand.” .

The declining 50-week MA itself has led McGlone to conclude that “trend is still down”.

According to data from on-chain analytics firm, Santiment, when the value of Bitcoin, Ethereum, and other crypto assets fell, traders sold at a loss.
“Bitcoin and Ethereum are both seeing more traders selling losses than gains this week, the first such week in 2023. In the past, once the crowd exited their positions more often at a loss, bottom is more likely to form.”

The ability of the Fed to keep interest rates higher for longer to tame inflation led Bitcoin to end the session in the red on Sunday for the third straight week.

The PCE index, a key US inflation gauge, outperformed expectations, pushing the dollar closer to year-to-date highs, while riskier assets fell broadly across the board. . The US crackdown following the failure of the FTX exchange is also putting pressure on the crypto market. Bitcoin’s February gains are tiny compared to January’s 39% gain.

According to Bloomberg analysts, investors should be cautious of Bitcoin’s two-month bull run. Since March 2020, there have been 5 similar cases where Bitcoin rose for two consecutive months with a smaller increase in the second month. In four cases, the market fell back in the third month, with an average loss of 5.8%. There was only one exception in February 2021, when the market experienced a strong bull run.

Altcoins also recorded a rally as Bitcoin attempted a weekly close above $23,000.

Leading the way is Neo (NEO) with a bounce of more than 15% in the past 24 hours. Followed by Klaytn (KLAY) and Maker (MKR) with nearly 10% growth. Other projects in the top 100 such as Synthetix (SNX), Optimism (OP), ssv.network (SSV), Dash (DASH), Basic Attention Token (BAT), Vechain (VET)… also jumped from 6-9% during the day.

After hitting a local intraday bottom at $1,587, Ethereum (ETH) has reversed course to the upside, breaking through the $1,600 region and currently trading around $1,642, with a gain of more than 3% in the short term.

Macro factors

U.S. stock market futures were little changed on Sunday night after the major indexes posted their biggest weekly losses of the year. Dow Jones futures contract fell 16 points, or 0.04%; S&P 500 futures lost 0.01% and Nasdaq 100 futures were mostly flat.

The US stock market fell sharply in Friday’s trading session (February 25), completing the biggest weekly loss since the beginning of the year, after statistics showed that prices increased more than expected in January. Oil rose slightly when at the same time affected by two opposite factors, one is the increase in US inventories and the other is that Russia is preparing to significantly cut production.

At the close, the Dow Jones Industrial Average fell 336.99 points, or 1%, to 32,816.92 points. The S&P 500 index fell 1% to 3,970.04 points. The Nasdaq index slid 1.7 percent to 11,394.94 points. During the session, at one point, the Dow Jones fell as much as 510 points, equivalent to a decrease of 1.54%.

All three indexes had a strong week of decline. For the whole week, the S&P 500 fell 2.7%, its worst since the week ended Dec. The Dow Jones lost about 3% for the week, marking its fourth straight weekly loss. Nasdaq slid 3.3% for the whole week, making this week the index’s second weekly loss in three weeks.

Shares of Boeing fell more than 4% after the plane maker announced it was suspending deliveries of 787 Dreamliners due to technical problems with the fuselage. Microsoft and Home Depot fell 2.2% and 0.9% respectively, which were also stocks that put great downward pressure on the market this session due to their large capitalization.

The personal consumption expenditures (PCE) price index report – the inflation gauge favored by the US Federal Reserve (Fed) – showed that prices in January increased by 0.6% compared to December 2022 and increased 4.7% over the same period last year. Both of these gains exceeded analyst expectations. The report added to pre-existing market concerns that the Fed may have to raise interest rates higher for longer to bring inflation back to its 2% target.

Charles Schwab’s chief strategist Liz Ann Sonders believes that in addition to the PCE data, the market still faces many other sources of downward pressure. “The market is troubled not only by hotter-than-expected inflation and the concern that the Fed will have to tighten monetary policy longer, but also because of the high level of speculation in the past time, which means the risk of a bubble. . The market often tends to move in the opposite direction when investors feel such a risk. So I think today’s performance has to do with sentiment as well, rather than just macro forces,” Sonders told CNBC.

This strategist believes that inflation cannot be reduced if the economy does not slow down on a large scale. “I think there needs to be some kind of broad-based slowdown in the economy, especially in the labor market, for inflation to come down significantly. Otherwise, inflation will persist.”

Brent crude oil futures in London rose $0.95/barrel, or 1.2%, to settle at $83.16/barrel. WTI crude oil futures in New York increased by 0.93 USD/barrel, or 1.2%, to close at 76.32 USD/barrel.

For the whole week, oil prices were almost flat. This week, oil prices have come under downward pressure from signs of increased supply in the US, the uptrend in the dollar, and the prospect of further tightening of monetary policy by the Fed. But along with that, the price of “black gold” was supported by optimism about the prospect of oil demand in China, plus the increase of Russia’s previously announced plan to cut production.

February 24 marks the 1st anniversary of the Russian-Ukrainian conflict. The price of Brent oil – the benchmark of the global oil market – is about 15% lower than it was at the time. On March 8, 2022, the price of Brent oil reached a 14-year high at nearly $128 per barrel.

On Thursday, oil prices rose more than 2% after Russia announced an increase in production cuts by 25%. In the middle of this month, Russia suddenly announced a reduction in production by 500,000 bpd starting in March.

Data from the US Department of Energy shows that the world oil market appears to be well-supplied, as the country’s oil inventories are at their highest level since May 2021. In addition, according to Reuters news agency, there are signs that Russian crude oil and refined oil products are being transported in large volumes by ships – a sign that supplies are still plentiful.

A report by investment bank JP Morgan said that in the short term, oil prices are more likely to slide towards the $70/barrel threshold than rise, “as global growth impediments grow,” even though “the The abundance of hard-to-calculate inventories in many places will diminish as the flow of Russian oil slows.”

JP Morgan also forecast that the Organization of the Petroleum Exporting Countries (OPEC) will cut production to limit the decline in oil prices.

Due to the Fed’s tightening policy outlook, the Dollar Index, which measures dollar strength, gained 0.6% on Friday, closing the week at nearly 105.3 points. Within a month, the index gained 3.3%, putting downward pressure on USD-denominated assets such as crude oil.

“While Russia’s reduction in oil production could be a bullish factor, this month’s oil price movement has sent a strong message that rising interest rates in the US will be a major obstacle to the ability to increase oil prices. sustainable price of oil,” Jim Ritterbusch of the consulting firm Ritterbusch and Associates told Reuters.

The early 2023 rally appeared to be waning as investors absorbed the minutes of the Fed’s latest meeting, which reiterated the central bank’s tough stance on inflation, as well as recent comments. Fed officials warned interest rates could go higher and longer than anticipated.

Over the next week, investors will be looking for clues about how inflation will affect consumers and businesses through several economic data reports and corporate earnings. Durable goods orders (MoM) figures will be released on Monday morning. Consumer confidence and the ISM manufacturing survey will also be made public next week.

Only 6% of companies in the S&P 500 will report earnings, including some major retailers, restaurants, travel and entertainment companies, and food companies. Target, Costco, Lowe’s and Macy’s are some of the big names that will report earnings this week.