Market Analysis

Bitcoin (BTC) starts a new week with consolidation in the air amid some of the least volatile conditions ever.

Despite losing 5% in an hour last week, Bitcoin’s subsequent lack of volatility is on every trader’s mind.

The question is whether that will change in the coming days.

There are plenty of potential catalysts, from macroeconomic data to exchange setups and more, but which will win out — and in which direction it will send BTC price — remains to be seen.

Behind the scenes, it remains business as usual for Bitcoin network fundamentals, with miners preserving their newfound buoyancy and ready for new all-time highs in difficulty.

Cointelegraph takes a look at these major market-moving factors and summarizes opinions as to how they might shape BTC price action this week.

Bitcoin price stays paralyzed after weekly close

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

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

Data from Cointelegraph Markets Pro and TradingView proves the point, with spot price moving within a barely perceptible range ever since.

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

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

“Boring price action on Bitcoin since the correction, but still acting in support here,” he told Twitter followers on March 6.

“Indices bounced already and seem to continue to do so. Might have another sweep of the lows and then reverse up, losing $21.5K = trouble time.”

A further post eyed a potential bounce target for $23,000 should the bulls reclaim some strength.

“I just want to see some price movement today if I am honest,” popular trader Crypto Tony continued.

“I remain short as of few days ago with my stop loss at $23,200 to remain transparent. I would like to see a move up to $22,800 before any downside.”

Fellow trading account Daan Crypto Trades noted that BTC/USD had already closed the modest CME futures gap from the weekend.

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

For trading resource Skew, the weekly open at around $22,300 should function as a “pivot” for near-term price performance.

“Probable that this weekly open price will trade as a pivot for 1D breakdown towards weekly demand ($19K) else HL with confirmation above $23K,” a tweet about the daily chart stated.

“We’re in the chop zone currently. (weakness or strength in coming day will be leading of momentum/direction).”

All eyes on Fed’s Powell as macro signals return

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

A classic source of market volatility, Powell’s words to the U.S. Congress’ House Financial Services Committee could flip the overall mood — at least briefly — depending on his language regarding future economic policy.

At stake, in particular, are interest rates, with the next decision on a benchmark Fed rate hike still two weeks away.

“Expecting Bitcoin volatility to pick up during midweek next week during Powell’s testimony,” trader, analyst and angel investor Crypto Santa confirmed in part of weekend Twitter posts.

Popular analytics account Tedtalksmacro also flagged nonfarm payroll data and a statement and press conference from the Bank of Japan toward the end of the week as crunch points.

As Cointelegraph reported, the liquidity decisions of central banks outside the U.S. are increasingly considered an important influence on Bitcoin markets.

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

“Liquidity leads, price lags!”

According to CME Group’s FedWatch Tool, the odds of the Fed’s March rate hike coming in at 50 basis points versus the previous 25 basis points stood at 28.6% as of March 6.

Fundamentals set for yet more all-time highs

Another adjustment, another all-time high — when it comes to Bitcoin difficulty, the only way is up.

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

This is no mean feat, coming at a time when BTC/USD has been consolidating for several weeks and miner profit margins continue to be slender.

Nonetheless, hash rate shows that commitment from mining participants is also in a firm uptrend. Raw data estimates from MiningPoolStats put the hash rate at 320 exahashes per second as of March 6.

On-chain analytics firm Glassnode meanwhile shared profitability statistics for Bitcoin miners, this having recovered markedly versus the second half of 2022.

Additional data shows miners have yet to begin a firm accumulation trend at current prices, despite being 40% up versus the start of the year.

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

Funding rates give cause for optimism

On derivatives markets, analysts are eyeing a potential rerun of conditions that sent BTC/USD to its February highs above $25,000.

This is principally thanks to funding rates, which have flashed negative twice since last week’s 5% BTC price dip.

“Bitcoin Funding Rate doing similar to Ethereum now, turned negative a couple times after the nuke a few days ago,” trading suite DecenTrader noted on March 6.

“Prior to this, Funding Rates were last negative before the pump to $25k on the 12th of Feb.”

In the way, however, the ratio of longs to shorts remains “stubborn,” DecenTrader added, with two longs for every short “typically higher than usual for Bitcoin.”

Cointelegraph has published a guide that fully explains funding rates and how they work.

Sentiment index hits 6-week lows

In a more pronounced turnaround than price action would suggest, crypto market sentiment is increasingly shedding any trace of bullishness this month.

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

According to the Crypto Fear & Greed Index, the mood on the ground is now “neutral,” while the return of “fear” is getting ever nearer.

At 47/100, the Index hit its lowest level since mid-January over the weekend.

As Cointelegraph reported, research is even querying the extent of crypto’s newfound cold feet, arguing that the market’s reaction to the Silvergate episode was out of proportion.

“Traders are more of a mixed bag when it comes to shorting or longing the markets right now,” research firm Santiment, which published the findings, stated.

Santiment added that sentiment might not necessarily form an accurate reflection of market strength given the aforementioned state of funding rates.

“So there could be something funky going on with an inflated amount of negative comments, even though perpetual contract funding rates on exchanges aren’t necessarily matching the sentiment,” it concluded.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article was originally published by Cointelegraph.com. Read the original article here.