As investors remain uncertain about the Omicron COVID variant, global stocks are still struggling to maintain gains. The SPX has seen rallies and sold intraday, which indicates that the near-term risk is still high.
Global macro risk-off; Federal Reserve Commentary on Continuous Tapering Bond Purchases; High Leverage on BTC Derivatives. These are all short-term headwinds that could lead to volatility.
However, the on-chain data is still firmly bullish and could provide investors with additional buying opportunities in the event of stock market volatility or long liquidations.
Chart by TradingView
Sentiment has quickly changed from fear to greed, with a 22% decline from the $69k highs. BTC’s price action for the year continues to produce higher highs than lower lows, which is why the higher time-frame charts are bullish.
Near-term technicals are showing positive developments, such as price making lower lows and RSI making higher lows. Positive news for the short-term is that the daily momentum has been steadily trending higher and flattening, which is another positive.
To confirm that a bottom has formed, the bulls must hold the $53.3K near-term lows and make higher highs. BTC can easily fall below $53.3K and send it towards the $53K to $50K region, which is the next zone of major technical and on-chain support.
BTC has performed well considering the SPX’s pullback. This makes current conditions similar to September and Oct, when BTC outperformed SPX, even with global macro risk-off.
BTC must ensure that the 21-week and 21 week EMAs at $51K, $53.1K, respectively, are not subject to further selling pressure from stocks or Omicron uncertainty. The selling pressure is primarily due to an overheated futures markets, younger coins suffering losses, macro risk-off as stocks test major technical resistance, bearish divergence and uncertainty over monetary policies and new virus concerns.
Despite near-term volatility, 22% drawdown and other factors, overall trends in on-chain indicators remain bullish. Long-term holders and miners are not aggressively selling the pullback.
Chart by CryptoQuant
A major concern for bull markets is the aggressive selling by long-term holders and miners when prices fall. It is unlikely that a bear market will begin as the price fell while all foreign exchange reserves made new multi-year lows.
As investors deposit Bitcoin onto exchanges to buy, the exchange reserve tends to increase in size. A strong trend of accumulation is evident in the declining reserves of exchanges, particularly during most of 2021. All exchange BTC reserves fell by approximately 62,500 BTC since November 1, 2021. This has resulted in a new multi-year low reserve of 2.3 million BTC.
This is 89% of total BTC supply, which means that it is currently not available for sale.
Chart by CryptoQuant
Near-term technicals are slowly improving according to momentum indicators. However, it’s too early for us to call a bottom because we need to see higher highs or lower lows.
BTC faces headwinds from uncertainty about monetary policy, stock market pullbacks, high leverage and Omicron variant. Despite the stock market risk, it has held up well. However, we need to be cautious because liquidations from derivatives could still cause it to drop to $53K or $50K.
Although the overall trend in fundamentals is still bullish and on-chain remains bullish, for now we will have to wait to see how stocks trade over the next week and watch for signs that a bottom might be forming on SPX. Investors might be wise to continue building Bitcoin at technical support and spreading buy orders in the event of stock liquidations.
Marla Brooks – Financial Analysis
My name is Marla Brooks, and I am the mainstream behind the”observednews.com” for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.