As hodlers get ready for the certain chaos, a week like no other in Bitcoin’s history suddenly arrives.
What are the major obstacles that investors must overcome as Bitcoin enters a new week under the shadow of a fresh global conflict?
Bitcoin is under stress, along with many other assets, in a macroenvironment that has changed so much from simply a few days ago that it is now unrecognizable.
The situation in Ukraine is destabilizing international markets, and new developments have the potential to drastically change public opinion in a matter of hours or even minutes.
The timing has also affected Bitcoin; its status as a haven is under significant scrutiny as investors seek security and currency holders search for an escape.
Cointelegraph examines what might be in store for Bitcoin soon as it holds up against complicated and even surreal macro developments as the dominant influence this week.
Below are five topics for BTC investors to consider this week.
Ukraine War is Predominant
Without a doubt, the confrontation between Russia and Ukraine is what is most impacting the market this week.
The crisis, which only started in its current form five days ago, is still in a constant state of change as new sanctions are imposed, both parties and their allies continue to put out a valiant effort, and markets respond to various threats and probabilities.
The Russian economy, which is preparing for chaos on Monday, is foremost among them. The outlook is gloomy for its currency, the ruble, which is already trading at record lows, and stock trading has been suspended for the day.
Monday is the scheduled start date for the talks, and any sign of progress might alter the short-term view and the way that the markets function.
However, while uncertainty reigns, everyone will be searching for the ultimate place of refuge, and the usage of Bitcoin — whether by common Russians and Ukrainians or their governments — is already a hot topic.
Ukraine has already amassed millions of dollars in cryptocurrency donations, as Cointelegraph revealed. Additionally, the vice president of Ukraine, Mykhailo Fedorov, urged exchanges to restrict the funds of users from Belarus and Russia.
Markets, on the other hand, are likely to be influenced by changes in localized events and their spillover effects on the respective governments.
In contrast to gold, which first rose quickly before losing all of its gains, oil has so far been one of the few wartime winners, though not Russian oil, and bitcoin has managed to maintain a reasonable level of stability.
Nevertheless, there is still a link between bitcoin and altcoins and regular stock markets, and low timeframes are therefore likely to give traders a tremendous headache regardless of the direction the conflict goes.
Spot Price Action Subject to Major Macro Forces
It is difficult to predict how Bitcoin will perform over the shortest timeframes because traditional markets are expected to open at a high level of volatility on Monday.
Despite correlations, Bitcoin has so far managed to stay in a very narrow range, and $40,000 is a definite area of resistance that bulls must overcome.
The issue, though, is that any such abrupt movements might ultimately arise from significant macro-changes, making them an unreliable longer-term indication.
Meanwhile, the well-known Twitter account Decodejar pointed out that current prices represent the so-called point of control for the last 15 months, with $38,000 witnessing high volumes in comparison to other price points in the current range.
The situation may completely change before Monday is over because American markets have not yet opened as of the time of writing.
It might be helpful to draw a comparison to March 2020, when Bitcoin initially declined in line with world markets before rebounding as an asymmetric gamble that sent hodlers on an unprecedented bull run for the following nine months.
Red Candle Burns for Yet Another Month
The Bitcoin market observers’ expectations were not met by Sunday’s close.
The first four consecutive monthly red candles since the 2018 bear market were recorded in the history books as a result of a last-minute plunge that eliminated the possibility of completing the week and the month over $38,500.
For Bitcoiners, who have yet to witness the cryptocurrency break free from traditional assets and experience a surprise comeback, last week’s events seem to be making matters worse rather than better.
Analysts are also having trouble with the monthly chart concerning its 21-month exponential moving average (EMA), which may cease to exist as support if losses persist.
It has historically been a hallmark of macro-bear trends for Bitcoin to see the 21 EMA broken; fortunately, this wasn’t the case in February.
Prior attempts by Bitcoin to retake two significant moving averages as justification for retaking higher resistance levels closer to November’s all-time highs failed. Rekt Capital, an analyst, foresaw the possibility of a probable revisiting of the range low at $28,000 as a result.
Positively, Bitcoin’s 200-week moving average crossed $20,000 for the first time this weekend. This is a milestone that few expect will be challenged as support.
A Ship Stabilized by Difficulty
Investors have every reason to remain confident in the resilience of the Bitcoin network, putting geopolitics aside.
The hash rate and difficulty have continued to rise as miners continue to operate despite price pressures and uncertainty on almost every timescale.
The status quo may be threatened this week; while the hash rate is constant, the difficulty is expected to drop for the first time in 12 weeks to account for the most recent modifications.
This is not a bad occurrence by any means; the 1.25 percent drop is only marginal by Bitcoin’s standards and most likely represents minor fluctuations in miner activity rather than the beginning of a new pattern.
The hash rate, on the other hand, continues to be above 200 exahashes per second, which is a significant change from only a few months ago when Bitcoin reached its all-time highs, according to tracking tool MiningPoolStats.
Over the past year, there has been a great deal of coverage on the fundamentals’ divergence from price.
Whether pricing will continue to follow the hash rate as in previous years is the topic at hand.
Sentiment Foresees Negative Outcome
The rise of a new military conflict in Europe does not appear to have pleased Bitcoin, in keeping with its motto.
Despite its potential functions, recent events haven’t exactly improved public opinion toward the biggest cryptocurrency.
The market is becoming increasingly uneasy, according to the Crypto Fear & Greed Index, a sentiment gauge that has drawn increased attention in 2022.
BTC/USD experienced a relatively minor decline throughout Sunday and Monday, but it was sufficient to push the Index back into the acute fear zone, dropping from 26/100 on Sunday to 20/100, its lowest level since February 22.
For reference, the reading for Fear & Greed in January was 11/100, with the local lows of $32,800 frequently serving as macro lows in previous years.
Commentators responded, however, and asserted that the price decline into Monday may have been a warning from the free market that doom and gloom would rule supreme once trading on the TradFi market began.
The Fear & Greed Index, cryptocurrency’s conventional rival, likewise experienced significant fear last week before making a comeback.
