Bitcoin sees turbulent sentiment, traders should remain vigilant

Data shows that Bitcoin had a turbulent last week of February, with BTC falling back below $25,000 after a classic “false breakout” on low-volume weekend trading.

Last week, Bitcoin rallied rapidly, even hitting a six-month high. However, the good times did not last, with overall growth in February being much slower compared to the 40% growth in January. A key monthly close is approaching, along with a potential external price trigger in the form of the Fed minutes.

RSI “bearish divergence” raises alarm

After a few days of macroeconomic data reaction, the weekend started largely calmly, with Bitcoin rising back above $25,000 late last Sunday. However, this did not last long, and according to signs on the Binance exchange order book, large traders manipulated this. According to data from TradingView, the decline after the weekly close took BTC below $24,000 and rebounded to the same level on Saturday. And this decline is for traders to be vigilant when trading.

“Whether Bitcoin can break higher anytime soon is really hard to say,” said trader and analyst Matthew Hyland, adding that “I wouldn’t be surprised” if there was a pullback and it stayed around $22,800.

In contrast, Venturefounder, a contributor to the on-chain analysis platform CryptoQuant, is more concerned about the strength of Bitcoin's rebound. In a Twitter post, Venturefounder warned that external factors such as "macro weakness" could have a direct negative impact on the crypto market.

Venturefounder referenced the relative strength index (RSI) indicator, which measures how overbought or oversold an asset is at a given price point. In 2021, the RSI gradually rose as the price of Bitcoin pulled back, then hit its current all-time high of $69,000 in November.

All eyes on FOMC minutes and the dollar

There are far fewer potential macro triggers in the upcoming week than in the previous week, with a light data release including the PCE index.

However, most cryptocurrency experts are focused on the release of the minutes of the Federal Open Market Committee (FOMC) meeting of the Federal Reserve in February. The FOMC meeting can determine the latest benchmark interest rate, so experts expect Fed Chairman Jerome Powell to release a speech at the meeting, including a pause in the rate hike policy. However, financial market resource research institution Capital Hungry warned this week that "the market has adjusted based on the CPI revision and the January report. The PCE data has contributed to the high inflation sentiment."

Hash rate, struggling to reach new all-time highs

The Bitcoin network remains bullish as the month draws to a close. The next automatic adjustment will increase Bitcoin’s difficulty by about 10%. This will offset the small drop in the previous adjustment and push the difficulty coefficient to a new all-time high.

Data from on-chain analytics firm Glassnode suggests that miners are holding onto more BTC than they are selling on a rolling monthly timeframe, reversing a net-selling trend seen since mid-January.

Meanwhile, raw data from MiningPoolStats shows that the Bitcoin network hash rate also continues its upward trend, remaining above 300 exahashes per second (EH/s).

Economist and analyst Jan Wuestenfeld described the phenomenon as “unstoppable!” as its 30-day “moving average” climbed to its own all-time high last week.

Blockware Chief Analyst Joe Burnett commented, “The 14-day moving average of the total global hash rate is now around 290 EH/s. Bitcoin miners are scavenging the planet for cheap, wasteful, excess energy.”

The Greediest Sentiment Since Bitcoin's All-Time High

New findings from research firm Santiment suggest that cryptocurrency market sentiment has become too greedy near those multi-month highs.

This phenomenon is also evident in altcoins, with Santiment summarizing using Dogecoin as an example, “This social volume pattern and high positive sentiment towards Dogecoin perfectly illustrates how mania can create price highs. Regardless of your opinion on Dogecoin, hype around this asset has historically foreshadowed market corrections.”

Meanwhile, the popular Crypto Fear & Greed Index shows that the dominant sentiment in the cryptocurrency market this week is "greed."

Bitcoin rose to a high with a Greed Index reading of 62/100. The Crypto Fear & Greed Index also hit a new high since BTC rose to $69,000 in November 2021.