Bitcoin (BTC) begins a new week and quarter as if starting the new year at just above $46,000.
In what will seem like serious deja vu to Hodler, BTC/USD is practically at the same levels as it was on Jan. 1, 2022.
Price action has been quiet for the past few days – perhaps too quiet – but behind the falling volatility there are signs that the market is busy determining future direction.
From macro to on-chain, there are actually plenty of clues to watch in April given that Bitcoin — so far, at least — is holding its annual opening price as support.
Cointelegraph takes a look at five of these factors relating to BTC price action over the coming week.
Inflation meets fresh money printing
There has been much talk about the end of the post-COVID “easy money” era and the impact it will have on risky assets like Bitcoin.
As the United States Federal Reserve pledges to reduce its record-high balance sheet and continue raising interest rates, commentators have sounded the alarm in what could be a shockwave that could hit crypto investments.
But so far there is small sign that a fundamental change is underway, while in Asia the opposite seems to be the case this week.
as highlighted According to market commentator Holger Zschaepitz, Japan’s central bank, the Bank of Japan (BoJ), has strengthened its balance sheet but printed even more liquidity.
The BoJ already had the largest balance sheet to GDP ratio and this trend continues to grow, now at 136% of GDP.
For Zschaepitz, this is not just a surprise, but could become “the greatest monetary experiment in history”.
“By comparison, the ECB and the Fed look like amateurs,” he argued.
Central bank balance sheet annotated chart. Source: Holger Zschaepitz/ Twitter
While more pressure means more good times for risky assets, not even everyone is convinced that the long-vaunted balance sheet contractions will last. Central banks, they claim, will soon have no choice but to resume liquidity injections.
“There has never been a government that has resisted the temptation to print money to pay its bills and appease its citizens. The government will never go bankrupt voluntarily. This is axiomatic. I challenge you to contradict me with evidence,” Arthur Hayes, ex-CEO of derivatives giant BitMEX, wrote in a blog post in March.
“Therefore, if your time horizon is in the years, it’s time. If you mess with the bull, you get the horns. Remember, it’s not gold or bitcoin that’s going up in price, it’s a depreciation of the fiat currency in which they’re valued.”
The opposite view as signaled from last week Yield curve inversioncontrasts rate hikes with the now-high risk of a U.S. recession — a combination likely to weigh on bitcoin and stocks alike.
Spot bulls target $50,000
The lack of volatility is the main talking point among bitcoin traders and analysts as Monday begins.
Some classic but brief excitement around the weekly close faded in a matter of hours, with bears still failing to take the yearly open as support, data from Cointelegraph Markets Pro and TradingView shows.
BTC/USD 1-week candlestick chart (Bitstamp). Source: TradingView
This puts BTC/USD exactly where it was three months ago, but short-term price signals are already seeing some calls for a continuation higher.
Among them is popular analyst TechDev, who has highlighted Bitcoin’s first “volatility squeeze” since January that played out on the 12-hour chart.
12H $BTC Volatility Squeeze Formation.
Only since January. This is during green trend bars.
The breakout arrow shows the direction when it occurs. pic.twitter.com/5QZDl92p7f
– TechDev (@TechDev_52) April 4, 2022
TechDev used indicators including the Bollinger Bands volatility measure, where BTC/USD is now surfing the middle of the channel with an upward tilt.
As Cointelegraph reported, the odds are already in place for an attack on $50,000, which will be Bitcoin’s first this year.
Meanwhile, April itself has a lot to offer – in and of itself, this month was historically “good” for Bitcoin.
Buyers take coins out of exchanges in March
It’s no secret that many bitcoins have exited exchanges this year, but the latest data shows how the supply tightening is shaping up.
According to on-chain analytics firm Glassnode, unlike many others, there have been exchange outflows over the past month — exchanges are down the equivalent of nearly 100,000 BTC.
Historically, there have only been two occasions in Bitcoin’s lifetime when outflows surpassed the 100,000 BTC mark, making March one of the highest.
“Aggregate stock market outflows of this magnitude have only been seen on a few occasions in history, most after the March 2020 liquidity crisis,” Glassnode added in Twitter comments next to an annotated chart.
Bitcoin exchange net position change annotated chart. Source: Glassnode/Twitter
Should investors recreate buying behavior at the bottom post-COVID-19 crash, the implications should be clear, but it may take a while to take hold. While BTC/USD rallied in 2020 after falling 60% in days, it wasn’t until the fourth quarter that the price trajectory really started to change.
Meanwhile, analytics platform CryptoQuant, which tracks the balance sheets of 21 major exchanges, shows that total BTC holdings are now at their lowest since Aug. 1, 2018 — 2.303 million BTC.
A meandering downtrend in 2022 picked up steam in March when a total of 77,000 BTC were withdrawn into private wallets.
Bitcoin exchange reserves chart. Source: CryptoQuant
Forget the off-season
An unusual event has occurred in relation to Bitcoin’s relationship with altcoins – the combined open interest and volume in the altcoin derivatives markets has surpassed that of Bitcoin for the first time in over a year.
The move was noticed by crypto analytics platform Coinalyze, which openly suggested that the telling “altseason” could now be here.
#OLDSEASON ? pic.twitter.com/O0rv3ttwMl
— Coinalyze (@coinalyzetool) March 31, 2022
“Could mean altseason, money is now flowing into alts,” founder Gabriel Dodan told Cointelegraph in private comments.
Such a perspective is consistent with data showing significant inflows into altcoins over the past week, leading one commentator to argue that investor risk appetite increased.
Taking the spotlight away from BTC may not be a drag on performance per se, meanwhile Dodan added, thanks to similarly falling volatility.
“On the other hand, it makes BTC pretty stable because it’s not leveraged too much; it’s a good bottom for BTC,” he explained.
The hash rate hits a new all-time high
Shortly after the record breaking difficulty for the bitcoin network, the hash rate hit new all-time highs.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC, VET, THETA, RUNE, AAVE
Showing miners’ belief in the long-term viability of participating in the network is now at 223 exahashes per second (EH/s), according to data source MiningPoolStats.
Bitcoin hash rate chart (screenshot). Source: MiningPoolStats
While the hash rate was only an estimate of the computing power expended by miners, it has never been this high and proponents say will continue to rise regardless of external attempts to “govern” Bitcoin.
“Bitcoin mining is just about the most vulnerable system designed by man,” argued Francis Pouliot, CEO of payments processor Bull Bitcoin, in a well-known blog post last year about bitcoin’s hash rate and energy consumption.
“Any attack on Bitcoin is guaranteed to make Bitcoin stronger, which in turn implies a higher price, higher hashrate, and higher energy consumption.”
The issue of bitcoin versus energy remains highly contentious, with several popular figures struggling to explain what they see as a fallacy – that bitcoin uses “too much”. Bitcoin doesn’t waste energy, they claim, it merely converts it into something more useful than the most solid money ever created.
Regardless of the narrative, meanwhile, the hash rate continues to grow, underscoring the fundamental bullish premise for investing in Bitcoin.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.