- Bitcoin reached $52,000, its highest price since November 2021, showing signs of strength nearing its all-time high again. However, upside looks capped short-term around $54,000-$58,000.
- Debate continues around Bitcoin’s 4-year halving cycles, with some arguing new factors like ETFs change the cycles. Others see current cycles continuing as usual, with a pre-halving rally starting soon.
- While liquidity conditions favor crypto, Bitcoin futures open interest spiked to 26-month highs, indicating risky new positioning. Sentiment also shows increasing greed, which tends to precede corrections.
Bitcoin had a strong weekly close above $52,000, reaching November 2021 levels. While the market debates upcoming halving impacts, BTC continues showing signs of strength as it nears all-time highs again. What factors are influencing Bitcoin’s price action in the short and long term?
Weekly Close Sends Bitcoin Back to November 2021
Bitcoin closed the week on Feb 18 at around $52,100, its highest since November 2021. This takes the market symbolically near the $69,000 peak of late 2021. Predictions for the weekly close varied, with some expecting a reversal. However, Bitcoin held $52,000 into the Asia trading session with little volatility.
The upside looks capped in the short term, with targets around $54,000-$58,000. After that, a broader correction and rotation towards altcoins may play out. If so, the $58,000 target could be followed by consolidation as that level becomes strong support.
Halving Cycles Spark Contention
Debate around the halving cycle’s impact is increasing ahead of the event in May. Some argue institutional access via US spot ETFs calls for reevaluating standard four-year Bitcoin cycles. However, others see current cycles as business as usual, with a cycle top still coming months after the halving.
Before April’s halving, a pre-halving rally could begin two months prior. Historically, this final retrace tends to occur only weeks before. After the halving, further upside at an aggressive pace is expected to build towards a blow-off top concluding this multi-year cycle.
Global Liquidity Conditions Favor Crypto
Caution marks the macroeconomic mood after recent US inflation data concerned markets. While risk assets like equities reach all-time highs, liquidity conditions influencing them appear increasingly divergent from reality.
However, global liquidity itself looks set to hit new all-time highs soon. This remains arguably the most important factor for a bull market. When combined with solid Bitcoin fundamentals, the backdrop seems conducive for continued upside.
Bitcoin Open Interest Matches 26-Month Record
Bitcoin futures open interest recently spiked to levels last seen during the 2021 peak. While this can precede upside, fresh positioning now looks risky as open interest reaches similar highs. Yes, prices could still run higher in the short term but the risk/reward profile appears unfavorable.
Crypto Sentiment Drifts Into Extreme Greed
Cross-crypto sentiment shows increasing signs of average investor euphoria. The Crypto Fear & Greed Index recently hit its highest level since the 2021 peak.
Such absolute bullishness tends to precede corrections. After similar greed in 2021, Bitcoin saw a major pullback. For now, the index remains elevated but below its most extreme 2021 levels.
Conclusion
In summary, while Bitcoin shows continued upside momentum, risks are building on multiple timeframes. Caution is warranted at current levels from a risk/reward standpoint. However, the multi-year bullish case remains intact. Bitcoin’s price action continues reacting to a mix of positive fundamentals and overly exuberant sentiment.
