Volatility is a factor that characterizes Bitcoin as an asset. In recent days, however, this factor has been greatly accentuated due to the most recent news events. These events, such as the Ukrainian conflict, have shaken world markets by spreading fear and uncertainty among investors, who have preferred to lighten their portfolios of more volatile assets in favor of lower risk products. Bitcoin also suffered some blows, closing candles with large shadows which are, precisely, a sign of uncertainty.
Technical Analysis
Bitcoin has reacted very well in the past few days, tracing an upward movement on the BTC/USD chart (Tradingview) accompanied by growing volumes. This is a very good sign considering that we are already above the $40,000 support on the weekly timeframe. A close in this position, therefore, would pave the way for the possibility of a further leg-up which could lead to testing the resistance at 50k. A downward movement would not necessarily be a negative signal: the price could in fact retest the support just gained at 40k and then start up again. The moving averages, on the other hand, are still reversed (MA50 below the MA200), but show a decline. The RSI stands at around 60 on the daily timeframe, which is intermediate on the rise, indicating a slight increase in buying power. A final mention should be made of the daily candlestick on February 24, the day when the markets were affected by the Russian invasion, which has large shadows (= uncertainty) but in the end closed in green.
Total Marketcap: Total Marketcap stands at 1.9T, after bouncing off a small support at 1.6T. At the moment the trend is positive, with the formation of a possible higher-low on the daily timeframe. Therefore, we can expect in the macro a continuation of the trend that would be very positive for the overall price of cryptocurrencies.
BTC-Dominance: The Bitcoin-Dominance has been on the rise from mid-January to today, reaching a value close to 45%. This means that for the moment Bitcoin is performing better than altcoins. Macroscopically, however, it is found in a very wide range that goes from 40 to 50% and continues to oscillate between these two values. Therefore, we must see how it will behave interacting with the resistance.
On-Chain Analysis
The On-chain analysis shows how the Addresses with a non-zero balance are on the rise. As Glassnode shows us, in fact, their number has just reached the highest point ever (40 million), in sharp uptrend since 2010. This is an indication of an increasing number of people interacting with the Bitcoin network, and then it shows a demand without degrowth.
The question that follows from the analysis conducted by Glassnode is: do people who approach Bitcoin do it for speculation or for investment? Here we are helped by the useful Hodl-Waves chart, in which we can see how the BTCs stopped for more than 10 years are increasing from 2019. That's not all: even the bands representing the holders for 3-5 years (= those who bought in 2017) and 1-2 years (= those who bought in 2020) are increasing their size in the most recent period. The most direct interpretation is that investors who buy Bitcoin in order to hold it for the long term are increasing more and more, to the detriment of those who have instead been taken by the fear deriving from the declines of the last months and have sold.
Finally, a look at BTC reserves on exchanges reveals that these are at their 3-year lows. The downtrend is in fact continuous and without hint of a reversal. This means that Bitcoin's exodus outside the major cryptocurrency exchanges does not stop, indeed investors are continuing to buy it at the current price. Low reserves are synonymous with shortage or scarcity of the asset and this would lead to suppose that the Supply Shock scenario is increasingly probable.
Read: A Supply Shock Scenario
Conclusions
Bitcoin, as mentioned above, shows resilience. This can be seen above all from the technical analysis and from the fact that lately it is used as an instrument of freedom by the oppressed population. Its reserves are in sharp decline and this suggests that a price hike is imminent. The intrinsic value, on the other hand, can be seen today more than ever since those who need it find in this asset a tool to free themselves from the current socio-economic condition. A final word should be spent to comment on the movement in the price of Bitcoin on the day when fear spread in the markets regarding the Russian-Ukrainian conflict, compared to when Tesla tweeted its intention to no longer accept payments in BTC. The comparison highlights how the phenomenon of panic-selling has affected the price more in the case of Tesla than in the other. This tells us many things in reality, but I like to think that the lower susceptibility of the price to external events is due to the fact that the market seems to have "matured" and improved over time.
Not a financial advice. DYOR.
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