Most sell risk since 3AC collapse: 5 Things to know in Bitcoin this week

Bitcoin (BTC) dodges tariffs and mass exchange selling as a wild February ride continues this week.

• Rangebound BTC price action is tipped to flip in an instant on “very thin” liquidity as a stubborn broader trading range endures.

• CPI week is here again, while Fed Chair Jerome Powell is due to testify twice before US lawmakers.

• Tariff talk is back, this time involving a whole raft of US trading partners — and so far, only gold is benefiting as a result.

• Whales are still in full distribution mode and have been since late last year — do they know something that the market does not?

• Not everyone is hawkish on the outlook — a new raft of crypto price predictions sees Bitcoin embarking on a trip to $700,000 starting this quarter.

“Very thin” order books set stage for BTC price move

BTC price volatility has yet to surprise traders up or down as a weekend of steady downside gives way to modest gains to start the week.

Data from Cointelegraph Markets Pro and TradingView shows BTC/USD lingering around the center of a well-defined trading range.

The buzz around fresh tariffs from the US government failed to spark a repeat of the intense volatility seen this time last week, with traders still waiting for the next market catalyst.

“Slow moves in the past 4 days which was normal in order to fill most wicks,” popular trader CrypNuevo summarized in a thread on X on Feb. 9.

“I think this week we could see some more volatility due to Wednesday’s CPI, so we could see the real move of the week after that event.”

CrypNuevo referred to the upcoming US macroeconomic data prints, which include the Consumer Price Index (CPI) numbers for January. 

“Orderbook is very thin at the moment, PA very slow and not seeing any strong signals to determine up or down,” he continued, giving $94,000 as a potential short-term bottom should a liquidity hunt ensue.

Crypto trader, analyst and entrepreneur Michaël van de Poppe is more optimistic, seeing potential for a marketwide recovery in the coming days.

“Good start of the week with upwards momentum after Monday open,” he commented, referring to current weak performance by altcoins and Ether (ETH) against BTC. 

“I think that we’ll see strong momentum with multiple daily greens ending up erasing the entire liquidation of previous week on Altcoins. If $ETH / $BTC goes up, more likely case that the bull has started.”

Others see little need for concern over BTC price strength until the wider range is challenged to the upside or downside.

Popular trader Poseidon characterized the situation as “in a range between 90k-110k over 3 months, but everyone is calling macro tops and bottoms in this range, while actually, nothing is happening on the weekly/monthly chart.”

“We are in a range, and as long as we don’t break down and accept below it, I doubt we will see lower 70k,” he argued. 

“Shady pullbacks to lower 85k are still bullish and healthy (weekly EMA 21 retest, range low liquidation cleaning).”

Poseidon referred to Bitcoin’s 21-week exponential moving average, currently at $89,200.

Powell testimony leads hectic macro week

A familiar round of US macroeconomic data prints combines with testimony by Federal Reserve Chair Jerome Powell this week.

Consumer Price Index (CPI) and Producer Price Index (PPI) figures for January are due on Feb. 12 and 13, respectively.

The latter will be accompanied by unemployment claims, a weekly release that has functioned as a short-term volatility catalyst for crypto markets in recent months.

Beginning on Feb. 11, Fed Chair Powell will testify before the Senate Banking Committee and House Financial Services panel.

The events come amid mixed inflation signals, with Powell remaining hawkish on the outlook for 2025, including any further interest rate cuts — a key issue for risk assets.

The latest estimates from CME Group’s FedWatch Tool currently put the odds of a small 0.25% cut at the Fed’s next meeting in March at just 6.5%, down from nearly 15% a week ago.

Eyeing developments at the Fed, however, trading resource The Kobeissi Letter noticed a “worrisome” phenomenon playing out.

The US Reverse Repo Facility (RRP) has dropped to its lowest levels since early 2021 — a sign that restrictive financial policy in the form of so-called quantitative tightening, or QT, may not last much longer despite the Fed’s hawkish mood.

“Less money in the RRP means more money in the market. Since $2.5 trillion has been depleted, does this mean the Fed can no longer inject liquidity in the market?” Kobeissi queried in part of an X thread on the topic at the weekend.

“It may indeed mean that the end of Quantitative Tightening is coming. This could come with a liquidity shock.”

Tariff wars enter second round

The ghost of last week’s trade war panic continues to permeate markets as the US government announces further tariff plans.

Targeting steel and aluminum, the blanket measures will seek to match tariffs already in place among US trading partners.

As a result, weakness in crypto markets was observed over the weekend, with US stock futures nonetheless shrugging off the news in a key divergence from behavior seen a week ago.

Major risk-asset volatility characterized the start of February as indexes across the board suffered a sharp dip as tariffs on Canada and Mexico, ultimately shelved, surfaced.

“Prepare for more volatility this week,” Kobeissi told X followers, adding that “ongoing trade war headlines will carry over from last week’s volatility.”

A clear winner in the current situation is gold, which tagged multiple new all-time highs last week and neared $2,900 per ounce for the first time on Feb. 10.

Despite traditionally following gold’s trends with a several-month delay, however, Bitcoin’s inability to capitalize on safe-haven appetite has not gone unnoticed.

“For all of the hype and supposed adoption rate Bitcoin has received in recent years, VERY INTERESTING the $BTC has struggled to pull away from Gold,” popular trader Peter Brandt commented on the day.

Some see a classic game of catch-up as being a matter of time.

“Gold making new ATHs daily. Around +50% vs its prior ATHs,” crypto entrepreneur Alistair Milne observed on X.

“Bitcoin is only +40% vs prior ATHs and has far higher beta … you are not bullish enough.”

Whales distribute BTC at 9X yearly average

Bitcoin investor cohorts continue to display divergent behavior when it comes to risk exposure at current BTC price levels.

In its latest findings, onchain analytics firm Glassnode shows that while retail investors have upped BTC buying activity, whales have been reducing exposure since BTC/USD first hit $100,000 in Q4 last year.

“Since mid-December, retail investors (≤1 $BTC) have been accumulating Bitcoin at an accelerated pace, stacking an average of 10,627 BTC per day – 72% faster than the past year’s average (6,177 BTC/day),” it reported in an X thread on Feb. 7.

Whales, on the other hand, have upped daily distribution volumes by nine times versus the yearly average — around 32,500 BTC per day.

Whales, traditionally considered to be “smart money” anticipating market shifts in advance, frequently flip between net accumulation and distribution, Glassnode data shows, with 2024 no exception.

Continuing, Andre Dragosch, European head of research at asset management firm, highlighted that spot selling pressure on exchanges is now at its highest since the implosion of crypto hedge fund Three Arrows Capital, also known as 3AC, in mid-2022.

“Yet, the price is still close to 100k USD,” he added alongside corresponding Glassnode data. 

“Seller exhaustion.”

$700,000 Bitcoin, $16,000 Ether?

When it comes to crypto benefiting from a major macro liquidity boost, hodlers may not need to wait long.

Related: ‘Altseason’ ended in 2024: Bitcoin dominance should hit 71% before it returns

In his latest round of price predictions, Bill Barhydt, founder and CEO of crypto asset manager Abra, said that beginning in Q1 this year, Bitcoin should embark on a trip to its cycle top — a giant $700,000.

The reason, he says, lies in US economic reality, hinting that the days of QT and other restrictive Fed policy measures are numbered.

“My model is simple,” he explained to X followers this weekend.  

“This administration wants interest rates much lower and they’ll do whatever they have to to achieve that.  They also need to refinance over $7T in debt. Tax cuts are coming.  All of this equates to a massive liquidity injection whether via QE or some other means.”

Even Barhydt’s “base case” calls for $350,000 per coin, while Ether and Solana (SOL) are due to see macro peaks of $16,000 and $1,800, respectively. 

“Cyclical Valhalla is coming,” he concluded.

As Cointelegraph reported, there is no shortage of bullish BTC price predictions currently in play. These include multi-million-dollar targets for 2030 and beyond.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.