Bitcoin has spent a week circling $50,000 as endless positive news from institutions contrasts with a lack of upward price momentum.
With all-time highs still out of reach, commentators have been asking themselves what would be needed to reignite the bull market which has characterized most of 2021.
Modern Consensus takes a look back at this week’s events and considers what might lie in store for Bitcoin in the coming days. We also publish a weekly markets outlook every Monday, the latest edition of which you may find here.
BTC mood hinges on $50,000 treatment
The week began with a modest comeback for BTC/USD, which had previously hit local lows of $43,000. In an attempt to crack $50,000, Bitcoin began what would be the defining price trait of the week—trying to establish firm support at that significant psychological level.
Appetites were mixed among investors—while support remained solid closer to $40,000, there was still no noticeable catalyst acting to disrupt spot price ranging.
As such, following the record highs of $58,300 late last month, Bitcoin embraced what has become a familiar pattern of behavior after price spikes—consolidation.
That outcome came as little surprise—as analysts often note, vertical upside cannot continue ad infinitum, and pauses in bull markets are inevitable and ubiquitous, regardless of the asset at hand. As popular trader Michaël van de Poppe added this week, March is traditionally a month in which cryptoassets encounter such pauses.
“Bitcoin is still acting in a sideways range and March is still a very conservative, bearish corrective consolidation month,” he said in a fresh update on Friday.
At press time, the battle for $50,000 was itself taking a break, with Bitcoin barely above the $47,000 mark. According to van de Poppe:
“If $50K fails to sustain support, I’m expecting a test of $42-44K and possibly $37-39K region for ultimate bottom.”
Fellow trader Josh Rager was similarly keen on seeing a definitive exit from the $40,000 zone.
“Lots of chop today with major uncertainty on the markets. Will continue to watch higher time frames and as long as Bitcoin price is above $45k – I’ll feel fine about it sustaining the current range,” he tweeted late on Thursday.
“Would like to see it get back above $50,400+ for more upside.”
Institutions happily keep buying the dip
Contrasting with the middling spot price action was the institutional aspect of Bitcoin investment, punctuated by mass outflows to private wallets indicating buy-ins. These appeared as Twitter announced a $1.25 billion convertible note offering which rumors suggested may simply be a way to build a Bitcoin position for the company’s balance sheet.
Twitter itself simply referred to the funds as going towards general company expenses and related goals. CEO Jack Dorsey, however, conspicuously retweeted a guide by developer Vijay Boyapati this week, describing it as “an excellent and inspiring introduction to, and reminder of, Bitcoin’s value to the world, all through a comprehensive and historical lens on money.”
Friday saw the accumulation trend continue, while data revealed that those institutions which came onboard in recent months have yet to sell any of their holdings.
“Institutions aren’t buying #Bitcoin as a hedge against their cash reserves, only to sell a few months later. They’re here to stay,” trader Scott Melker responded.
Retail was likely not far behind, with data showing strong increases in the numbers of on-chain users this year, similar to late 2017.
Pointing to an adoption curve chart, statistician Willy Woo commented:
“Bitcoin users (on-chain) growing at insane rates, same as the final weeks of the 2017 bull market; BTC going mainstream.”
“Crazier, most of the user growth is not seen here, it’s seen at the exchanges (majority of new users never use the blockchain).”
Woo further showed that Bitcoin’s mempool—the size of the vat of unconfirmed transactions—has been rising in step as more on-chain transactions hit the blockchain and miners prioritize high-fee options. He did not comment on whether the data suggested that a local or macro price top was due for BTC/USD.