The cryptocurrency market has stabilized over the past three days. Investors resumed active investing amid geopolitical and economic instability. Bitcoin showed the biggest gains, managing to form a massive green candle at the end of February 28 and consolidating its success on March 1.
The cryptocurrency gained 14% on the last day of February, the biggest daily gain in the last year. With that in mind, we would expect to see further declines after the $44k momentum. Surprisingly, however, the digital asset has maintained its position near the local high and may continue its upward movement in the near future. Given the increased bullish sentiment, is the cryptocurrency capable of continuing its upward movement in the current fundamental conditions?
Both yes and no. Bitcoin can maintain a strong upward trend, and there are several reasons for that. The first is the resilience of long-term BTC holders, who have not started selling the asset in the course of Russia's military invasion of Ukraine. This indicates investor confidence in the asset's long-term and medium-term potential. Glassnode experts noted that Bitcoin continues to be quoted as a capital protection vehicle, and the whales' confidence will improve market sentiment.
Another positive On-Chain news was the market's resilience to the events in Ukraine, which was reflected in the continued downward trend in coin volumes on exchanges. In addition, the number of unique addresses on the BTC network has shown a significant gain over the past seven days, indicating an increase in bullish sentiment. These factors suggest that Bitcoin's likely rise is underpinned by On-Chain activity.
As for the technical part, we can note the positive dynamics on the MACD, which has crossed the zero mark and is moving in the bullish zone. The RSI and stochastic also turned flat after a prolonged rise, indicating that buying activity remains at a high level. However, Bitcoin needs to complete the formation of an inverted head and shoulders pattern to confirm intentions to continue the upward movement. To do so, the asset needs to hold onto the $40.2k support area and break the line of the neck at $44.7k.
However, it is worth mentioning that with this development, the potential for price movement will be limited by two important factors. The first is the potential of the head and shoulders pattern, which ends around $54.4k. The second factor is temporary and concerns the Fed meeting on March 16. Either way, cryptocurrencies will be depressed at the equator in March, even if a key rate hike is factored into the price.
With this in mind, the maximum to expect from Bitcoin is a move out of the $32k-$45k range and into the next $46k-$56k area. Under the current market and macroeconomic conditions, there is no reason to assume that BTC will show a prolonged and solid rally.