FX.co ★ Bitcoin continues to consolidate near the $25k level: what to expect this week?

Despite a strong finish to the previous trading week, Bitcoin failed to build on its weekend success. The asset spent the weekend in a consolidation move with attempts to jump above $25k.

However, as it becomes clear, it is difficult for the cryptocurrency market to make strong price movements on its own. A significant portion of BTC investors primarily trade on stock markets that are closed on weekends. This also confirms the high level of correlation between BTC and SPX.

Meanwhile, despite a "historically weak month for the stock market," equities are performing well. The S&P 500 Index ended the trading week up and continues to hold the key $4,000 level. Much of this week's SPX movement will determine BTC's chances at $25k.

In addition, the head of IMF made a neat statement that the markets have every reason to be optimistic as the U.S. economy manages to avoid recession. At the same time, we should not forget BofA's statement that liquidity in the U.S. system began to decline again.

Given the minimal drop in inflation in the U.S. in January, we can conclude that the quantitative easing policy has been suspended. It is likely that this allowed the labor market to strengthen significantly and the cryptocurrency market to make a local bullish rally.

The result of this pause was a minimal drop in inflation and the extension of the Fed's hawkish policy until at least April. However, as of February 20, there is no reason to argue that the resumption of liquidity withdrawal will dramatically affect the crypto market.

BTC/USD Analysis

After forming the biggest green candle since September 2022, Bitcoin tried to build on the bullish success over the weekend. By the end of Saturday, the price of BTC reached $25.3k, however, as a result of a strong response from sellers, the asset began to decline.

As a result, bears were able to absorb buying volumes near the important $24.4k support level, which is the key springboard for the movement to $25k. Subsequently, the bears continued the pressure and managed to reach the $23.8k level, where the buyers managed to seize the initiative and recover to $24.4k.

As of writing, the Bitcoin price is consolidating near the $24.4k level. Technical indicators indicate the continuation of the flat trend: the RSI is moving sideways, and the stochastic oscillator is trying to implement a bullish crossover.

The situation will likely change during the opening of the American markets. The key task of buyers this week will be to consolidate above the $25k–$25.3k area, where large volumes of sell orders are concentrated.

It is also important to note that the confident consolidation of the price above $24k was caused by a powerful impulse reaction of BTC buyers. The weakness of buyers over the weekend raises doubts about the viability of the current bullish reversal.

Results

Bitcoin managed to get one step closer to the retest and the final consolidation above the $25k level. However, in the next few days, the market needs to see increased buying volume and positive sentiment leading to an impulse move towards $25k. Otherwise, the asset risks falling to the $23.8k–$24.4k area and consolidating there.

Most likely, Bitcoin will move exclusively impulsively in the new trading week. If macro factors and SPX dynamics remain at last week's level, Bitcoin will make at least a retest of $25k level and, at most, a final break of this top.