Bitcoin crosses $72,000 for first time in a month but caution remains
Open interest points to the market viewing bitcoin in a more positive light this week.
Following a few chaotic days, Bitcoin crossed $72,000 on Wednesday morning, the first time it has reached this level since February 4.
Bitcoin is up over 7% in the past 24 hours, but whether this is a sustainable rally remains to be seen.
“The move brings BTC to the level where previous rallies have stalled, and there is no confirmation yet of a break with follow-through,” Nicolai Søndergaard, a research analyst at Nansen, told Sherwood News.
Søndergaard said that if bitcoin holds above $71,000 through Friday’s nonfarm payrolls print and builds continuation, the range structure shifts materially, as a soft number would likely reinforce rate cut expectations ahead of the March 18 FOMC decision, providing a macro tailwind at the margin.
“However, if this level fails to hold as it has before, the 60K to 71K range remains intact, and fading the edges is the more defensible positioning until a clear direction is confirmed,” he said.
In another hopeful sign, Stan Low, research lead for Grvt, told Sherwood that based on open interest (OI) it appears that the market is viewing bitcoin in a more positive light this week, “with a higher level of long OI observed.”
Low said that levels to watch for potential long squeezes resulting in downward price action would be ~$67,000 and higher (and a danger zone of $64,000 and above). Conversely, the levels to watch for upside potential via short squeezes are mid- to high $69,000.
Ryan Lee, chief analyst at Bitget, also said that while the Crypto Fear & Greed Index has been lingering in “extreme fear” territory for nearly a month, the fact that bitcoin continues to hold above $68,000 is “a classic contrarian signal suggesting capitulation may be nearing its end.”
“Historically, extended periods of extreme fear during mature market cycles often precede strong rebounds as selling pressure exhausts itself and long-term capital begins to step back in,” he said.
Meanwhile, bitcoin ETFs recorded $683 million in inflows so far this week, according to SoSoValue, which indicates institutional allocators treating bitcoin as a geopolitical crisis hedge, or even as a hedge against future inflation, Nic Puckrin, cofounder of Coin Bureau, told Sherwood.
“The ‘safe haven’ narrative, which many investors had all but given up on, may be playing out this time. A continuation of ETF inflows over the coming days and weeks would confirm this,” he said.
