The biting sanctions imposed by the West on Russia over the weekend are one of the key catalysts for the rally prompting strong inflows into Bitcoin and other digital assets as Russians look for ways to get their money out of the country and their rapidly tumbling currency.
The second factor behind the overnight rally was the market's overnight dovish reassessment of the Federal Reserve’s hiking cycle. U.S yields fell 12-17bp across the curve, all but pricing out the possibility of a 50bp hike from the Federal Reserve in March.
Lower yields support risk assets in general, including equities and digital assets, and the opposite is also true. If we were to analyse Bitcoins’ 50% fall from its November $69,000 high, it’s no coincidence the decline coincided with the hawkish shift by the Federal Reserve that promised higher interest rates and the imminent withdrawal of liquidity (quantitative tightening).
Turning to the charts, Bitcoin has broken above the down trend resistance at $42,000, coming from the November $69,000 high. Should Bitcoin see two consecutive daily closes above $42,000, it would likely trigger a more robust recovery towards resistance coming from the 200-day moving average at $49,000.
Aware that should Bitcoin see a sustainable break the 200-day moving average it would be an initial sign that the next leg higher of the rally is unfolding towards resistance at $52,000.
Source Tradingview. The figures stated areas of Mar 1st, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as having any financial product advice or financial product recommendation
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