Bitcoin (BTC<\/a>) begins its first full week of 2022 in familiar territory below $50,000.<\/p>\n After ending December at $47,200 \u2014 far below the majority of bullish expectations \u2014 the largest cryptocurrency has a lot to live up to as signs of a halving cycle peak remain nowhere to be found.<\/p>\n With Wall Street set to return after stocks conversely ended the year on a high, inflation rampant and interest rate hikes looming, 2022 could soon turn out to be an interesting market environment, analysts say.<\/p>\n So far, however, all is calm \u2014 BTC\/USD has produced no major surprises for weeks on end.<\/p>\n Cointelegraph takes a look at what could change \u2014 or continue \u2014 the status quo in the coming days.<\/p>\n Look no further than the S&P 500 for an example of the state of play when it comes to United State equities.<\/p>\n The index achieved no fewer than 70 all-time highs<\/a> in 2021, rounding out the year with a flourish, even as risk assets looked far less appetizing.<\/p>\n Bitcoin was among them, trailing below the $50,000 mark with the only noticeable events coming in the form of peaks and troughs around thin holiday liquidity.<\/p>\n With that said, central bank policy is widely tipped to provide a potential cat among the pigeons in the coming months. The U.S. Federal Reserve has signaled two interest rate hikes this year, and the market\u2019s ability to absorb them is seen as a key test for asset performance.<\/p>\n For the first chunk of the year, however, it may well be a continuation of the latest flavor of \u201cbusiness as usual\u201d \u2014 stocks adding to all-time highs.<\/p>\n \u201cHistory suggests the beginning of rate rise regimes actually result in stock market strength for 6 months,\u201d Charles Edwards, founder of asset manager Capriole, noted<\/a> in a series of tweets this week. <\/p>\n \u201c10 of the 13 regimes (77%) since the 1950s had positive stock market returns over the first six months, averaging +5.1%. We are approaching the start of a new regime now.\u201d<\/p><\/blockquote>\n Edwards said that while such circumstances are generally \u201cgood\u201d for Bitcoin, upheaval further down the line would likely mean that stocks take a beating in the long term thanks to the rate hikes.<\/p>\n \u201cWithout significantly higher economic growth (yet to be seen), it is unlikely any rate rise programs by the Fed will have a long runway,\u201d he continued. <\/p>\n \u201cBitcoin will be volatile in this period, both an effect of stock market volatility, but also from sharp Fed course corrections.\u201d<\/p><\/blockquote>\n Inflation will be on the radar again next week, with Jan. 12 scheduled for the latest U.S. consumer price index data for December.<\/p>\n Bitcoin spot price action has provided precious little by way of interesting cues lately, staying in a well-defined range.<\/p>\n A tussle between bulls and bears has in fact been somewhat underwhelming in nature beyond rhetoric found on social media \u2014 volumes are thin, interest from retail is low, and large players continue to maintain sell levels nearby.<\/p>\n Two levels I find important for #Bitcoin<\/a>.<\/p>\n ▫️ $48,000, the one we’re currently rejecting on. \u2014 Micha\u00ebl van de Poppe (@CryptoMichNL) January 2, 2022<\/a><\/p><\/blockquote>\n Responding to levels to watch from Cointelegraph contributor Micha\u00ebl van de Poppe Sunday, popular trader and analyst TechDev agreed<\/a> that $48,000 represents \u201ca little brick wall.\u201d<\/p>\n To the downside, van de Poppe said that he was eyeing the area between $40,000 and $42,000, with action above that corresponding<\/a> to \u201caccumulation.\u201d<\/p>\n Bitcoin, however, has a habit of upending even the strongest trend at the least expected moment.<\/p>\n For fellow trader Pentoshi, there is little cause for celebration at levels much below $60,000, these last appearing over a month ago.<\/p>\n \u201cI will long logical areas in a downtrend. I will be macro bearish until 58-60k reclaim. And bullish at local areas,\u201d he summarized<\/a> about his position over the weekend.<\/p>\n Pentoshi and others urged a pivot to Ether (ETH<\/a>) on the basis of altcoin strength, thus providing a convenient way<\/a> to \u201cde-risk\u201d with Bitcoin underperforming.<\/p>\n That strength is captured in Bitcoin\u2019s market capitalization dominance, which has now slipped under 40% for the first time since May, data from TradingView shows.<\/p>\n For those looking for a silver lining to the uninspiring price action, on-chain metrics provide no shortage of relief.<\/p>\n The further away the market gets from last month\u2019s snap correction, the more enticing Bitcoin looks as an investment punt based on historical trends.<\/p>\n In its latest newsletter<\/a> issued Dec. 31, Capriole director Ryan McCoy highlighted the shifting tide in investor selling habits as aligning with the latter stages of previous corrections.<\/p>\n Of particular interest is the short-term holder spent profit output ratio (SOPR) from on-chain analytics firm Glassnode, which shows the extent of gains or losses from recently spent coins \u2014 specifically those that last moved in the past 155 days.<\/p>\n Currently, with a median score below 1, SOPR shows that coins spent at a loss are declining in numbers \u2014 a potential form of seller exhaustion.<\/p>\n \u201cTypically, when this metric starts to bottom and then rise, a more sustainable price trend has begun,\u201d McCoy explained. <\/p>\n \u201cThe 30-day median is still below 1 (implying that the average price of the coins moved is lower than the price they were purchased at), but signs of life like this after a substantial corrective event suggest we are likely in the latter stages of the current correction.\u201d<\/p><\/blockquote>\n Cointelegraph has reported extensively<\/a> on hodlers\u2019 habits when it comes to BTC, and long-term investors remain steadfast in their conviction not to sell. <\/p>\n \u201cDespite the -38% drop since November, Long-Term Holders continue to diamond hand Bitcoin,\u201d McCoy summarized.<\/p>\n \u201cThe last time Bitcoin was at $47K, long-term holdings were 10% lower. To date there has been insignificant distribution despite the volatility. That\u2019s bullish.\u201d<\/p><\/blockquote>\n Continuing the positivity, network fundamentals underscore the strong belief of another cohort of essential Bitcoin market participants.<\/p>\n Miners, despite seeing all-time highs of $69,000, are accumulating<\/a>, not selling, their coins.<\/p>\n At the same time, the network hash rate is at all-time highs of its own, these last seen in March and April before the upheaval of the Chinese ban sparked months of migration.<\/p>\n Should the old adage of \u201cprice follows hash rate\u201d remain true, miners\u2019 faith in the long-term profitability of Bitcoin provides a key indicator of where the market is going.<\/p>\n \u201cMetrics like this are effectively old-guard fundamental outlook material and are largely overlooked by newer and sexier methods of explaining price dynamics, supply and demand, but cannot be ignored for their ability to explain institutional and infrastructural support for securing the protocol that at this point effectively underpins the entirety of the crypto economy,\u201d Capriole added.<\/p>\n The hash rate is currently over 190 exahashes per second, according to\u00a0estimates<\/a>\u00a0from MiningPoolStats.<\/p>\n Later this week, meanwhile, Bitcoin\u2019s network difficulty is set to increase by around 2.4%. <\/p>\n This reflects the competitiveness of the current mining landscape, and difficulty should shortly tackle 25 trillion again for the first time since the pre-China peak, data<\/a> from Blockchain.com shows.<\/p>\n With every increase, difficulty reinforces network security, creating an even more robust ecosystem.<\/p>\n Bitcoin sentiment began 2022 with serious cold feet, the Crypto Fear & Greed Index measuring<\/a> \u201cextreme fear.\u201d<\/p>\n Related:\u00a0Top 5 cryptocurrencies to watch this week: BTC, LUNA, FTM, ATOM, ONE<\/a><\/em><\/strong><\/p>\n As Cointelegraph reported, investor emotions have become highly sensitive<\/a> to even smaller price movements within the current range.<\/p>\n Fear & Greed reflects this, moving up eight points since the weekend despite price action offering little change.<\/p>\n At the time of writing, the Index measured 29\/100, nevertheless in the \u201cfear\u201d zone. <\/p>\nStocks could see six months of \u201cup only\u201d<\/h2>\n
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$40,000 stays support floor<\/h2>\n
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▫️ $49,400, the one that caused the latest correction and should flip for a bullish test of potentially mid $55k. pic.twitter.com\/zISQu2IcDV<\/a><\/p>\n![](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/93ddfaa7-cc41-4bd9-b1f0-68312be2dc78.png\")
On-chain metrics predict \u201csustainable price trend\u201d<\/h2>\n
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Fundamentals have (almost) never been better<\/h2>\n
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How sustainable is \u201cextreme fear\u201d this time?<\/h2>\n
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