Bitcoin (BTC<\/a>) starts a new week in a strange place \u2014 one that is eerily similar to where it was this time last year.<\/p>\n After what various sources have described as an entire 12 months of \u201cconsolidation,\u201d BTC\/USD is around $42,000 \u2014 almost exactly where it was in week two of January 2021.<\/p>\n The ups and downs in between have been significant, but essentially, Bitcoin remains in the midst of a now-familiar range.<\/p>\n The outlook varies depending on the perspective \u2014 some believe that new all-time highs are more than possible this year, while others are calling for many more consolidatory months.<\/p>\n With crypto sentiment at some of its lowest levels in history, Cointelegraph takes a look at what could change the status quo on shorter timeframes in the coming days.<\/p>\n Bitcoin saw a trying weekend as the latest in a series of abrupt downward moves saw $40,000 support inch closer.<\/p>\n Data from Cointelegraph Markets Pro<\/a> and TradingView<\/a> showed BTC\/USD hitting $40,700<\/a> on major exchanges before bouncing, a correction that has since held.<\/p>\n Ironically, it was that very level that was in focus on the same day in 2021, which nonetheless came during what turned out to be the more vertical phase of Bitcoin\u2019s recent bull run.<\/p>\n Last September also returned the focus to $40,700, which acted as a turning point after several weeks of correction, and ultimately saw BTC\/USD climb to $69,000 all-time highs.<\/p>\n Now, however, the chances of a breakdown to the $30,000 zone are unreservedly higher among analysts.<\/p>\n \u201cWeekly Close is just around the corner,\u201d Rekt Capital summarized<\/a> alongside a chart with target levels. <\/p>\n \u201cTheoretically, there is a chance that $BTC could perform a Weekly Close above ~$43200 (black) to enjoy a green week next week. Weekly Close under ~$43200 however & BTC could revisit the red area below.\u201d<\/p><\/blockquote>\n Bitcoin ultimately closed at $42,000, since hovering at around that level in what could turn out to be some temporary relief for bulls.<\/p>\n \u201cI think market puts in a lower high,\u201d fellow trader and analyst Pentoshi forecast<\/a>, adding that he believes $40,700 will ultimately fall.<\/p>\n An increasingly alluring target, meanwhile, lies at last summer\u2019s $30,000 floor.<\/p>\n The macro picture this week is particularly complicated for risk asset fans, with Bitcoin and altcoins no exception.<\/p>\n What the future holds, however, varies considerably from one pundit to another.<\/p>\n The United States Federal Reserve is broadly seen to start raising interest rates in the coming months, this making investors de-risk and causing a headache for crypto bulls. \u201cEasy money,\u201d which began flowing in March 2020, will now be much harder to come by.<\/p>\n The bearish viewpoint was summarized neatly by ex-BitMEX CEO Arthur Hayes in his latest blog post last week.<\/p>\n \u201cLet\u2019s forget what non-crypto investors believe; my read on the sentiment of crypto investors is that they naively believe network and user growth fundamentals of the entire complex will allow crypto assets to continue their upward trajectory unabated,\u201d he wrote. <\/p>\n \u201cTo me, this presents the setup for a severe washout, as the pernicious effects of rising interest rates on future cash flows will likely prompt speculators and investors at the margin to dump or severely reduce their crypto holdings.\u201d<\/p><\/blockquote>\n This week sees the U.S. consumer price index (CPI) data<\/a> for December released, numbers that will likely feed into the story of surprise inflation gains.<\/p>\n Hayes is far from alone in worrying over what the Fed may bring to crypto this year, with Pentoshi, among others, likewise calling a temporary end to the bull run.<\/p>\n \u201cAnd the final question is, can crypto ignore the Fed if it decides to go all out wielding a deflationary machete? I doubt it,\u201d analyst Alex Kr\u00fceger concluded<\/a> in a series of tweets on the issue this weekend. <\/p>\n \u201c\u2018Don\u2019t fight the Fed\u2019 applies both ways, up and down. If the Fed is *too hawkish* then Houston, we have a problem.\u201d<\/p><\/blockquote>\n There were some optimists left in the room. Dan Tapiero, founder and CEO of 10T Holdings, told followers to \u201cignore\u201d the recent rout and focus on an unchanged long-term investment opportunity.<\/p>\n \u201cMost bullish macro backdrop in 75 years,\u201d he said<\/a>. <\/p>\n \u201cBooming economy supported by massive negative real rates. Fed will never equalize rates with inflation. Stay long stocks and Bitcoin and ETH. Hodl through short term volatility. Real Dollar cash savings will continue to lose value.\u201d<\/p><\/blockquote>\n Here’s a look at the Effective Fed Funds Rate and Inflation Rates when the Unemployment Rate was at 3.9%, as it is today.<\/p>\n Find the outlier… pic.twitter.com\/zU1zRj1uXC<\/a><\/p>\n \u2014 Charlie Bilello (@charliebilello) January 7, 2022<\/a><\/p><\/blockquote>\n Tapiero highlighted data compiled by Charlie Bilello, founder and CEO of Compound Capital Advisors.<\/p>\n Amid the gloom, not everything is pointing to a protracted bearish phase for Bitcoin specifically.<\/p>\n As Cointelegraph has been reporting, on-chain indicators are calling for upside in droves<\/a> \u2014 and historical context serves to support those demands.<\/p>\n This week, it\u2019s Bitcoin\u2019s relative strength index (RSI) that continues to headline, reaching its lowest levels in two years.<\/p>\n #Bitcoin<\/a> RSI has been this low just 2 other times in the last 2 years. Looks like a bottom is near and bounce due. Let’s see pic.twitter.com\/qhQ1pD8yEl<\/a><\/p>\n \u2014 Bitcoin Archive (@BTC_Archive) January 9, 2022<\/a><\/p><\/blockquote>\n RSI is a key metric used to determine whether an asset is \u201coverbought\u201d or \u201coversold\u201d at a given price point.<\/p>\n Plumbing the depths at $42,000 suggests that such a level really is considered too extreme by the market, and a rebound should occur to balance it. <\/p>\n By contrast, last January, RSI was sky-high and, conversely, well within \u201coverbought\u201d territory, while BTC\/USD traded at the same price.<\/p>\n \u201cThe Bitcoin RSI is on the lowest point in 2 years on the daily. March 2020 & May 2021 were the last ones. And people flip bearish here \/ want to short,\u201d a hopeful Cointelegraph contributor Micha\u00ebl van de Poppe commented<\/a>.<\/p>\n Cointelegraph noted similarly bullish hints on the monthly RSI chart<\/a> last week.<\/p>\n Another blip from last week already \u201ccuring itself\u201d comes from the realm of Bitcoin fundamentals. <\/p>\n After hitting new all-time highs throughout recent weeks, Bitcoin\u2019s network hash rate took a hit<\/a> when turbulence in Kazakhstan compromised internet availability.<\/p>\n Kazakhstan, home to around 18% of Bitcoin\u2019s hash rate, has since stabilized, allowing the hash rate to mostly return<\/a> to prior levels of 192 exahashes per second (EH\/s).<\/p>\n At one point down to 171 EH\/s, responses to what may have reminded some of last May\u2019s China mining ban appear to have lifted the hash rate and preserved record-breaking miner participation.<\/p>\n Bitcoin\u2019s network difficulty<\/a>, despite the upheaval, still managed to put in a modest increase this weekend and is currently on track to do so again at its next automated readjustment in just under two weeks.<\/p>\n \u201cGoing up forever,\u201d on-chain analyst Dylan LeClair commented<\/a> about the classic mantra<\/a>:\u00a0\u201cprice follows hash rate.\u201d<\/p>\n For context, China\u2019s mining rout caused the hash rate to decline by 50%. It took around six months to recoup the losses.<\/p>\n Someone who has long been saying that it\u2019s high time for a Bitcoin trend reversal is quant analyst PlanB, creator of the stock-to-flow-based BTC price models.<\/p>\n Related:\u00a0Top 5 cryptocurrencies to watch this week: BTC, LINK, ICP, LEO, ONE<\/a><\/em><\/strong><\/p>\n Currently weathering a test of his creations \u2014 and the accompanying storm of social media criticism \u2014 PlanB nonetheless remains more optimistic than most when it comes to mid-to-long-term price action.<\/p>\n \u201cI know some people have lost faith in this bitcoin bull market,\u201d he acknowledged<\/a> this weekend. <\/p>\n \u201cHowever we are only halfway into the cycle (2020-2024). And although BTC experiences some turbulence at $1T, the yellow gold cluster at S2F60\/$10T (small black dots are 2009-2021 gold data) is still the target IMO.\u201d<\/p><\/blockquote>\n He was referring to the stock-to-flow value for Bitcoin, gold and other assets as part of his stock-to-flow cross-asset (S2FX) model, which calls for an average BTC\/USD price of $288,000 during the current halving cycle.<\/p>\n Closer to home, however, a more simplified comparison between Bitcoin this cycle and its two previous ones saw a feasible trajectory beginning with a U-turn now. <\/p>\n What if … pic.twitter.com\/te36HkFAbQ<\/a><\/p>\n \u2014 PlanB (@100trillionUSD) January 9, 2022<\/a><\/p><\/blockquote>\n A separate model, the floor model, which demanded $135,000 per Bitcoin by the end of December, has now been discarded<\/a> after failing to hit its target for the first time ever in November.<\/p>\n<\/div>\nWill $40,700 hold?<\/h2>\n
![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/c4b9a621-decb-4f27-a0b1-126f675a89f0.png\" "\\"\\"")
Consensus forms over dire outlook for cash<\/h2>\n
\n
RSI hits two-year lows<\/h2>\n
\n
![](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/8c2e2294-70c8-4207-9db6-0cfa5a88b595.png\")
Hash rate recoups Kazakhstan losses<\/h2>\n
![](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/8af59ae6-5e6d-4f6c-b318-86ff4f599b56.png\")
\u201cWhat if\u2026?\u201d<\/h2>\n
![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/f852b7dc-2023-4c55-b9f4-f4c7e6446b13.png\" "\\"\\"")
\n