Bitcoin: An Improvement in Risk Appetite – Possible Scenarios

The major cryptocurrency has technically confirmed a resistance level at 45744.38 on Tuesday. Despite the pullback, the Crypto Fear and Greed indicator are showing an improvement in risk appetite. Market sentiment has become less bearish after the recent price hike. Let's see if there is a chance of new highs for Bitcoin.

Inflation and the Federal Reserve – Threat and headwinds to growth

Now the headwinds to demand for risky assets are concerns about the possibility of a rapid Fed monetary policy tightening. Thursday's strong inflation report may accelerate rate hikes.

Investors expect the price to be raised in March by 50 basis points in one go. And stronger-than-expected CPI data could increase the probability. This leads to the risk of a new decline in stock indices, and then Bitcoin, which is increasingly related to stock markets.

Mood improves, but so far only to the level of "neutrality"

The near-term outlook for the major cryptocurrency is becoming less bearish given the recent price rally that started on Friday. According to the Crypto Fear & Greed Index, the “fear” is gradually fading away and the market sentiment is now “neutral”.

This indicator uses a combination of factors to generate a token sentiment score from 0 to 100. It was at 48 points on Tuesday. By comparison, I spent most of January in the "extreme fear" zone.

Canadian company KPMG adds cryptocurrency to Treasury

Positive news about Bitcoin also started emerging, which was also conducive to improving sentiment. KPMG Canada has stated that Bitcoin and Ethereum will be added to the company's treasury as a "one-of-a-kind investment."

Meanwhile, Tesla, in its annual report to the US Securities and Exchange Commission (SEC), indicated that its bitcoin assets at the end of December were around $2 billion. The company views cryptocurrency as an investment and a liquid alternative to cash.

Two technical scenarios for Bitcoin

At the time of writing, BTCUSD has technically bounced off the green dotted resistance at 45744.38.

So far, there are two scenarios for Bitcoin. The first is a sideways decline between the support area 40,878.71 – 41,959.23 and the current resistance 45,744.38. And if it is applied, it is possible that the movement will continue in this flat direction.

The second optimistic scenario is a breach of 45744.38 and stability above it. Then the next growth target will be the range from $50,000 to $52,000 per bitcoin.