Bitcoin (BTC), begins a new week in a bearish but not unfavorable move. However, it fails to shake investor confidence and remain positive about the bull run.
BTC/USD closed above $47,000 on a mixed weekend, but lost all its gains hours later to test $45,000 support.
It’s a delicate position — not only Bitcoin but also stocks and sentiment are suffering as the Evergrande collapse in China unfolds. What are the possible effects on the cryptocurrency market
Analysts expect a “choppy week” for BTC price action. Cointelegraph looks at five factors to consider when charting where Bitcoin may be heading in the near term.
El Salvador “buys the dip.”
As the week starts, traders are not impressed by Bitcoin spot price action.
Overnight, a reversal in strength was seen on Sunday. BTC/USD fell to $46,000.
This week could not be a good week for profitable trades, given the turmoil in traditional markets. Pentoshi, a popular trader, advises that now is the right time to look at the situation and wait for it to improve.
Im def spot long. I’m bullish. It was said the previous week. This week is going to be loud. We don’t have enough information. I believe we could get as low as 41k, but IMO we are going down to 56-58. We can then just chill in spot
— Pent*shi Wont DM You (@Pentosh1) September 20, 2021
According to Cointelegraph, $44,000 is a support wall that Bitcoin appears ready to test. The Fibonacci retracement level at the $38,000 mark could be reached by a deeper dive.
However, overall, the mood is still in favor of upside returns across cryptocurrency markets into Q4.
The government of El Salvador is one of those “buying the dip”, as it confirmed Monday that it had bought another 150 BTC to bring its total holdings to 700 BTC.
President Nayib Bukeele tweeted, “They can’t beat you if they buy the dips,” in a series tongue-in-cheek tweets about his country’s Bitcoin policy.
BTC/USD 1-day candle chart (Bitstamp). Source: TradingView
Bitcoin is “like an absolute champ”
Analysts say that Bitcoin is doing much better than expected in a difficult environment.
This week’s picture is less optimistic, whether it be stocks or safe-haven gold. For the first time since June, the S&P 500 is expected to fall below its 50-day moving mean.
While gold is headed towards its lowest levels since April, Peter Brandt, a veteran trader, notes that the Nasq 100 Index is a better indicator than gold. However, Peter Brandt noted that the precious metal is nearly at its lowest level in 20 years.
The price of Gold is approaching the cheapest levels ever set in 2000 compared to the NASDAQ 100 Index$NDX $QQQ $NQ_F #GOLD $GC_F $GLD pic.twitter.com/C19m6fT46G
— Peter Brandt (@PeterLBrandt) September 18, 2021
“Given the rise of the dollar (it’s close to a cycle high), weakness and plunge in metals, BTC has been acting like an absolute champ, rejecting any notion of moving into deep Cycle Low. In a recent summary, Bob Lukas, trader and entrepreneur as well as investor, wrote that the situation was relative strong.
The U.S. dollar’s strength is evident, with DXY (the U.S. currency index) hovering around 94. This is a classic headwind to Bitcoin.
If the status quo begins to change, then the impetus to make Bitcoin perform more strongly is clearly in place.
U.S. currency index 1-day candle graph Source: TradingView
Bitcoin announces its first five consecutive difficulty increases since 2019.
The Bitcoin fundamentals are better than ever — it may sound cliché, but the numbers speak for them.
Both difficulty and the hash rate stubbornly refuse to trend downwards, which indicates that miners remain unwaveringly bullish.
The fifth consecutive increase in the mining difficulty is expected to occur on Tuesday. This has been doing a good job of reducing the negative impact of May’s Chinese mining rout.
This is an unusual event. The last time difficulty rose five times in a row was in late 2019. It happened before the March 2020 cross market crash, which shook the mood. The achievement was not repeated by the bull market that followed and the $64,500 record highs.
Accordingly, those who believe price action must be driven by network fundamentals are more bullish than ever.
It is confirmed by the hash rate — despite a poor price performance in the past week estimates continue to show 140 exahashes/second (EH/s), for the network. This is just 17% lower than the all-time highs.
Investor Vince Prince is a commentator for regulators on hash rate performance. The latest contrast between spot and metric prices gives him reason to be confident.
He summarized his last week’s findings as follows: “While Bitcoin Massively Dumps the Hash Rate Actually Increasing.”
This shows a relative strength in bullish demand.
Chart showing the 7-day average Bitcoin hash rate. Source: Blockchain
Zooming out, it’s only “up”
Bitcoin’s realized limit is now greater than spot price’s 2017 record high of $21,000. The WMA’s 200-week moving average (WMA), which is commonly considered to be a price floor that Bitcoin/USD never violated, stands at $15,000.
Bitcoin 200WMA vs. realized cap vs. BTC/USD chart. Source: PlanB/ Twitter
These are not just numbers, according to analyst PlanB, who created the stock-to–flow Bitcoin price models.
The relationship between realized capital — an expression market cap that is determined by the price at which each Bitcoin last moved — and 200WMA can be used to gauge market growth potential.
The gap between these metrics was evident in previous price cycles, particularly those of late 2013 and 2017. The opposite is true this time — Bitcoin is a solid “buy”
It’s not true, the realised cap was higher than 200WMA at previous peaks. Top 2013: 320/49 = 6.5 Top 2017 Top 2017 Top 2017 Top: 5k/1.4k = 3.6 Today: 21k/16k = 1.3 (so IMO, we’re fine. Top has yet to come).
— September 19, 2021, PlanB (@100trillionUSD).
Cointelegraph reported that estimates suggest that the BTC price will reach six figures by the end the year. The springboard should be Q4, with October providing a solid foundation and a minimum monthly close at $63,000.
PlanB has added the following: “October $63K is only +31% compared to today” PlanB said last week.
The monthly close for September shows that the “worst-case scenario” is $43,000.
“The best bear market”
This is a classic setup that has historically prevented major periods of bullish prices action — Bitcoin is at comparatively high levels, but nobody’s interested.
Similar: Top 5 Cryptocurrencies to Watch This Week: BTC. DOT. LUNA. ATOM. FTT.
BTC/USD trades at close to $50,000, but this month it is not on the lips of many people — a trend that is also evident among internet users.
Google Trends data shows that “Bitcoin”, which was trading at just over $30,000.00 in July, is still very popular.
Google Trends data on “Bitcoin” Source: Google Trends
Relative search interest was lower in December 2020, just before the Bitcoin bull market really took off.
Analyst William Clemente says that such conditions are ideal for BTC price action, delivering a surprise shakeup.
“Bitcoin broke through a bull flag last evening, set a higher top, funding at 0.1%, and my account is dead silent.” He tweeted Sunday “Excellent,” previously describing the current situation as the “best bear markets ever.”
As of September 19, the Crypto Fear and Greed Index was at 9. Source: Alternative.me
Investor sentiment is also in a good place at the moment, with Crypto Fear & Greed Index remaining “neutral” as Bitcoin moves past final resistance of $50,000.
The metric indicates that “Greed” is not yet back to prominently in crypto markets. This is in line with the September speculative trading wipeout.
Eileen Wilson –Technology and Energy
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