Bitcoin (BTC), which is now in its second week, approaches key resistance after the shock of the most recent US inflation data passes. Can the strength continue?
Although the July 17 close was almost identical to the previous week, BTC/USD showed some strength before the Wall Street open on July 18.
The last week was difficult for crypto hodlers all over the world. Inflation ruled the mood across risk assets, and the U.S. Dollar capped the dark atmosphere. The pressures are now less, at least temporarily, and there is room for relaxation.
However, the on-chain data suggests there is a “make or break” moment for Bitcoin miners and that capitulation in the market is imminent.
Cointelegraph looks at the factors that will influence BTC’s price performance over the next few days as talk continues about Bitcoin’s macro bottom.
Weekly moving averages – All eyes
BTC/USD ended July 17 under $100 from its July 10th close-up.
Bitcoin’s latest weekly close is a disappointment. It erased gains and printed a “red” candle for seven days.
The next event was the opposite — a rapid overnight march higher, with the largest cryptocurrency adding $1.400 in less than twelve hours.
All of this leads to an old challenge in intraday timeframes: BTC/USD is nearing $22,000 and a key trendline of $22,600 in form the 200-week moving Average (WMA).
The 200 WMA was previously used as support during bear markets. However, it has now become resistance. It lost its value in June and was never recovered.
Analysts are therefore keeping an eye on that area for potential upside pressure if bulls can sustain it.
PlanB, the creator of the Stock to-Flow family BTC price models is now reaffirming its importance. The 200 WMA briefly surpassed Bitcoin’s realized value this year, as in previous bear markets. This signal is a classic market reversal sign.
The real price is the average price at the which all bitcoins have moved in the last 24 hours.
PlanB shared the following tweets with its followers: “In the bear markets of 2014/15 (blue), realized price was higher than 200WMA, and the bull market didn’t start until realized price reached 200WMA,” PlanB said on July 17, alongside an accompanying chart.
“Now realized price and 200WMA have reached $22K. BTC must be above the 200WMA and realized price for the next bull market.
Cointelegraph reported that bulls need to be able to use longer time frames to calculate moving averages. Forecasts include the 200 WMA and the 50-week and 100 week exponential moving averages (EMAs).
Data from TradingView and Cointelegraph Markets Pro shows that the 50 EMA is currently at $36,000, and the 100 EMA at just over $34,300.
BTC/USD 1-week candle charts (Bitstamp), with 50, 100 EEMA; 200 WMA. TradingView
Ethereum close to $1,500 as a potential trendetter
Altcoins could be the catalyst that takes Bitcoin past its $22,600 resistance mark.
While Bitcoin moves are usually seen before copycat moves, some are still waiting to see if BTC/USD will be following the largest altcoin Ether, (ETH), higher.
Ethereum’s price gains have outperformed other cryptocurrency, with a 25% increase in the past week, despite news that it could transition to Proof-of-Stake mining (PoS).
At the time this article was written, the ETH/USD was close to $1,500, the first time since June 12.
Popular Twitter account Bluntz summarised the day by saying that $eth had reclaimed its 200-week moving average this week. btc will likely recover it next week.
Light, a fellow commentator, also believed that Ethereum’s strength should continue upward pressure on Bitcoin. He noted liquidations among traders who ignored the ETH moves but continued to be short BTC.
BTC was difficult to obtain for shorts. There was no reason to short it when ETH did what they did. The ecosystem’s largest asset ripping 40% creates risk-seeking behavior elsewhere. This makes people realize that assets can rise in price. It can lead to rotational and catch-up flows. https://t.co/nae0WIys9M
— light (@lightcrypto), July 18, 2022
According to Coinglass, cross-crypto short liquidations totalled around $132million in the 24 hour period ending July 18, according to data from Coinglass.
Chart of crypto liquidations. Source: Coinglass
However, not all people are convinced that Ethereum can reverse its current downtrend. This will have obvious implications for other tokens.
Michael van de Poppe, a Cointelegraph contributor, argued that the pull from the weekend CME futures on Bitcoin could be a downside force to break the optimism.
CME futures closed their previous trading day on July 15 at approximately $21,200.
He wrote that he was aware of the possibility of a CME gap below us and Bitcoin swimming around the CME gap, so he didn’t surprise with a fake out move to retest lower for $ETH.
“I’m looking to buy longs in the $1,250-1.280 area.”
BINANCE: ETH/USD 1-hour candle charts Source: TradingView
Bitcoin’s strength finally turns in Bitcoin’s favor
The landscape surrounding macro movements looks less chaotic than the one that greeted crypto investors last Wednesday.
The data on inflation have been released and debates over whether or not the U.S. has seen an increase in inflation are now quiet until August’s Consumer Price Index (CPI).
While the Federal Reserve will make a decision on how to combat inflation in relation to key interest rate increases later this month (Federal Open Markets Committee, FOMC) is still scheduled to meet on July 26.
All macro cues regarding BTC price action will therefore be coming from other areas with high geopolitical triggers.
The modest recovery of Chinese tech stocks, which had been ravaged by Coronavirus nerves, helped Asian markets to recover as the week began.
The U.S. Dollar, which has been the star of recent weeks when equities around the world felt under pressure, started to consolidate its gains.
After reaching new two-decade highs last week, the U.S. dollar (DXY) index, whose strength has been inversely related to cryptoasset performance for a long time, fell below 108.
IncomeSharks, a Twitter analyst, commented that “Finally seeing the daily drop,” highlighting the potential of DXY to test the trendline starting in May.
“Even a small drop to this trendline would be huge for Stocks and Crypto. This would be in perfect alignment with a bullish week prior to the FED meeting.
Rickus, a fellow account holder, also believed that Bitcoin would not “breakdown again” despite a pullback still possible — thanks to DXY’s comedown and a stronger finish by the S&P 500.
SPX closed at a strong close just before the weekend. DXY looks weak on ltf, while BTC is near resistance levels. I personally don’t believe we will break down again but I am looking for a pullback. pic.twitter.com/KcYRJFrrbS
— Rickus (@rickus_trades), July 17, 2022
“Should allow room this week for equities & cryptocurrency to bounce until it find nearsupport,” 0xWyckoff (creator of the crypto trading resource Rekt Academy), said in a thread about DXY.
Dan Tapiero (Managing Partner and CEO of 10T Holdings) made a separate observation. He said that a macro USD low compared to the Chinese Yuan would mark a turning point for Bitcoin.
He noted that the “Last 3 significant BTC highs of 2014, 2018 and 2021 roughly coincided avec highs Chinese RMB/lows USD” in a tweet on July 18.
“Suggests that the Dollar will soon peak, which would support a BTC low.”
U.S. dollar index (DXY) 1-day candle chart. Source: TradingView
Miners dump 14,000 BTC in days
There is so much hope for a trend turn that on-chain data shows Bitcoin miners selling inventory.
CryptoQuant data shows that miners took a substantial amount of BTC out of their reserves starting July 14.
This resulted in miner reserves falling to their lowest level since July 2021. A point that also marked a low BTC price.
On July 18, the reserve count was 1.84 million BTC, down 14,000 BTC from the July 14 total.
CryptoQuant contributor Edris said that the numbers were a positive sign and suggested that miners were contributing to the establishment of a macro BTC price ceiling.
He summarized the weekend’s events as follows: “Bitcoin miners have finally given up,”
“BTC price has been steadily consolidating at $20K for the last few weeks. This makes investors wonder if there is an accumulation phase or a distribution phase. It seems that the Miners Reserve chart supports the latter.
Bitcoin miner reserves chart. Source: CryptoQuant
Alex Krueger, a Macro Analyst, described June’s miner sales in June as a “clear indication of capitulation,” and added that miners “tend not to accumulate on their way up, then puke when things get bad.”
RSI triggers “very rare” BTC price Inflection Point
Analysis suggests that a rare event on Bitcoin’s chart could have been the catalyst for a historic turnaround.
Similar: Top 5 Cryptocurrencies to Watch This Week: BTC. ETH. MATIC. FTT. ETC
Stockmoney Lizards examined the BTC/USD chart since the beginning of Bitcoin’s existence. They found that Bitcoin’s relative strength indicator (RSI), is now at a suitable level. This has been combined with a hint of a log chart trendline, which has sparked the largest BTC price recoveries.
It announced that it was in a “Current exciting, very rare situation now” at the weekend.
“RSI below 45, logaritmic low showed a dramatic reversal in past, which was followed by a wild bull run. Cross = RSI
A chart was created to illustrate the power of this event. It occurred just after RSI reached its lowest level ever recorded.
BTC/USD chart annotated Source: Stockmoney Lizards/ Twitter
Johnny Szerdi, CoinPicks analyst, said that Bitcoin had to breach the 50 mark on RSI to avoid a new sell-off.
GM! #Bitcoin has reached a critical point. Since 3/14, it has not been able break 50 RSI. Since 4/20, it rejected it five times. The vertical lines show where it corresponds to the large sell-offs. If we reject this 6th time, it could be another sell off. pic.twitter.com/znZNpfJ3K8
— Johnny Szerdi (@johnnyszerdi) July 17, 2022com. You should do your research before making any investment or trading decision.
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