Bitcoin (BTC), a cryptocurrency, begins a new week in uncertain places facing uncertain times — Is $40,000 resistance now?
The biggest cryptocurrency just closed its fourth weekly red candle, something it hasn’t done since June 2020.
Bulls are still feeling cold feet about the macro-market outlook. This week is starting to get underway and Bitcoin isn’t done selling yet.
Due to $4,000 losses in the last four days, the price targets now include retests at liquidity levels towards $30,000.
There are still some bright spots. Long-term hodlers as well as key players such as miners, have a positive outlook on Bitcoin as an investment.
Cointelegraph examines the forces that will shape BTC price action over the next days with this in mind.
French elections are ruined by sia woes
At the beginning of the week, the key external event that will impact risk assets is the French election. This was won by incumbent Emmanuel Macron.
Market players who were worried about Marine Le Pen’s surprise win are relieved to hear Macron’s second term will lift French stocks, in particular Monday’s open, and the euro.
Like the United States, the European Union is facing a powerful cocktail of inflation, plummeting bond market, and the European Central Bank (ECB), has yet to take decisive steps to increase interest rates or reduce its close to $10 trillion in balance.
Bitcoin did not react to Macron’s victory. Risk assets are already facing an Asia downturn Monday as Coronavirus in China shakes sentiment.
The Hang Seng index in Hong Kong has fallen 3.5%, while the Shanghai Composite has lost 4.2%.
Since crypto is en masse strongly correlated with stock market movements, repeat performances by the United States and Europe would provide clear directional cues.
“The concern is that the current policy support that government has put in place may no longer be effective due to the Covid policies as activities have been subdued,” Jenny Zeng (co-head of Asia Pacific fixed income, global asset management firm AllianceBernstein), told Bloomberg.
Holger Zschaepitz, a market commentator, noted that the past week had already been painful for equities despite Monday’s losses.
He said that global stocks fell $3.3tn in mkt caps this week as US equities, which had reached their peak on Thur morning, experienced steady declines as investors began to question why they were buying risk assets in a world full of uncertainty.
“Global stocks worth $107.6tn equal to 127% GDP”
Bloomberg global stock market cap chart. Source: Holger Zschaepitz/ Twitter
Another post highlighted the “Buffett Indicator” — the ratio of U.S. stock markets valuation to GDP — still being in what was called “problematic territory at over 100 percent.
Dollar strength is back with an vengeance
The U.S. Dollar is one component of the macro landscape that remains in bullish mode, much to the dismay of crypto traders.
After reaching two-year highs last Wednesday, the U.S. currency index (DXY) now appears to be on a steady upward trend.
DXY, at 101.61, is contesting its performance since March 2020, when assets around the world fell after the Coronavirus crash.
Bitcoin has not been helped by dollar strength, and the inverse correlation is being criticized for its inability to control the month.
BTC/USD 1-week candle graph vs. U.S. currency index (DXY). TradingView
Crypto Ed, a popular trader, joked that it looked like DXY had announced a token burning or some other move in his response.
Preston Pysh is the host of Investor’s Podcast Network. Something doesn’t seem right to him.
He warned Monday that the BoJ had implemented Yield Curve Control, while the Yen was collapsing, and the FED is about to raise 50bps while dollar rises.”
“Something sure feels about to break …”
Weekly chart shows fourth consecutive red candle
This Monday is not looking good for Bitcoin. Despite the weekend being free from significant volatility, the weekly close was disappointing, coming in just below last week’s.
However, this means that now there are four red candles in succession on the weekly chart. This is something Bitcoin hasn’t seen since June 2020 according to data from TradingView and Cointelegraph Markets Pro.
BTC/USD fell below $39,000 overnight, continuing the downtrend that it has been experiencing since then.
BTC/USD 1-week candle chart (Bitstamp). Source: TradingView
Although traders are looking at various chart features to see if they can predict where the pair will go next, bullish indications are rare.
Popular analyst and trader Rekt Capital believes that the Ichimoku cloud overhead would cause more losses for Bitcoin.
During Retest 1 #BTC fake-brokedown from the Cloud before reversing During Retest 2 $BTC wicked sub-Cloud before reversing Now retest 3 is in progress BTC needs to reclaim Cloud as support It’s crucial BTC doesn’t flip Cloud into resistance to avoid downside#Crypto #Bitcoin https://t.co/dDLtWwzuTn pic.twitter.com/NQfEbS3nAH
— Rekt Capital (@rektcapital) April 24, 2022
Cheds, popular analyst and author of Trading Wisdom, was meanwhile looking for a crossing below the 200-period moving mean on the three-day chart.
He argued that this would be significant as it was the first time such an event occurred after a bull market.
He cautioned, “Not a prediction but an observation.”
Matthew Hyland (known as Parabolic Matt) made further comparisons between December 2018’s $3,100 floor and the current BTC price action.
He said that $37,600 in cash is “crucial” for longer periods of time.
#Bitcoin comparison of the 2018/2019 Bear Market Bottom compared to the current structure BTC has been in since January of this year Similar Time Frame Series of Lower Highs and Higher Lows Creation of a higher high Pullback after first higher high Crucial $37.6k Holds pic.twitter.com/kzQhvZUTMr
Matthew Hyland (@MatthewHyland_ April 23, 2022
“Looking for the sweep down, at that point i’ll be looking for signs for a relief rally for play off from,” Crypto Tony, a fellow Twitter pundit, added Monday in his own analysis.
Hodlers set a new record
It is a trade that can be boring for even the most experienced players due to its “choppy” nature and lower price action over time on Bitcoin.
It is not surprising that most hodlers prefer to do what they love best, and keep their hands off of the action.
This is now evident in on-chain data which shows that the Bitcoin supply that has been dormant for at most a year is at an all-time high.
Jan Wuestenfeld, an economist, cited Glassnode’s on-chain analytics firm and noted that this means that the supply is becoming more “older”. In other words, more coins are being kept for longer than they are used.
Glassnode reports that the supply, which has been dormant for at least a year, has fallen to 64% for the first record.
For the first time, 64% of the total #Bitcoin supply was active in the last 1+ year. The trend continues upward in the percentage of old coins. / pic.twitter.com/Zyj0hyqFti
Jan Wustenfeld (@JanWues), April 24, 2022
HODL Waves is a Glassnode indicator that shows hodled coins from all ages. The 1-2 year supply has grown more than any other since December 2021 — from less than 10% to almost 15% as of this week.
Q1 also saw an increase in its presence due to the 3-5 year hodled coin band.
Chart of Bitcoin HODL Waves. Source: Unchained Capital
The moon is still the center of fundamentals
It’s not just the steadfast hodlers, who stubbornly refuse to reduce their BTC exposure despite the dire outlook.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC. DOT. XMR. APE. CAKE
An examination of Bitcoin’s network fundamentals reveals that miners are anything but bearish when investing in Bitcoin.
This is a common story, but it’s still impressive given the price trend. Bitcoin’s difficulty and network hash rate are expected to reach new highs this week.
Based on the price performance, difficulty will adjust up by approximately 2.9% in two working days, setting a new record at 29.32 trillion.
The competition for mining is evident in the difficulty joins hashrate — an estimation of the processing power dedicated the blockchain — that is currently at its highest point.
Although estimates vary depending on the source, raw MiningPoolStats data highlights an “up only” trend in hash rate. This is a key trigger for bullish price performance, some argue.
Screenshot of the Bitcoin hash rate chart Source: MiningPoolStats
As investment continues to grow, the trend towards an increasing hash rate is not new.
Cointelegraph reported that 20% of Bitcoin mining was done by publicly-listed companies as of April 1.
com. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.