14 Jul BTC ‘likely’ to repeat Q4 2020 move — 5 things to watch in Bitcoin this week
Bitcoin is likely going to repeat its Q4 2020 price move, and this week we look at five things that could help us determine what the next move will be.
The “has crypto hit bottom” is a question that has been asked many times. The answer to the question is likely, but still not confirmed. This week Bitcoin has seen some volatility. There are 5 things to watch in Bitcoin this week.
Can the previous barrier below $50,000 ultimately give way as Bitcoin (BTC) faces several obstacles this week but also has significant internal support?
Many people are frustrated by a corrective event that is already in its third month, but more experts are predicting that the circumstances may soon be favorable for a new offensive against opportunistic bears.
There are several possible problems ahead with inflation on the rise and US politicians planning to make the Bitcoin mining issue public this week.
But it seems like Bitcoin is getting to the stage where it can deliver a traditional shock when the bulk of the conventional economy least expects it.
When analyzing the price movement of BTC over the next week, Cointelegraph looks at five elements worth noting.
Key weekly closing level is maintained for Bitcoin
As the week starts, Bitcoin is distinctly uninterested in overcoming even nearby resistance levels.
Following a weekend of range-bound trading with no noteworthy price activity, BTC/USD is making lower lows on shorter time frames but avoiding crucial areas around $44,000.
Due to Wall Street’s holiday closure, Monday may bring more of the same unless the markets give guidance.
However, Bitcoin did manage to end the week precisely at the turning point that trader and analyst Rekt Capital had identified as being important for fostering positive momentum.
He said on Sunday along with a price chart, “A Weekly Close over $43100 (black) would be a positive indicator of confirmation for BTC to go upward from here.
“By turning black into support on the Weekly, $BTC would confirm a re-entry into its ~$43100-$51800 range.”BTC/USD annotated chart. Source: Rekt Capital/ Twitter
The biggest cryptocurrency then dropped, with $42,337 on Bitstamp serving as the local low on Monday at the time of writing.
Another well-known trader, Crypto Ed, is cautiously bullish as well. He anticipates a recurrence of last week’s surge over $44,000, which the bears ultimately suppressed.
“Even though it’s still early, this seems to be the beginning of the continuation of last week’s move. Cross your fingers! “He briefly described in his most recent Twitter post.
Cointelegraph published an article last week on feeling that an upward breakthrough will eventually result from the present range behavior.
Congress will debate “scrubbing up” cryptocurrency mining
This week, as the issue of inflation returns to plague American markets and politicians alike, the “scene is being set” in more ways than one.
The highest consumer price index (CPI) print in 40 years is already hurting President Joe Biden’s popularity ratings amid a new crop of articles about how inflation is affecting consumers.
According to an estimate made by Goldman Sachs last week, the Federal Reserve may implement no less than four significant rate rises in 2022 alone if the CPI growth of 7 percent year over year is contained. Weary customers are thus under increased pressure.
In the next weeks, Pentoshi said, “the stage is being prepared.”
More locally, this week’s congressional debate in the United States will center on the purported environmental effects of bitcoin mining.
Any unfavorable measures will impact more than most in terms of public perception given that the U.S. currently contributes a significant portion of the Bitcoin hash rate. Nobody will be happy to see the China migration from May 2021 happen again because of the impact it will have on the hash rate and network security.
As Cointelegraph highlighted, hash rate has completely recovered from the events of last year and is once again at all-time highs.
Thursday’s hearing of the Oversight and Investigations Subcommittee is themed “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains.”
On the scheduled day, the hearing will be webcast live online.
Bitcoin is “a gasoline-covered blaze”
The fact that bitcoin volatility is at multi-year lows is positive for its acceptability as a common asset, but few anticipate this trend to remain.
Bitcoin is at its least volatile since November 2020 at 2.63 percent, according to the Bitcoin Volatility Index, which computes the standard deviation of daily BTC returns for the past 30 and 60 days.
Thus, the current price swings are comparable to those from before BTC/USD entered price discovery after breaking over its $20,000 record high from 2017.
The scene has now been prepared for a probable repetition of those events, according to trader, entrepreneur, and investor Bob Loukas.
“Recall how everyone loaded up on BTC options in September and October in preparation for the super cycle. Those are definitely down by more than 80%, he said, adding that derivatives investors who bought before the current all-time high of $69,000 are surely more than disappointed.
“Vol dropping speaks to consolidating period, likely similar outcome period leading into Oct 20′ move. But think still time to grind in this BTC range.”Bitcoin Volatility Index chart. Source: Buy Bitcoin Worldwide
Although “exciting” price movements have not yet materialized since December’s drop, they are now all the more possible as a result of the decreasing supply of Bitcoin.
According to market analyst Johal Miles, “Bitcoin is simply a blaze wrapped in gasoline with illiquid supply near ATH’s for this cycle.”
“Raging flames will ignite at the first scent of demand.”
According to Cointelegraph, BTC is being dragged away into cold storage to keep speculators at bay.
Early 2021 interest has been “calm ever since”
New data reveals that the industry has in reality shown little interest in Bitcoin for a whole year, despite concerns regarding the lack of retail investors even after a 40% price fall.
TXMC Trades, a Glassnode analyst, demonstrated exactly how quiet Bitcoin has really been in terms of retail adoption since January 2021 by looking at new organizations surfacing on the blockchain.
The 30-day exponential moving average (EMA) of newly added entities to the chain shows that the last significant increase ceased at the beginning of Q1 last year.
Since then, despite two more all-time market highs, the number of new entities has decreased and reverted to the typical rates seen following bull cycle peaks.
TXMC said on Twitter that “Bitcoin bull/bear markets have an unique on-chain activity profile.”
“…Activity wise, the last bull run ended in January 2021. It’s been quiet ever since.”Bitcoin new entities chart (30-day EMA). Source: TXMC Trades/ Twitter
The data emphasizes how, despite Bitcoin reaching fresh highs and strong institutional demand, the typical investor has all but forgotten about it.
Google users’ interest levels are contributing to the trend, with “Bitcoin” search rates reaching levels that were once standard in December 2020.
Worldwide Search results for “Bitcoin” on Google. the Google Trends website
Even while they are not yet in the red, miners are nonetheless making less money from transaction fees than they have since late 2020 – only 1.08 percent.
“This shows that retail hasn’t arrived yet… even if the cost is really comparable to early 2021 When does retail? This past weekend, on-chain analyzer Blockwise of Twitter queried and presented further Glassnode data.
Annotated graph of the transaction fee earnings from bitcoin mining (7-day MA). Blockwise and Twitter
Be scared, be “really” scared.
If on-chain behavior is any indication, bitcoin’s “extreme dread” of the new year will continue to dominate opinion.
Related: BTC, NEAR, ATOM, FTM, and FTT are the top 5 cryptocurrencies to monitor this week.
According to the Crypto Fear & Greed Index, which measures market sentiment via a basket of factors to assess just how traders are likely to act at a given price point, things have rarely looked more bleak.
Since late December, the Index has labeled the current situation as “severe dread,” and price changes have not been able to change it.
The same is true this week, with Fear & Greed at 21/100 — well within the “extreme fear” bracket.
Crypto Fear & Greed Index. Source: Alternative.me
In a similar vein, data on BTC transactions that resulted in a profit or loss reveals reluctance among traders and little evidence of profiteering.
Such behavior is typical amid market declines, as was seen last summer when BTC/USD dropped and bottomed out at about $30,000.
Annotated graphic illustrating the realized profit/loss ratio for bitcoin. Twitter/On-Chain College as a source
“This is the real Fear & Greed Index,” popular Twitter account On-Chain College commented, uploading the data, which comes from Glassnode’s realized profit/ loss ratio indicator.
“The crypto entering bear market” is a term that has been used before, but the cryptocurrency markets are now in a bear market. “5 things to watch in Bitcoin this week” will include what the price of BTC is doing, as well as other cryptocurrencies like Ethereum and Ripple.
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