Bitcoin (BTC) starts a new week facing a wild macro environment after marking its lowest weekly close in almost two years.
As risk assets in the global economy take a hit and the US dollar soars, the largest cryptocurrency is in a weak situation.
September, which had started out on the side of the bulls, is now living up to its informal nickname in the cryptocurrency market, “Septembear”, and the BTC/USD pair has lost 6.2% since the beginning of the month.
The bad news keeps coming for cryptocurrencieswhich are holding on to dormant coins in ever-increasing numbers, as they the dollar proliferates and the general public’s appetite to diversify into riskier games continues to evaporate.
Given the macroeconomics is the focus of attention for the whole world this weekCointelegraph takes a look at what may happen to the price of BTC.
In economic conditions that rival any major period of historical upheaval seen in the last century or more, here are some factors to consider when assessing where bitcoin could be headed.
Weekly close sends BTC/USD back to November 2020
Although the losses of the previous week have not been matched (3.1% vs. 11%), the last seven days have managed to cause the lowest weekly close of bitcoin since November 2020data from Cointelegraph Markets Pro and TradingView show.
As the dip keeps coming, bitcoin has turned back the clock to before the breakout, which took it past the all-time high of its previous halving cycle..
The feeling of déjà vu is not welcome for the average hodler: the vast majority of purchases and cold storage from the last two years are now underwater.
“Looks bearish as stocks are also looking to break support. But on the other hand, this is what everyone expects.”
The possibility that the markets could make a move surprise “maximum pain” to the upside, liquidating the short bias, is a key alternative argument for Bitcoiners. For popular trader Omz, the weekly closing price of $18,800 represents even a local compelling local background.
RSI divergence has not gone unnoticed elsewhereand trader JACKIS signaled its arrival last week.
“Then we’ve had two touches of oversold territory in the past and they’ve always marked the exact bottom as well,” he tweeted at the time.
The trading account IncomeSharks also argued that a setback could accompany the US midterm elections in early November, but stopped short of saying bottom had been reached..
“Elevator down, stairs up”, commented over the 4 hour chart of the day
“We have to continue building double bottoms and new supports; the mid-term rally is still on the table. We have to break this structure, eliminate these targets and find a new fund.”
Dollar Wrecking Ball Costs Stocks and Fiat Money
Monday has only just begun and the turmoil that accompanied last week has already returned with a vengeance to macro markets.
An unstoppable US dollar is devastating the main currencies of its trading partners, and the pound sterling is the protagonist of the day, plummeting 5% and being a few percentage points from parity with the dollarits lowest levels against the greenback.
The GBP/USD pair follows the euro, which was once worth less than 1 dollar, while misery forced the Japanese authorities to artificially prop up the yen exchange rate In the past week.
The EUR/USD pair briefly dipped below $0.96 before a modest rebound, while the USD/JPY pair remains near its highest since the 1990s. despite Japan’s intervention.
At the same time, alarm bells are sounding for global bonds, which have fallen back to levels of 2020. Market commentator Holger Zschaepitz warned along with data from Bloomberg:
“It looks like the bond market bubble has burst. The value of global bonds has plunged by another $1.2 trillion this week, bringing the total loss on ATH to $12.2tn.”
Stocks are not going to fare any better, as futures are lower in the day before the opening of Wall Street. Brent crude fell below $85 a barrel for the first time since the start of 2022.
“Global bonds are crashing in their fiat currencies, which are crashing against the dollar, which is rapidly losing purchasing power,” reacted Saifedean Ammousauthor of the popular books “The Bitcoin Standard” and “The Fiat Standard”.
“It will be months and years before the average fiat user realizes just how financially ruined they are. The ‘new normal’ is poverty.”
With cryptocurrencies still highly correlated to stocks and inversely correlated with dollar strength, the outlook for bitcoin is dim.since it seems that the status quo will continue.
This week the consumer price index (CPI) for the eurozone will be published, which is expected to show that inflation continues to risewhile the US personal consumption expenditures (PCE) price index should continue the downward trend that began in July.
For its part, the US dollar index (DXY) shows no signs of reversal and is at its highest level since May 2002.
Hodlers are in classic bear market mode
In the midst of such chaos, no wonder bitcoin hodlers conviction rises and long term investors refuse to sell.
Hodler stubbornness is a hallmark of bitcoin bear markets, and the latest data shows that mentality is back with a vengeance this year..
According to on-chain analytics company Glassnode, Bitcoin’s so-called Coin Days Destroyed (CDD) metric is hitting new lows.
CDD refers to how many inactive days are cleared when BTC leaves your wallet after a certain period. When the CDD is high, it suggests that there are more coins in long-term storage on the move.
“The total volume of bitcoin coin-days destroyed in the last 90 days has effectively reached an all-time low”, commented Glassnode.
“This indicates that coins that have been HODLed for several months to years are the most dormant.”
The news follows weeks of various hodling-focused metrics showing a commitment to keeping the BTC supply under lock and key for better days..
Glassnode further noted the increasing prevalence of coins hodged for at least three months as a proportion of the USD value of the BTC supply..
“Bitcoin holders appear to be firm and unshakable in their conviction,” coincided.
An attached chart showed bitcoin’s HODL Waves metric.a representation of supply broken down by coin inactivity.
Whales continue to dictate support and resistance
As veterans walk away from the “sell” button, bitcoin’s biggest volume investors are on analysts’ radar when it comes to spot price movements.
The current trading range represents an area of interest due to the magnitude of trading activity involving whale money in the past.
Large purchases lend additional weight to a specific support price, while the same goes for resistance levels.and according to on-chain monitoring resource Whalemap, the BTC/USD pair is currently stuck between the two.
“Holding $19,000-18,000 is key for BTC”, summarized the whale map team at the end of last week.
An attached chart showed the whale resistance levels capping the relief for bitcoin and capping it at the $20,000 zone..
Nevertheless, Separate figures from research firm Santiment confirm that whale exposure to BTC has generally fallen to two-year lows.
“Extreme fear” enters the second week
In a familiar return to 2022 norms, cryptocurrency market sentiment has now been in “extreme fear” mode for over a week.
According to the Cryptocurrency Fear and Greed Indexwhich measures the aggregate sentiment of the cryptocurrency market, the average investor could not feel much more unsettled at the prospect.
As of September 26, the Cryptocurrency Fear and Greed Index recorded a score of 21/100with 25/100 being the limit for “extreme fear”.
Doubts are nothing new for the market this yearwhich saw his longest stint ever on “extreme fear”, over two months.
Social media interest, which picked up over the weekend, could be a positive, according to Santiment.
“Among the top 100 crypto assets, BTC is the topic in 26%+ of discussions for the first time since mid-July,” revealed in part of his Twitter comments this week.
“Our backtesting shows that 20%+ dedicated to bitcoin is positive for the sector.”
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