Bitcoin (BTC) starts a new week with a fresh multi-week low amid a return of nervous feeling.
After falling below $21,000 over the weekend, The largest cryptocurrency consolidates around 10% less than a week ago, and the fear in the crypto markets is clearly visible.
While some call for new lows and others warn that difficult months lie ahead, the bulls have a lot to deal with both short and long term.
The annual symposium of the United States Federal Reserve in Jackson Hole will be held this weekwhile the month of september will already become something of a showdown when it comes to inflation and the associated macroeconomic price triggers.
This could mean new volatility in risk assets both during and beforesomething that weary investors will certainly not welcome after last week’s breakouts in the BTC/USD pair.
At the same time, miners are giving strong signs that the worst is over, and hashrate starting to recover from a rare “capitulation” phase.
With this in mind, Cointelegraph takes a look at five market-moving topics that are relevant to bitcoin traders in the coming days and beyond..
All eyes are on Jackson Hole
The US Federal Reserve is back in the spotlight this week when it comes to potential macro price triggers for risk assets..
Following last week’s Federal Open Markets Committee (FOMC) meeting, Federal Reserve officials, along with banking figures from around the world, will gather at the annual Jackson Hole symposium August 25-27.
This year’s meeting comes at a critical time for markets in the United States and beyond. Inflation under the Fed’s jurisdiction appears to have started to cool off, while the opposite continues elsewhere.
The latest inflation data in the United States is still weeks away, but that could not stop Fed Chairman Jerome Powell from giving strong hints about how the Fed will react.as well as to position expectations regarding future economic policy.
Bearing this in mind, volatility could easily pick up both leading up to and during the event, making Jackson Hole a hot spot on traders’ radar to watch.
They’re so focused on doing this, in part, because they screwed up last year with the whole “transience” thing, and they realize the only thing they can do now is tighten policy, and that will slow down inflation.”Kevin Cummins, chief US economist at NatWest Markets in Stamford, Connecticut, told Bloomberg.
With that, it remains to be seen whether the market is leaning towards another fund rate hike of 75 basis points in September or gravitates towards a lesser 50 basis point hike.
In a preview of his Jackson Hole comments that circulate by Internet, Bank of America said it “would continue to seek 50 basis point rate hikes in September and November, plus an additional 25 basis point rate hike in December.”.
Rate hikes themselves present headwinds for risky assets, and in turn pose a challenge for bitcoin and its bid to escape strong correlation with asset classes such as US equities..
BTC faces six “ugly” months
Bitcoin managed to avoid further volatility over the weekend but still posted a new low in Augustas weak weekend trading conditions accentuated market moves.
After the sudden crash on August 19, the BTC/USD pair spent the next few days making a bottom in a general consolidation pattern, which was continuing at the time of writing.
The low came in the form of a visit to $20,770 on Bitstamp, with bitcoin later gaining $1,000. before returning to operating approximately in the middle of the two values.
Weekly close at $21,500 was troublesome, marking the lowest since the week of July 18 after last week’s candle cost the bulls almost $3,000 or 11.6%.
feel like $BTC preparing to head back below $20k soon.
Don’t get caught off guard.
— Ben Armstrong (@Bitboy_Crypto) August 21, 2022
It seems that BTC is preparing to go back below $20,000 soon. Don’t let them be caught off guard.
With fear of a new low palpable among commentators, others argued that the conditions did not unequivocally point to greater misery.
For Cointelegraph contributor Michaël van de Poppe, the BTC/USD pair may cap any decline at the close of CME futures on Aug. 19, which sits around $21,200. Harder for most of the market, he hinted, would be earningsgiven the overall downward entry bias.
“Probably around the CME open, we’ll see markets drop to $21,200 as that’s Friday’s close, and then all is well,” said to your Twitter followers during the weekend:
“We are not yet inclined to see new lows. The general period of accumulation and the strong correction on Friday cause panic. The pain is on the rise.”
Nevertheless, Brian Beamish, founder of educational suite The Rational Trader, left social media with no illusions about how the rest of 2022 should shape up for Bitcoin..
“The next 12-19 weeks are going to be ugly,” He said part of a tweet.
“Once that’s done, the minimum of this cycle should be displayed, and then we’ll start all over again.”
Beamish built on the experience of two previous cryptocurrency bear markets.; a comparison chart of price action suggests that the real macro bottom was far from being reached for the BTC/USD pair.
However, the analyst Matthew Hyland was confident in a long-term recovery, arguing that traders should not lose faith..
“Bitcoin’s structure over the next few weeks/months shouldn’t scare you. An upper bottom, double bottom or cycle bottom will form,” summarized.
“The end is near.”
Hash tapes show miners outside capitulation phase
One group of Bitcoin network participants for whom the end of the hard times seems clearly near is the miners..
Despite the latest price drop, on-chain data shows that bitcoin miners have emerged en masse from a period of “capitulation” that lasted more than two months.
According to the metric of hash tapeswhich uses two moving averages of the hash rate to determine miner engagement trends, now an uptick is taking place.
This move has been expected for a long time. In early August, the mining company Blockware predicted that the hash tape capitulation phase would end this month or next.
The last change was noted by Charles Edwards, CEO of asset manager Capriole, who compared this year’s capitulation to others in Bitcoin history.
“The bitcoin miners capitulation has officially ended today, making it the third longest capitulation in history, at 71 days”, wrote in a Twitter thread:
“This capitulation zone was longer than 2021, and only two days shorter than 2018, where the price touched $3,100.”
A look at hash rate estimates from the monitoring resource MiningPoolStats shows that a spike above 200 exahas per second (EH/s) probably started in the last few days.
“Historically, bitcoin miner capitulations have captured major price lows and have been great buy signals,” Edwards continued.echoing the classic Bitcoin market mantra, “price follows hash rate”:
“Miner capitulations occurring late in the cycle (at least 2 years after halving) and after cycle highs have been the most profitable long-term signals (eg, 2012, 2015, 2018).”
Exchange balances hit new 4-year lows
Price fights on short time frames have proven to be something of a problem for buyers this time.
Behind the scenes, investors, rather than fleeing BTC exposure, have entered the market at a remarkable pace in recent days.
According to data from the CryptoQuant on-chain analytics platform, as of August 18, bitcoin available on 21 major exchanges fell from 2,342,662 BTC to 2,309,727 BTC on August 22.
In four days, exchange users withdrew more than 30,000 BTC from their accounts.
Partner data firm Glassnode, meanwhile, added that the combined current balance across all the exchanges it monitors hit a new four-year low on Aug 22.
For comparison, in August 2018, the BTC/USD pair was rising towards $7,000, but still several months away from its bear market bottom of $3,100.
The sentiment indicator falls 40% in a week
Compared to before the price drop, sentiment is not what it was regarding cryptocurrencies.
Even as exchanges see an acceleration in BTC leaving their books, the big picture is now firmly one of “scary” when it comes to bitcoin and altcoin investors.
According to the cryptocurrency Fear and Greed Index, which uses a basket of factors to give a normalized score of market sentiment, “extreme fear” is one step away from reigning supreme..
At 29/100, the index is four points away from returning to its extreme fear level, having hit 27/100 over the weekend..
The latter represents a drop of 40% in a single week. Seven days earlier, the Index was at 45/100, posting its most bullish levels since April..
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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