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5 factors to consider with Bitcoin this week

July 13, 2020

Bitcoin (BTC) starts on Monday and avoids another $ 9,000 testBut what could happen to change the mood or even cause a bull run?

Cointelegraph analyzes five key facts that could affect BTC’s price in the next week.

Measures under pressure: is “evaluation” important?

The macroeconomic outlook appeared to be more or less stable on Monday. Before trading, futures for the Dow Jones, SP 500 and others rose moderately despite growing concerns about the corona virus.

5 factors to consider with Bitcoin this week5 factors to consider with Bitcoin this week

In particular, a source quoted by Bloomberg on Sunday warned of this The feeling is worryingBoth due to the proliferation of cases and the response of the United States to protecting the economy.

If the Federal Reserve intervened again in stocks and expanded its income statement, it would increase the feeling of an artificial presence in the markets with respect to competition.

“There is an increasing likelihood that the Federal Reserve has not gone far enough,” the quantitative strategists added Sanford C. Bernstein in a note.

“If that were to happen, the market valuation might simply not matter.”

Fed balance sheet as of July 7th

Federal Reserve balance at July 7. Source: Federal Reserve

As Cointelegraph reported Bitcoin has shown no signs of decreasing its dependency on stocks in recent weeks. Upward or downward movements seemed to be shaping BTC / USD performance, with the past week moving from USD 9,000 to almost USD 9,500 and then declining.

Analysts are particularly watching the SP 500, an index with which Bitcoin currently has a 95% correlation.

The corona virus also affects consumer confidence in the United States, as new data show. Five indicators show a downward trend in July after the recovery in the past two months.

Two indexes: fear and greed

Regarding the macro problem, traders’ sentiment regarding cryptocurrency is still in contrast to that of traditional markets.

This was the conclusion of the two personifications of the Fear and Greed indices, a combination of factors that should show whether traders are too risky or too confident.

He Crypto Fear Greed Index (or index of fear and avarice) remains in the “fear” category with little exercise for several weeks. On the contrary, the traditional equivalent of the market is “greed” at times, while it tends to fall towards “neutrality”.

On a scale of 1 to 100, he scored 59.7 points less on Monday than a month ago. The crypto equivalent was 43 for Monday and 38 for the past month.

Traditional “greed” was fueled by “extreme greed” across the board, while call and put option derivatives and demand for a safe haven also held in the same area.

Crypto Fear  Greed Index 1-month chart

Monthly chart of the Fear and Greed Index. Source: Alternative.me

Cash and gold flows outperform stocks in 2020

The argument of greed agrees with other signs of actioncertain You are too optimistic.

As noted on Monday the market commentator Holger Zschaepitz, the correlation between Nasdaq and the SP 500 It is on the rise what he describes as a “sign of exuberance”.

At the same time, Banks are preparing for a lousy quarterly performance, something that is on its way to be the worst since the 2008 financial crisis.

As Cointelegraph emphasized Bitcoin circles have long had doubts about the stock’s recovery since March. Interventions by the Federal Reserve in particular have led to accusations that the entire atmosphere is now artificial and that the “true” value is of little relevance.

This week’s numbers show that even in 2020, investors are looking for money and gold – not stocks. The entries in the two assets have outperformed others since the beginning of the year, similar to 2008/09.

Inflows in% of assets under management

Flows as% of assets in the management chart. Source: Jeroen Blokland / Twitter

Bitcoin fundamentals remain strong

There will be a new Bitcoin difficulty level on MondayThis is the latest in a series of upward trends that underscore the trust of miners.

Since the event takes place just a few hours after the article was published, It is estimated that the level of difficulty increases by around 9.5%.

This is much stronger than the previous move two weeks ago, which stagnated and was on track to hit the 15% surge last month, which was the largest since early 2018.

The difficulty indicates how much effort is required to solve the equations when new Bitcoin blocks are mined. The upward revisions point to more competition, with the forecast for Monday slowly rising last week.

At the same time, The network hash rate, which had reached a historical average last week, declined slightly. Blockchain data estimates a 7-day average of 124.42 EH / s for Monday after previously reaching 126 EH / s.

The hash rate is a sensitive and inaccurate metric, But still provides information about how much computing power is used for Bitcoin mining. Sudden changes are not uncommon, and a popular theory suggests that the increase in the hash rate is associated with an imitation of the Bitcoin price.

Bitcoin 7 day average hash rate 1 month chart

Bitcoin: Average 7-day hash rate – monthly chart. Source: Blockchain

Derivative warnings are retained

The Bitcoin futures markets offered few opportunities for price movements at the weekend. Low volatility means that markets start on Monday in a similar position to that on Friday.

If Monday and Friday don’t match, A gap will open on the futures markets that the BTC / USD spot will tend to fill in the coming days or even hours.

CME Bitcoin futures chart shows lack of weekend gap

The CME Bitcoin futures chart shows the lack of a gap at the weekend. Source: TradingView

However, Futures remain a source of uncertainty for some. As Cointelegraph reported, the analyst Felt felt warned about it last week A poor performance could be a sign of the worst.

In particular, one indicator showed strange similarities to the days before Bitcoin crashed in March. If the story repeats itself, however, the case should not be as serious as it was then.