Bitcoin (BTC) is starting a new week to test the weaker support at $ 9,000. But which factors could increase or weaken price developments?
Cointelegraph Markets takes a look at the main street Things traders should focus on for Bitcoin over the next five days.
China is leading the recovery
The stock market futures showed a mixed mood, but were stronger overall until Monday. The data, especially employment figures for the United States, which were better than expected, helped to lift the mood.
The stocks continue to rise and the Chinese are boomingdespite the rapid increase in the spread of the coronavirus. China’s FTSE A50 index hit record highs on that day.
Balancing this issue with economic data is an important balancing act for the market its volatility will reflect in Bitcoin’s own movements.
“”As a representative of risk sentiment in China, this could be a good sign for cryptocurrencies.predicts Amber Group crypto lender.
At press time, the BTC / USD pair had just reached $ 9,200, a level that has not been seen since July 2; It fell below $ 9,000 at the end of Sunday.
Bitcoin vs. Chart three-month S P 500. Source: Skew
As Cointelegraph reported Correlating Bitcoin with the macro can still cause more pain than profit for investors. The strange “recovery” of the shares takes place amid massive central bank intervention in the markets.
Last week, Charts showing the performance of the Bitcoin and Gold market showed how unstable the current conditions are.
… while China is trampling on financial privacy
Continuation of economic factors, China dominated financial news on Monday: the country imposed controls on large transactions.
As Bloomberg reported The pilot program will ultimately affect 70 million people who have previously had to report more than 500,000 yuan (USD 71,000) worth of transactions, whether residential or business.
The problem is bad debts, which have increased in China as a result of the corona virus and that it’s giving major national banks a big headache.
Chinese are officially prohibited from trading Bitcoin, but OTC activity continues. The true size of the underground market remains controversial.
Recently, A mining group located in China recorded the second largest runoff in history. This suggests that BTC could end up in an OTC sale.
For its part, The Hong Kong debacle and its new security law have had no impact on Bitcoin like the riots last year. At that time, bitcoin became the center of the scene as a safe haven as cash stocks shrank and the Hong Kong dollar fell sharply amid the unrest.
Bitcoin basics explode
Although it was completely static in the last shot, Bitcoin’s network shortage is expected to see a healthy recovery again next week.
The non-technical difficulty is a representation of the miners’ participation in the Bitcoin network. Its value rises and falls due to factors that affect its activity, including price.
Adjustments that take place every two weeks are an integral part of Bitcoin’s ability to regulate itself as a system, regardless of price movements or otherwise.
The difficulty will increase in about seven days Estimated 6%This implies that the processing of Bitcoin transactions must be made more intensive in terms of computing power.
The previous adjustment was 0%, somewhat rareThe level of difficulty had previously risen by 15%, the biggest upward movement in more than two years.
Bitcoin 7-day semi-annual chart with average difficulty. Source: Blockchain
Meanwhile, the hash rate -an estimate of computing power already dedicated to mining- it reached a peak of over 120 EH / s this weekendas suggested by the blockchain data. The hash rate has increased by 10% in the past two weeks.
Futures “Mini Gap” offers little inspiration
Those who hope that a break in the Bitcoin futures markets could bring price developments to a certain level will be disappointed this week.
Low weekend volatility means the difference between last week’s closing price and this week’s opening price is almost non-existent – just $ 20.
Bitcoin tends to “fill” gaps left by futures quickly. As Cointelegraph reported, it was only a matter of days before a gigantic $ 1,000 gap was closed by profits at the beginning of the year.
However, The gap of USD 20 to USD 9,100 has already been closed for the beginning of the week.
30-minute chart of CME Bitcoin futures with gaps. Source: TradingView
Generally, however Derivatives markets are playing an increasingly important role for Bitcoin analystsYou are responsible for most of the trading volume. Last week, Cointelegraph discussed what time of day traders are most active.
The volume determines the rise or fall of Bitcoin
In the short term, analysts at Cointelegraph Markets believe that the most important thing for Bitcoin is not just to hold $ 9,000, but even less.
In a summary at the end of last week Michaël van de Poppe said that the target to be protected was $ 8,600 and that failure to do so would trigger a “sharp decline”.
In the same way, There is a potential rise above $ 10,500, which is itself an important level of resistance. It all depends on the volume, says Van de Poppe.
“During the 2019 reach period, volume declined over time. The real peak in volume came up, meaning that the upward traders reached their buy limit and the short-term traders reached their stop. Loss,” he wrote, comparing the rise in Year 2019 with the current conditions.
“This chain reaction triggered a sudden $ 1,000 candle.”
Volume declines have been associated with the return of lower currency reserves as traders appear to be willing to save their Bitcoin and not sell it as quickly.
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