The price of Bitcoin (BTC) is starting a new week on familiar territory after a solid earnings weekend ended in decline. What can you expect?
With another rally to nearly $ 36,000 under his belt, The largest cryptocurrency is showing signs of strength, but old levels of resistance are still there.
The conditions are complex: The current migration of miners and the associated price campaigns have alarmed many, and Bitcoin’s most accurate forecasting tools are put to a real test.
However, since the basics finally give signs of life, the cops may finally have something to celebrate.
Cointelegraph looks at five factors at play in the BTC / USD pair this week.
Stocks and oil dispute
This week the big markets are in a “Roaring Twenties” mood, thanks thanks the SP 500 has made new all-time highs for seven consecutive days.
Encouraging US economic data and the maintenance of Federal Reserve interventions have pushed the stock index up in the past few weeks.
“The markets are trading for the continuation of a scenario that could not be better constructed”, summarized Chris Iggo, Director of Basic Investments at AXA Investment Managers, based in the Netherlands, in a notice cited by Bloomberg.
An interesting twist is that of oil, now at the center of yet another OPEC + production dispute that wins again, but the Raises concerns about the amount of fuel that will be available in August.
With the US dollar stable, it appears that the equity narrative is the likely driver for the future and this scenario traditionally supports bitcoin price movement.
The basics are not made of wood
Bitcoin may have seen its biggest drop in trouble this weekendBut even that may not be enough to stabilize fundamentals.
Saturday’s decline was 27.94%, slightly beating all previous oneswhich reflects the impact of the Chinese War on Mining on the Bitcoin network.
However, according to BTC.com data the next adjustment may mean an even bigger decrease.
Since difficulty adjustments can only be estimated before they take place, and many things can change during each two-week difficulty period, hard to say how much the metric needs to drop to reflect the true health of the network.
Given the recent crash, mining is now much more economically attractive to many current and potential participants. Therefore, there may be more miners starting their work in the next thirteen days, increasing the hash rate and thus potentially reducing the need to further reduce the difficulty.
A look at the hash rate activity of the last few days shows that a 180 degree turn has already taken place: Hash rate tops 90 exahashes per second (EH / s) from lows of 83 EH / s last week.
At the time of this writing, however, it was Bitcoin is well on the way to reducing the difficulty level by another 28.68%.
“After yesterday’s difficulty adjustment, which broke the -27.9% record, Bitcoin’s difficulty level is now similar to what it was after it was halved last year.”, pointed outÂ On Sunday the popular Twitter account diluted safe together with a difficulty graphic with comments.
However, the price is + 263% higher. This shows how incredibly profitable bitcoin mining has become for efficient miners.
The BTC price action bounced off $ 36,000
The difficulty drop came at least at a good time: Bitcoin price action had a boost and rose again towards the upper limit of its trading range.
For the rest of the weekend the BTC / USD pair saw little resistance and rose about 5% before returning.
What could limit the enthusiasm even more? For popular analyst Rekt Capital, two famous moving averages (MA) could be bearish momentum’s best friend in the coming days.
As reported by Cointelegraph, Last month BTC / USD experienced a “death crossover”. This refers to exceeding the 50-day MA below the 200-day MA, an event traditionally viewed as a bearish signal.
Indeed, “Death Crosses” have not always resulted in losses, but their reputation remains strong this year.
Now the current price power can get a taste of reality if Bitcoin hits one of the MA that is currently hovering above the spot price.
“Once BTC is able to break above USD 36,000 … the next big resistance will be the ~ USD 38,000 zone”, explainedRekt Capital on Sunday and adds a summary chart.
â ???? This is not just the range high of the macro consolidation area that Bitcoin is currently in … ????
The dealer Crypto Ed warnedOn Monday the ground of the weekend is lost again.
“A full setback is coming”he said, arguing that the market must “properly retest” the lower levels in order to promote a real recovery.
The BTC / USD pair corrected from the highs of $ 35,900 to bounce off the $ 34,000, a level that is maintained at the time of this writing.
Volume doesn’t help cops
The weekend rebound was suspect for those looking at a classic characteristic of the market: volume.
Despite the speed of the climbs, the volume behind was still small and therefore its reliability and self-preservation ability were in question from the beginning.
On-chain monitoring service on Monday CryptoQuant noted that volumes continue to decline, indicating a lack of interest from potential large buyers..
“BOTH the inflows and outflows dry up with the volume of trade in the market. The whales appear to be staying low with little effort, ”the company said in a blog post.
â ???? Shifting to either side of the market would have a high chance of triggering a relatively strong reaction to the price. ‘
On Saturday, however, the statistics Willy Woo observed a instant reboundA classic sign that whales are interested in Bitcoin units holding large amounts of BTC. This followed the difficulty adjustment downwards.
As reported by Cointelegraph, other investor profiles are also entering the crypto space; are interested in the remaining stock of Bitcoin, especially the so-called “Rick Astley”, or Hodler of last resort.
“Mr. Astley says ‘Shorter ones get straightened'”, commentedÂ Woo along with additional supporting data.
Investor confidence is slowly returning
How pessimistic is the average Bitcoin market participant?
This question is traditionally answered with the Fear and Greed Index of cryptocurrencies., and if we believe your readings this week, it may not be bad.
On Monday the index hit its highest level in almost three weeks: 29/100. The last time this happened BTC / USD was on its way to the June local high of over USD 41,000.
The index uses a basket of factors to show sentiment estimates for the cryptocurrency markets, etc. helps identify when assets are overbought or oversold at a given price.
Its bullish highs tend to hit 95/100 or higher, what leaves Bitcoin plenty of room to soar before “extreme greed” hits the market and causes a crash.
The index hit a low of 10/100 on June 22nd – “extreme fear” before he recovers.