Sentiment Surrounding BTC is “comparable to a funeral”: 5 things to watch out for about Bitcoin this week

Bitcoin is not dead for the fiftieth time, but market fear could easily convince anyone otherwise, as analysts predict a slow return to higher levels.

Bitcoin (BTC) begins a new week with traders still digesting the impact of the last one, in which there was a significant price drop that at one point reached USD 41,900. A modest recovery is now competing with some formidable resistance, the first of which is at $ 50,000.

As a sense of déjà vu fills the markets, analysts are coming to terms with the fact that the end of the fourth quarter of 2021 will likely not reach the maximum they had anticipated. There is also a concern that there has to be another deeper BTC price low before a true recovery occurs. What could happen in the last weeks of the year? Cointelegraph takes a look at five factors that are on everyone’s radar for the new week ahead.

Going “bullish” in the first quarter of 2022?

After approaching $ 50,000 earlier this weekend, the BTC / USD pair is back at around $ 48,000, down 16% in a week. Against the all-time highs of $ 69,000, the maximum loss overnight on Friday is 39% so far, which is a significant percentage, but by no means record in terms of Bitcoin.

The 2-week RSI corrections are about 40%. The minimum is broken

2013 4 1 (bearish sentiment confirmed)

2017 7 1 (bearish sentiment confirmed)

2021 6 0 (excluding March 2020)

As the price predictions run out, the focus is now on a revival towards 2022. “For what it’s worth, my base case is that we consolidate / rank until the end of the year, we carve out a funding rate regime mixed-negative / premium, ahead of a bullish first quarter, “predicted William Clemente in a discussion on Twitter.

A focus of attention in terms of the sustainability of the price recovery will be the derivatives markets after their cascade of position liquidations.

Yesterday’s cascade of sell-offs was the second-largest single-day event of 2021 in BTC terms, second only to the May 19 crash in sheer size. The events of Friday somehow managed to “readjust” the open interest in Bitcoin futures to levels last seen in September at prices similar to the trough of the slide.

New CPI data, new inflation problems

Macro markets are already on the brink, but this week may add some fuel to the fire in the form of new consumer price index (CPI) data. November’s US CPI readings are expected to exceed even October’s surprising 6.2% YoY reading.

Lyn Alden, financial commentator and founder of Lyn Alden Investment Strategy, pointed to economists’ forecasts. She added that housing, a lagging indicator that was not as present last month, is likely a factor influencing the results.

Economists expect on average next week’s CPI impression for what happened in November to be 6.7% year-on-year (up from 6.2% the previous month) and for the month-on-month impression to be 0.7% (down from 0.9% of the previous month). Inflation was in the news again last week after Federal Reserve Chairman Jerome Powell seemed to hint that “transitory” was no longer an adequate description of it.

Bitcoin reacted to this immediately, and the bulls will be keeping a close eye on the new CPI data in the hope that there will be a reaction similar to that of October. Cryptocurrencies, despite their recent volatility, are considered the best possible solution to protect purchasing power, especially since inflation is much higher when assets not covered by the CPI are taken into account.

“Everybody has double-digit inflation if they measure it correctly, and they need Bitcoin more than they realize,” MicroStrategy CEO Michael Saylor, a well-known critic of the IPC in Bitcoin circles, warned late last month. . The printing of money by central banks, especially the Federal Reserve, has recently drawn criticism from the head of another sovereign state.

“Can they stop printing more money? They are only going to make things worse,” responded Nayib Bukele, president of El Salvador, to Powell’s “transitory” speech. “Really. It’s a no-brainer. ”      

Watch out for the gap

Bitcoin is facing a “giant” futures gap this week, one so large that it may not close immediately, but traders shouldn’t forget about it, says Cointelegraph contributor Michaël van de Poppe. Although derivatives traders have only added to the downside pressure over the weekend, futures can be a target for positive momentum.

CME futures closed at $ 53,545 on Friday, about $ 5,000 higher than spot price levels at the time of writing. In line with tradition, the BTC / USD pair could well rise to “fill” that gap, paving the way for it to at least regain $ 50,000 of support and possibly even its $ 1 trillion market cap. “There is going to be a massive gap from CME to $ 53,500 later today,” Van de Poppe predicted Sunday.

“Very often, like 99% of the time, they close at some point. It’s at least an important level to watch for the next few weeks if the market continues to bounce for Bitcoin. ” For its part, the fall managed to close a gap prior to the decline that appeared at the end of November.

“There have been some minimal movements in the markets over the weekend, but I expect the real volatility to kick in when the week opens and US futures are launched again,” added Van de Poppe.

New echoes of March 2020 as sentiment hits 5-month lows

Despite the fact that only a few months have passed since the price wobble in September, the chaos of last week is the one that has the most comparisons with the events of March 2020. Then, as now, the Coronavirus was the curtain. bottom of the instability, and the BTC / USD pair sold drastically in a run that reached 60% in the course of a single week.

This time, the stakes weren’t that high, which has led to the description of a “mini” reissue this month. Currently BTC acts as a miniature version of the March 2020 crash. A key difference lies in the composition of the market: 18 months ago, leveraged traders and their influence on the markets were a much smaller phenomenon.

“This Bitcoin crash was NOT driven by sentiment,” said Danny Scott, CEO of the CoinCorner exchange, in a series of tweets on Saturday. “The drop was driven by gamblers who leverage and liquidate. Sentiment is still very bullish. “

While sentiment remains intact, Scott argues, the timing is serving to alter the positive mood and hopes that 2021 will end up rather than down. In March 2020 there was a slow recovery from lows that only accelerated about eight months later. For its part, a look at the Cryptocurrency Fear and Greed Index reveals the shock among many market participants: a 16/100 marks “extreme fear”, and is its lowest score since July. “Fear has not been this low since the May crash,” Van de Poppe added about the index. “The feeling is literally comparable to a funeral. I like it.”

The de facto hash rate is at all-time highs

An aspect of Bitcoin that seems anything but bearish? The fundamentals of the network. Panic among spot traders and catastrophic press headlines have not taken a toll on key Bitcoin network activity, underscoring the long-term outlook for miners.

Not even the drop to $ 42,000 was enough to compromise performance, and the hashrate – a measure of computing power dedicated to the network – remains near its all-time highs.

Different estimates give different definitions of what the highest Bitcoin hash rate count in history actually was. According to the popular resource MiningPoolStats, the hash rate is at its highest sustained levels ever.

Blockchain’s seven-day average currently stands at 162 exahashes per second (EH / s), falling 18 EH / s from the record prior to China’s crackdown in May. Regardless, the popular mantra remains that spot price action inevitably follows hash rate trends. The difficulty, which maintains Bitcoin’s equilibrium regardless of hash rate changes, is now poised to surge just under 1% within six days.

Previously, the metric was scheduled to decline for the second consecutive period.

Reference: es.cointelegraph.com

Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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