Bitcoin price action is yet to impress in 2022, but bets are stacking that things will get interesting again soon.
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Bitcoin (BTC) starts a new week facing multiple hurdles but with strong internal support – old resistance below $50,000 finally falling?
A corrective event now nearing its third month has disappointed many, but conditions may soon be right for a fresh charge against opportunistic bears, a growing number of analysts. Tich said.
With inflation running high and US lawmakers set to go public with the Bitcoin mining debate this week, there are plenty of potential pitfalls in store.
However, it’s starting to feel like Bitcoin is at a point where it’s likely to deliver a classic surprise when much of the mainstream economy least expects it.
Cointelegraph looks at five notable factors when charting BTC price action over the next week.
Bitcoin maintains key weekly close
Bitcoin doesn’t seem interested in settling even at local resistance levels as the week begins.
After a volatile weekend with little single price action, BTC/USD is placing lower lows on the short time frame while avoiding key areas around $44,000.
With Wall Street closed for a holiday, Monday could be set to offer much of the same before the market sets its direction.
However, Bitcoin managed to end the week at precisely the key moment identified by trader and analyst Rekt Capital as useful to support bullish momentum.
“Weekly close above ~$43100 (black) would be a good confirmation for BTC to continue higher from here,” he said. Written Sunday with accompanying price chart.
“By turning black into Weekly support, $BTC will confirm a re-entry into its ~$43100-$51800 range.”
A subsequent price drop sent the largest cryptocurrency lower, with $42,337 on Bitstamp, the local exchange on Monday at press time.
Also cautiously optimistic is fellow trader Crypto Ed, who is eyeing a potential retracement of last week above $44,000, which the price drop was subsequently broken.
“Although it is early, this looks like the beginning of a continuation of last week. Crossed fingers!” he summed it up in his latest Update Twitter.
Meanwhile, last week, Cointelegraph reported on sentiment favoring a bullish breakout as an end result of the current divergent behavior.
Congress discusses “cleaning up” crypto mining
“The stage is being set” in more ways than one this week as the topic of inflation returns to haunt US markets and politics.
Amid a flurry of new headlines about how inflation affects consumers, the highest consumer price index (CPI) in 40 years has earned President Joe Biden’s approval rating.
According to a forecast by Goldman Sachs last week, if the 7% annual CPI increase is contained, the Federal Reserve could issue no less than four important rate hikes in 2022. This adds pressure. for weary consumers.
“The stage will be set in the coming weeks,” Pentoshi Discuss.
More recently, this week, US lawmakers will discuss the alleged environmental impact of cryptocurrency mining.
With a significant portion of Bitcoin’s hash rate now coming from the US, any hostile policy will matter more than most when it comes to sentiment. A repeat of the China exodus from May 2021 — and its effect on hash rates and cybersecurity — will not be welcomed by anyone.
The hash rate, as Cointelegraph notes, is now back to all-time highs, having fully recovered from last year’s events.
The hearing of the Oversight and Investigations Subcommittee will take place on Thursday and is titled “Cryptocurrency Cleanup: The Energy Impact of Blockchain.”
The hearing will be broadcast live in real time during the day.
Bitcoin “a fire covered with gasoline”
Bitcoin’s volatility is falling to multi-year lows — encouraging for its adoption as a major asset, but not something many expect to last.
According to the Bitcoin Volatility Index, which calculates the standard deviation of BTC’s daily returns over the past 30 and 60 days, Bitcoin is the least volatile since November 2020 at 2.63%.
As a result, the current price movement is similar to what it was before BTC/USD started exploring after breaking the $20,000 all-time high from 2017.
For businessman, entrepreneur and investor Bob Loukas, the stage is now being set for a repeat of those events.
“Remember when people were loading BTC options in September/October for the super cycle. That could be 80 +% off,” he said commented, note that derivatives traders from before the current $69,000 all-time high are likely to be more disappointed.
“The drop in volume speaks to a period of consolidation, the resulting period could be similar to the October 20 move. But think there is still time to brood in this BTC range. “
While “interesting” price moves have yet to resurface following the December drop, they are now more likely thanks to Bitcoin’s increasingly inaccessible supply.
Market commentator Johal Miles argues: “With an illiquid supply at ATH for this cycle, Bitcoin is essentially a fire covered in gasoline.
“Even the smallest need will bring about burning flames.”
As Cointelegraph reported, BTC is being put into cold storage beyond the control of speculators.
Interest rates are “quietly silent” in early 2021
Amid questions about the absence of retail investors even after the 40% price drop, new data suggests that the sector has in fact not been much interested in Bitcoin for the whole year.
Keep an eye on new entities appearing on the blockchain, Glassnode analyst TXMC Trades shows shows how quiet Bitcoin has really been in terms of retail adoption since January 2021.
A look at the 30-day exponential moving average (EMA) of new entities in the series shows that the last major spike ended in early Q1 last year.
Since then, despite two new all-time highs, the number of new entities has declined and returned to the usual standard price levels after a bull cycle peak.
TXMC explained on Twitter: “The Bitcoin bull/bear market has a distinct on-chain activity profile.
“… Activity wise, the last bull run ended in January 2021. It has been quiet since then.”
The data underscores how casual investors have neglected Bitcoin, even as it hits new highs and institutional activity remains strong.
Interest from Google users adds to the trend, with worldwide search rates for “Bitcoin” staying at what was previously normal in December 2020.
Miners, although far from current prices, are also earning less from transaction fees than at any point since the end of 2020 – just 1.08%.
“This is an indicator that retail has not… Although the price is really comparable to early 2021 When retail?” Twitter-based Chain Analyst, Blockwise question later this week, presenting more Glassnode data.
Fear, fear “extremely”
Bitcoin’s New Year of “extreme fear” continues – and if on-chain behavior is anything to go by, it will remain the dominant force in sentiment.
Related: Top 5 cryptocurrencies to watch this week: BTC, NEAR, ATOM, FTM, FTT
According to the Crypto Fear & Greed Index, which measures market sentiment through a basket of factors to gauge how traders are likely to act at a given price level, things are rarely more bleak.
Since the end of December, the Index has described the status quo as “extreme fear” and so far, no price change has been able to change it.
The same is true this week, with Fear & Greed at 21 out of 100 – in the “extreme fear” category.
Likewise, data including BTC has moved at profit or loss shows timidity among traders, with precious little profiteering visible.
Such behavior is common during bearish times and was seen last year during the summer when BTC/USD dropped and bottomed out at around $30,000.
“This is the real Fear & Greed Index,” popular Twitter account On-Chain College commented, upload data, taken from Glassnode realized profit/loss ratio indicator.