5 things to watch in Bitcoin this week
Uncertainty across the board implies that Bitcoin’s bull market will come to an unexpected finish in the fourth quarter this year, but a price floor may be closer than many belief.
Analysts are looking for a bottom in Bitcoin (BTC) as the week begins, but it may not imply a drop to $40,000 or below.
Bitcoin supporters now face a new week of adverse sentiment throughout the global economy, as risk appetite remains low, after an average weekend.
There appear to be few catalysts to assist BTC/USD recovering higher in time for the new year, given the lack of a “Santa rally” for nearly everyone. On-chain metrics, meanwhile, remain solid, and miners are reluctant to invest.
$50,000 seems far away for Bitcoin bulls
After failing to make any substantial movements over the weekend, traders are now looking for a volatility “bottoming” in the market.
BTC/USD is firmly set in a familiar range near $46,000, with bulls struggling to find the impetus needed to launch a new attack on the $50,000 barrier. Although buying is taking place, particularly among smaller retail investors, seasoned market players are expected to see lower levels.
Pentoshi, a well-known trader, believes that they might still prevent a $40k retest. He mentioned big exchange Bitfinex and its large-volume traders as a possible source of assistance in a tweet on Sunday.
“On $BTC, Finex sets the tops and bottoms. This appears to be a similar situation, in which they will just absorb selling at these crucial levels. He said, “See Sep after 40.7k low,” referring to market developments that occurred at the end of September.
“I’m now searching for a 42-46k bottom,” says the seller. Others were more upbeat, with Galaxy, a fellow trader, predicting a “green week” headed by altcoins. With only ten days remaining in the year, a surprising end to 2021 isn’t completely ruled out in the crypto markets.
Trading platform Decentrader mentioned Bitcoin’s Advanced NVT signal as a probable springboard to higher price levels in its most recent market update.
After almost reaching its lowest “overbought” level ever, the historical cycle measure, which is still bottoming, might yet surprise traders.
“Will we see a bounce and rally into the Christmas break as we did last time?” Or will we see further profit-taking at the conclusion of the year?” a summary of the latest news
“Right now, $BTC is at a critical decision point, therefore it’s prudent to handle risk cautiously until a clear trend develops.”
Miners keep hodling
Miners, whose outflows have dropped to their lowest level in three months, are one group of Bitcoin hodlers that aren’t in the mood to sell at present levels.
According to Glassnode statistics, miner outflows have nearly halved in just over a month, confirming the market’s reversal since the all-time highs.
In September, there was a similar sharp drop, with spot markets bottoming out two weeks later. As a result, the action this month has precedence.
Further data suggest that unspent supply is poised to reach all-time highs, marking the end of a miners’ hodling trend that began in 2020.
In other words, after a new block is successfully mined, miners are not in a hurry to spend their block subsidies.Further data suggest that unspent supply is poised to reach all-time highs, marking the end of a miners’ hodling trend that began in 2020.
In other words, after a new block is successfully mined, miners are not in a hurry to spend their block subsidies.
Macro swaps 21-month bull run for volatility
According to reports this week, macro volatility is expected to persist through 2022, causing concern among investors.
An unexpected spell of bearishness, similar to Bitcoin, suggests that Q4 this year may conclude on a whimper, denying the market its traditional “Santa bounce.”
Both the Coronavirus and political upheaval in the United States are to blame, with one senator rejecting President Joe Biden’s doomed $2 trillion spending plan. Stocks in Asia dipped on the day, and investors were cautious ahead of the U.S. start.
“Investors can expect Covid to remain a major influence in-market performance far into 2022,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management.
“Investors aren’t used to protracted bouts of the volatility after the bull market we’ve had over the last 21 months.”
Schein was referring to the worldwide market rebound that began in March 2020, when a cross-market slump sent Bitcoin to $3,600 lows.
In the midst of it all, the US currency is strengthening, which might provide a new headwind for BTC, which is historically negatively associated with the greenback.
The dollar currency index (DXY), which gauges the strength of the dollar against a basket of key trade partners’ currencies, was at 96.6 at the time of writing, after almost reaching 97 late last week.
GBTC reaches biggest ever discount
To large-volume investors, Bitcoin under $50,000 should appear to be a bargain, but one industry yardstick offers a different tale.
According to statistics from on-chain analytics site Coinglass, the Grayscale Bitcoin Trust (GBTC), the largest institutional BTC instrument, is presently trading with a discount of over 20%.
The market behavior of GBTC, which expects to convert to a Bitcoin spot price exchange-traded fund (ETF) next year, has changed dramatically in the second half of 2021.
According to Cointelegraph, after trading at a premium for the first few years of its existence, the investment fund now provides institutional purchasers “bargain basement” BTC.
The regulatory ambiguity surrounding spot-based ETFs is still a hot topic in the United States. The industry continues to rally behind the issue, lobbying for change in 2022, despite the fact that only futures-based products were approved this year.
Coinbase, a large US exchange, confirmed plans for GBTC conversion last week.
Cold feet freeze over
While there may not have been much in the way of spot price activity over the weekend, it is no comfort for concerned traders.
The Crypto Fear & Greed Index shows that attitude about cryptocurrency is as low as it has ever been. The Index is back in the “severe fear” zone as of Monday, after failing to break even 30/100 throughout December. Fear & Greed measured 84/100 — “severe greed” — at the all-time highs of $69,000 on Nov. 9. However, as prominent trader and analyst Rekt Capital frequently emphasizes, “anxiety precedes financial opportunity.”
“This current BTC downtrend channel reminds me of the downtrending channel BTC established in May,” he continued on Sunday, referring to the events that occurred following the China mining ban when BTC/USD reversed 50% and Fear & Greed bottomed many times at 10/100.
It only took a month for the Index to return to the “extreme greed” zone after that bottoming structure and consolidation.