BTC ‘likely’ to repeat Q4 2020 move — 3 things to watch in Bitcoin this week
Can old resistance below $50,000 ultimately fall as Bitcoin (BTC) opens a new week facing many challenges but with strong internal support?
Many people are frustrated by a downturn that is already approaching its third month, but conditions may soon be favorable for a new attack against opportunistic bears, according to an increasing number of analysts.
There are lots of potential hazards in store, especially with inflation on the rise and US politicians ready to make the Bitcoin mining issue public this week.
Nonetheless, it appears that Bitcoin has reached the point where it may produce a classic surprise when the majority of the conventional economy does not expect it.
When analyzing BTC price action in the coming week, Bitdenex looks at three elements to keep in mind.
Bitcoin retains key weekly close level
As the week begins, Bitcoin appears uninterested in confronting even local resistance levels.
BTC/USD is putting in lower lows on short timeframes while avoiding important zones around $44,000, following a rangebound weekend with little unusual market movement.
With Wall Street off for the holiday, Monday could be more of the same until the markets provide guidance.
Bitcoin, on the other hand, managed to end the week at precisely the pivotal level highlighted by trader and analyst Rekt Capital as critical for sustaining upward momentum.
“A Weekly Close above $43100 (black) would be a positive indicator of confirmation for BTC to go upward from here,” he said on Sunday, with a price chart to go along with it.
“$BTC would confirm a re-entry into its $43100-$51800 range by turning black into support on the Weekly.”
Following that, the largest cryptocurrency fell, with the local floor for Monday at $42,337 on Bitstamp at the time of writing.
Crypto Ed, a popular trader, is also cautiously hopeful, predicting a repeat of last week’s run above $44,000, which bears subsequently suppressed.
“Although it is still early, this appears to be the beginning of a continuation of last week’s move. Crossing my fingers! “In part of his most recent Twitter update, he summarised.
Congress to discuss “cleaning up” crypto mining
This week, the “scene is being set” in a variety of ways as the theme of inflation returns to haunt both markets and politics in the United States.
The highest consumer price index (CPI) print in 40 years is already affecting President Joe Biden’s approval ratings, amid a new wave of articles about how inflation is affecting consumers.
According to Goldman Sachs, reining in the 7% year-over-year CPI increase might result in the Federal Reserve enacting four crucial rate hikes in 2022 alone. As a result, consumers who are already under stress are put under even greater strain.
“In the following weeks, the stage will be prepared,” Pentoshi asserted.
Closer to home, US lawmakers will debate the purported environmental consequences of bitcoin mining this week.
With the United States accounting for a large portion of the Bitcoin hash rate, any hostile policies will weigh more than most when it comes to public opinion. No one wants a recurrence of the May 2021 China migration, which would have a negative impact on hash rate and network security.
As reported, the hash rate is now back to all-time highs, totally recovered from the events of last year.
On Thursday, the Oversight and Investigations Subcommittee will hold a hearing titled “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains.”
Bitcoin “a bonfire covered in gasoline”
Bitcoin volatility is at multi-year lows, which is good for the currency’s acceptability as a mainstream asset but unlikely to remain.
Bitcoin is at its least volatile since November 2020, according to the Bitcoin Volatility Index, which evaluates the standard deviation of daily BTC values over the last 30 and 60 days.
As a result, current price swings are comparable to those seen when BTC/USD entered price discovery after breaking above its all-time high of $20,000 in 2017.
The scenario is now set for a possible replay of those events for trader, entrepreneur, and investor Bob Loukas.
“Remember when everyone was buying BTC options for the super cycle in September/October? He said, “Those are definitely down 80+ percent,” implying that derivatives traders who bought before the current $69,000 all-time highs are going to be disappointed.
“The decline in volume indicates a time of consolidation, with a likely similar outcome leading up to the October 20th move.” However, I believe there is still time to grind in this BTC range.”