Bitcoin (BTC) Starts a New Week in an Uncertain Place Against Uncertain Times – Is the $40,000 Level Already a Resistance?
The largest cryptocurrency just closed a fourth consecutive weekly red candle, something that had not happened since June 2020.
As doubts about the market’s macro outlook remain the norm, It seems that there is not much to console the bulls with as the week progresses.
After losses of USD 4,000 in the last four days, price targets are now focused on retesting liquidity levels towards $30,000.
However, not everything in space is pessimism: long-term holding companies and key players such as miners are showing a more positive stance when it comes to bitcoin as an investment.
With this in mind, Cointelegraph takes a look at the forces at play when it comes to shaping BTC’s price action in the coming days.
Asia’s woes outweigh French election relief
The key external event for risk assets at the start of the week is the French electionwhich was won by incumbent Emmanuel Macron.
Macron’s second term, a sigh of relief for market players worried about a surprise win by far-right rival Marine Le Pen, it is expected to lift French stocks in particular at the open on April 25 and the beleaguered euro along with them.
The European Union, like the United States, faces a powerful cocktail of inflation and falling bond marketsand the European Central Bank (ECB) has not yet taken decisive measures to raise interest rates or reduce its balance of almost USD 10 billion.
Bitcoin price has not been affected by Macron’s victory, and risk assets are already dealing with a decline in Asia on April 25, as COVID-19 in China shakes sentiment.
Hong Kong’s Hang Seng Index is down 3.5% so far on the day, while the Shanghai Composite is down 4.2%.
Since cryptocurrencies are highly correlated to the movements of the stock markets today, if the behavior of Europe and the United States were repeated, there would be clear directional signs.
“The concern is that the support policies that the government has already put in place may not be effective due to the policies taken against Covid, since the activities are tenuous,” he told him. said a Bloomberg Jenny Zeng, co-head of Asia-Pacific fixed income at global asset management firm AllianceBernstein.
Even before the April 25 losses, last week was already a painful one for equities, as market commentator Holger Zschaepitz pointed out.
“Global stocks lost $3.3 million in market cap this week as US equities, after peaking earlier today, saw a steady declineas investors seem to reconsider why they have been buying risky assets in a world filled with so much uncertainty,” said to Twitter users on April 24:
“World stocks are worth $107.6 trillion, equivalent to 127% of GDP.”
In another post it pointed what the so-called Buffett Indicator – the ratio of the total valuation of the US stock market to GDP – was still in what was called “problem” territory, above 100%.
Dollar strength returns
One component of the macroeconomic picture that is firmly in bullish mode – much to the chagrin of crypto traders – is the US dollar.
The US dollar money index (DXY), after reeling from two-year highs last week, looks set to continue its uptrend.
At 101.61 at the time of writing, the DXY is challenging its performance since March 2020when the fall caused by the Coronavirus caused assets to fall around the world.
The strength of the dollar has rarely been a blessing for bitcoin, and the inverse correlation, although criticized by someit seems to be firmly in control this month.
“Looks like the developer of DXY announced a token burn or something,” joked popular crypto trader ed in response to the last move.
For Preston Pysh, host of Investor’s Podcast Network, something doesn’t seem right.
“The Bank of Japan is implementing Yield Curve Control as the Yen slumps, and the Fed is poised to rise 50bps as the dollar is hitting new highs,” warned On April 25.
“It seems that something is about to break…”
The weekly chart shows the fourth consecutive red candle
On April 25, bitcoin is not looking rosy. While the weekend managed to avoid significant volatility, the weekly close remains disappointing as it sits just below last week’s level.
This, however, means that there are now four red candles in a row on the weekly chart, something that Bitcoin has not seen. from June 2020, as shown by data from Cointelegraph Markets Pro y TradingView.
The downtrend then continued overnight to see the BTC/USD pair drop below $39,000, a position it holds at the time of writing.
Traders are watching various chart features for clues to the pair’s direction, but theBullish signs are decidedly scant.
For popular trader and analyst Rekt Capital, it is the Ichimoku cloud hanging over the pair that could cause further losses for bitcoin.
During Retest 1 #BTC fake-brokedown from the Cloud before reversing
During Retest 2 $BTC wicked sub-Cloud before reversing
Now retest 3 is in progress
BTC needs to reclaim Cloud as support
It’s crucial BTC doesn’t flip Cloud into resistance to avoid downside#Crypto #Bitcoin https://t.co/dDLtWwzuTn pic.twitter.com/NQfEbS3nAH
— Rekt Capital (@rektcapital) April 24, 2022
During Retest 1, BTC falsely dropped from the Cloud before reversing. During Retest 2, BTC absorbed from the Cloud before being reversed. Now retest 3 is in progress. BTC needs to recover the Cloud for support. It is crucial that BTC does not turn the Cloud into resistance to avoid a drop.
For his part, the popular analyst Cheds, author of Trading Wisdom, noted a possible cross below the 200-period moving average on the three-day chart.
This would be significant, he argued over the weekend, as the last time this happened after a bull run was the bottom of the 2018 bear market.
“It’s not a prediction, it’s just an observation,” warned.
On the topic of December 2018 and its $3,100 low, Matthew Hyland, known as Parabolic Matt on Twitter, produced more comparisons between that period and current BTC price action.
On longer time frames, he said, holding the $37,600 level now is “crucial.”
#Bitcoin comparison of the 2018/2019 Bear Market Bottom compared to the current structure BTC has been in since January of this year
✅Similar Time Frame
✅Series of Lower Highs and Higher Lows
✅Creation of a higher high
✅Pullback after first higher highCrucial $37.6k Holds pic.twitter.com/kzQhvZUTMr
— Matthew Hyland (@MatthewHyland_) April 23, 2022
Bitcoin comparison of the 2018/2019 bear market bottom with the current structure that BTC is in since January of this year
✅Similar time frame
✅Series of lower highs and higher lows
✅Creation of a higher maximum
✅Pullback after the first higher high
It is crucial to be able to hold the $37,600 level.
On April 25, Crypto Tony, another Twitter expert, added: “I am looking for that sweep to the downside, at which point I will look for signs of a relief rally.”
The Hodlers set a new record
The “choppy” nature of price action on the lower bitcoin time frame makes it an uninspiring operation for anyone who is not an experienced player.
Therefore, It’s no wonder that most investors choose to stay on the sidelines and do what they do best.
This is now reflected in the on-chain data, which shows that the proportion of bitcoin supply that has been dormant for at least a year is now at all-time highs.
Citing figures from on-chain analytics firm Glassnode, economist Jan Wuestenfeld noted that this means that the offer in general is getting “older”. Proportionally more coins are held for longer than are spent.
According to Glassnode, supply that has been inactive for a year or more has topped 64% for the first time on record.
The percentage of the #Bitcoin supply last active 1+ years ago just crossed 64% for the first time ever! The percentage of old coins continues to trend up. ↗️ pic.twitter.com/Zyj0hyqFti
— Jan Wüstenfeld (@JanWues) April 24, 2022
The percentage of bitcoin supply last active over 1 year ago has just surpassed 64% for the first time ever! The percentage of old coins continues to trend upwards. ️
HODL Waves, a Glassnode indicator that sample holding coins of all ages confirms the trend. Since December 2021, the 1-2 year supply band has increased more than any other: from less than 10% then to almost 15% as of this week.
The 3-5 year band of currencies that have been held has also increased its presence in the first quarter.
The fundamentals keep pointing to the moon
It is not just casual miners who are stubbornly refusing to reduce their exposure to BTC despite the bleak outlook.
A look at the fundamentals of the Bitcoin network shows that miners are also anything but bearish when it comes to investing.
A frequent story this year, but nevertheless an impressive one, given that the price is moving in the opposite direction, is that Bitcoin network hash rate and difficulty should hit new all-time highs this week.
Depending on price action, the difficulty should conform around 2.9% within two days, setting a new record of 29.32 billion in the process.
Underlining the competition to participate in mining, the difficulty is coupled with the hash rate – an estimate of the processing power devoted to the blockchain – which is already at an all-time high.
Estimates vary by source, but the raw data from MiningPoolStats underline trending “only up” when it comes to hash rate, a key factor, according to some, to the subsequent bullish price performance.
The trend of increasing hash rate is nothing newsince it is anticipated for a long time what would happen because investments continue to grow.
As Cointelegraph previously reported, in early April, 20% of Bitcoin mining was carried out by listed companies.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investments and operations involve risk, so you should do your own research when making your decision.
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