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Bitcoin (BTC) is lower in a new trading week Monday saw a test of levels below $ 33,000 and the bulls are in trouble.
What could be next? With little bullish voice in the short term, it looks like the cryptocurrency is just not of interest to investors at the moment.
Amid macro market uncertainty, low volumes and claims of a bull market top, Bitcoin has a long way to go to convince the market that the good times are yet to come.
Cointelegraph offers five things to consider when charting what might happen to BTC / USD in the coming days.
Spotlight on the Fed … once again
The main focus of investors across the economy this week is the Federal Reserve.
Following last week’s comments from President Jerome Powell, the US dollar made solid gains as stocks then sold off massively as market participants repositioned themselves. The Dow Jones, for example, fell 3.5% in one day, its worst since last October.
The volatility arose because Powell hinted that the Fed may soon begin to reduce its level of market intervention. This has become standard practice as part of its response to the coronavirus and the economic shutdowns that have followed.
Related: 4 Reasons Paul Tudor Jones’ 5% Bitcoin Exposure Advice Is Hard For The Deep Sea
A reduction in purchases, which CNBC says currently stands at around $ 120 billion per month, therefore presents a notable change.
Powell will speak again on Tuesday, this time in the Senate, and it is believed he will give more information on the news he extensively described last week.
I’m certainly very interested in what Powell has to say, said Peter Boockvar, chief investment strategist at Bleakley Global Advisors on Friday.
They’re all going to give us now the fine print of what was in the statement and what Powell said.
Should any surprises arise, the volatility that has characterized the past few days could continue. The good news for the dollar, as Cointelegraph often notes, tends to be bad for Bitcoin price action.
I didn’t have good vibes from the BTC chart when I woke up, summed up popular trader Crypto Ed at the start of the week.
One of the reasons is the sudden strength of IMO in the DXY since last week.
He added that the dollar may continue to put pressure on Bitcoin until the U.S. Dollar Index (DXY) hits around 94 from its current levels of 92.2.
1-day candle chart of the US Dollar Currency Index (DXY). Source: TradingViewChinese Bank Removes Anti-Crypto Statement In Minutes
It’s not good for Bitcoin spot price action as the week begins, but whose fault is it?
Besides the Fed, another economy is once again exerting its influence on crypto markets, this time more directly: China.
In a statement, the Agricultural Bank of China, the country’s third-largest lender, explicitly stated that its services should not be used for cryptocurrency-related transactions.
The Agricultural Bank of China has announced that it will not participate in virtual currency transactions and related activities, China-oriented news resource 8btc reported, translating the original document for social media users.
Client accounts participating in such activities will be closed and client relationships will be terminated.
The result of its publication was instantly recognizable. Bitcoin fell over $ 1,000 in a matter of minutes before rebounding to $ 33,000.
Such behavior is far from surprising, but patience is now running out in the face of instinctive reactions to China. The last episode turned out to be a case in point, the bank deleted the statement shortly after it was posted, but the damage was done.
Quick explanation for those who are confused regarding AGbank
Agricultural Bank of China released announcement that all crypto customers will have their accounts closed
15 minutes later it looks like they deleted the notice
2021 gets tough by the world’s third largest bank pic.twitter.com/qXax70lqgA
db (@ tier10k) June 21, 2021
Overall, nothing has fundamentally changed in the Chinese government’s stance on Bitcoin since its controversial trade ban took effect in September 2017.
Half of the Bitcoin network has now been shut down by China. Bitcoin hash rates at mid-2020 levels, noted Charles Edwards, CEO of asset manager Capriole, in a series of tweets about the mining crackdown that was the previous source of Chinese price pressure.
Others have argued that Bitcoin has gained new opportunities through punitive measures by government banking and mining, and that the network will thrive through the use of more user-friendly and trusted jurisdictions.
The Chinese-dominated Bitcoin mining era may be coming to an end. Alex Gladstein, director of strategy at the Human Rights Foundation, commented on the farewell message from a minor in Sichuan province.
It will be a source of rich irony for future historians to teach that the world’s free, open and decentralized monetary network was secured in its infancy by individuals within a repressive dictatorship.BTC / USD 1-hour Candle Chart (Bitstamp). Source: TradingViewBitcoin’s “Rick Astleys” are back
As the $ 30,000 support moves closer and closer, concern and confusion characterizes the reactions to BTC / USD performance on Monday.
This is because the indicators of a bullish reversal are there, but the price has so far done the opposite.
One of them is the financing rate, which resolutely favors the bulls. At the time of writing, rates are negative on all stock exchanges, a classic sign that a hike is underway.
Movements among seasoned hodlers confirm the trend, with coins unearthed even at levels before Monday’s drop.
Oh my God, Rick Astley is back, statistician Willy Woo said alongside a chart showing Bitcoins decreasing the cash supply. Rick Astley refers to a popular metaphor for strong hands.
The coins return to the HODLer who never desert their BTC.Bitcoin cash supply change board. Source: Willy Woo / Twitter
Analyst William Clemente added that this re-accumulation echoed what happened in 2013, when Bitcoin experienced two bullish phases separated by a major retracement.
HODLers stacking BTC heavily here, he confirmed, noting the net position change data.
Bitcoin Net Position Change Chart. Source: William Clemente / Twitter Fundamentals echo uncertainty
China has had a significant impact on the fundamentals of the Bitcoin network.
As Edwards noted above, thanks to a large shutdown from miners, the hash rate has dropped significantly from its peak just a few months ago.
It’s troubling in the short term, especially for those who adhere to the classic mantra of price follows hash rate, but it’s necessarily short-lived.
Related: Predicting the Price of Bitcoin Using Quantitative Models, Part 4
Thanks to the inherent configuration of Bitcoins, there is always an attractive opportunity to mine somewhere under different circumstances. A miner’s rout prompts to participate in the network due to the hash rate and, therefore, the difficulty, on the downside.
The cost of participation thus decreases, and mining becomes a viable proposition for more and more potential entities.
Meanwhile, Adam Back, CEO of Blockstream, tries to point out that China’s impact on the hash rate was at most about 39% from the top. The numbers vary widely as the hash rate is an estimate and ultimately cannot be definitively measured.
PSA to lead the next round of Chinese confused hashrate FUD: The hashrate has NOT halved, you are looking at VERY inaccurate data. 7 day peak 130 PE, current 98 PE maybe -25% drop. and ATH peak 160 EH vs 98 = -39%. please. get. your. basic. facts. right. when reporting. thanks pic.twitter.com/Add83UvIj3
Adam Back (@ adam3us) June 20, 2021 Is it really that bad?
Not everyone thinks the outlook for Bitcoin is all bad news.
Some comparisons to previous bull market years place 2021 firmly within the framework of standard price performance.
As popular Twitter analyst Root pointed out over the weekend, on-chain indicators are flashing oversold rather than bearish despite current external pressures.
So bearish today even though we are still moving around the same range (~ 35k) totally in line with previous bull markets! #Bitcoin pic.twitter.com/4Ivn3oVUhJ
Racine (@therationalroot) June 20, 2021
Others, like the creator of the stock-to-flow model PlanB, are even bullish in virtually every time period beyond the daily chart.
As Cointelegraph reported, its worst case scenario is now $ 135,000 for BTC / USD by the end of this year.
Stock-to-flow has welcomed all of the price surprises of 2021 and remains valid.
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