5 things to watch in Bitcoin this week

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Bitcoin (BTC) starts a new week in known territory, crucial support is back, but the bulls have yet to break through. Could that soon change?

After recovering $ 33,000 on Friday, BTC / USD has retained the trade corridor it was in before last week’s brief volatility.

This involved a drop to $ 32,000 as a result of sudden short positions building up on the Bitfinex exchange.

However, the impact was only temporary and the weekend hit highs of $ 34,600 on Bitstamp.

Cointelegraph presents five factors to consider when considering what Bitcoin might do next.

Stocks explode as USD hits classic resistance

With stocks on the rise as usual, there appears to be little friction that could cause issues for cryptocurrency gains.

As analysts increasingly warn of a decline going forward, the mood for equities remains firmly supported this week.

There seems to be a complacency that Goldilocks are not only alive and well, but growing stronger by the day, Simon Ballard, chief economist at First Abu Dhabi Bank, told Bloomberg.

Unfortunately, we have to recognize that in the future, the longer the rates stay where they are, the more we look at going down, the more severe and acute the reaction could be.

The US dollar, however, could provide more clues.

Looking at the US dollar exchange rate index (DXY), which measures the strength of the US dollar against a basket of 20 trading partner currencies, the picture shows some familiar resistance is returning.

At the end of last week, an analyst argued that the DXY needed to move from its current level of 92.2 to around 94 in order to see major resistance come into play, which would boost Bitcoin.

On Monday, however, DXY is still recovering from the losses it suffered at the end of the week, also battling an area that has kept it in check in the past.

The inverse correlation between Bitcoins and DXY has also recently come under the microscope, as BTC increasingly carves its own way in the macro environment.

1-day candle chart of the US Dollar Currency Index (DXY). Source: TradingViewBitcoin’s Price Does All It Takes

Looking at the spot market, traders are bullish on the prospect of $ 33,000 returning and holding on after a brief bearish spell last week.

After reaffirming the level, trader and analyst Rekt Capital explained on Sunday that BTC / USD is back in the low end of an established range.

BTC is returning above the orange trendline, he said in a later update alongside a chart showing the current landscape.

$ BTC is doing whatever it takes to recover this trendline as support. Recover the trendline for support and it will be a big step forward towards a challenge for a breakout of that blue wedging structure. BTC / USD scenario starting July 12. Source: Rekt Capital / Twitter

Monday continued the trend, with Bitcoin trading at around $ 34,350 at the time of writing.

Bitcoin is trying to rally and close an 8th consecutive week above 34k with a long wick down. Lots of demand still, added fellow trader Scott Melker.

Last week, targets of up to $ 39,000 were slated for Bitcoin if the bulls managed to attack the resistance of $ 35,500 and continue, which ultimately did not happen.

Fundamentals support their comeback

While last week’s price action disappointed, under the hood Bitcoin worked on a bigger rally.

Data from monitoring resources on Monday shows the network difficulty and hash rate are stabilizing, and as a result, the worst of the recent mining turbulence may be over for good.

After his record drop earlier in July, the difficulty was previously on track to beat even his last performance and lose another 28% or more.

In the meantime, however, a recovery has started to take place. Now the next difficulty adjustment should only see a 10% drop if the price action stays near current levels.

With the blocks coming to a fast phase, the next difficulty adjustment is now estimated at ~ -7.5%, but it seems to me that the hash rate is coming back pretty quickly for now, angel investor Klaus Lovgreen summed up this that day.

Bitcoin network difficulty table. Source: Blockchain.com

The changes are a testament to the Bitcoin network’s ability to balance itself without any outside help whatever the circumstances, the difficulty adjusts to accommodate any given eventuality.

The estimated hash rate remains only slightly above its recent lows of 83 exahashs per second (EH / s), but even here stability and a slow return to normality are visible.

As Cointelegraph reported, both measures are expected to make further gains as mining power returns to Bitcoin after moving out of China. The timeframe for that to happen, on the other hand, is one to guess.

Grayscale unlocks 40,000 BTC

One event that is on the radar of all Bitcoin market participants this month is the multiple BTC unlocks at institutional giant Grayscale.

As Cointelegraph explained, the Grayscale Bitcoin Fund (GBTC) is expected to release over 40,000 BTC in the coming weeks, this having been subject to a six-month blocking period.

Opinions differ as to its impact on the market. Some fear the selling pressure will increase (and then go to virtually zero once the unlocks are complete), while others argue that the spot markets will not be affected overall.

Sunday July 18 is particularly interesting, with an unlock worth just over 16,000 BTC.

When GBTC shares unlock and sell, GBTC Premium drops (the stock price drops relative to BTC in the trust), statistician Willy Woo commented last week.

Investors now have more incentive to buy GBTC shares rather than BTC, this diverts some of the buying pressure in the BTC spot markets. This is the bearish GBTC unlock schedule chart. Source: BybtBullish price metric is getting closer to launch pad

Need a reliable hopium for the coming week? Bitcoin market analysis has the answer.

On Monday, attention turned to a nifty indicator from the on-chain data service CryptoQuant, which has historically captured all of the major BTC prices over the past two years.

Dubbed the Taker Buy Sell Volume / Ratio, it tracks the trade data to be produced as a guide to when to hod and when is a good opportunity to take profit during a local market cycle.

Right now, the ratio appears to be forecasting another BTC / USD increase, leading to a classic profit point.

Analyst Cole Garner even pointed out what to expect if history repeats itself. He noted, however, that the trigger phase where the ratio hits the upper green channel has not yet taken place.

Buy the incoming signal, he commented nonetheless.

BitcoinTaker Annotated Chart Buy Sell Volume / Ratio. Source: Cole Garner / Twitter

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.

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