Bitcoin (BTC) is starting a new week by returning from a new multi-year low amid renewed sentiment high jitters.
After dipping below $21,000 over the weekend, the largest cryptocurrency is consolidating around 10% less than a week ago, and the fear across the cryptocurrency markets is clearly visible.
While some are calling for new lows and others are warning of tough times ahead, bulls have plenty to deal with on both the long and short time frames.
The annual US Federal Reserve symposium in Jackson Hole is scheduled for this week, and September should already be something of an event for inflation and related price macro.
This could mean further volatility in risk assets during and before, which investors weary after last week’s breakout in BTC/USD are unlikely to appreciate.
At the same time, miners are giving strong signals that the worst is over, with the hashrate starting to rebound after a rare “capitalization” phase.
With this in mind, Cointelegraph takes a closer look at five market topics relevant to Bitcoin traders in the coming days and beyond.
All eyes are on Jackson Hole
The US Federal Reserve is in the driver’s seat again this week regarding a potential macro price trigger for risky assets.
Following last week’s Federal Open Market Committee (FOMC) meeting, Fed officials, along with key banking figures from around the world, will gather for the annual Jackson Hole Symposium August 25-27.
This year’s meeting comes at a critical time for markets in the United States and elsewhere. Inflation under the Fed’s jurisdiction appears to have begun to cool, while the opposite is true elsewhere.
The latest US inflation data won’t be released for several weeks, but that won’t stop Fed Chairman Jerome Powell from giving strong signals on how the Fed will respond, as well as an expected position on future economic policy.
With this in mind, volatility could easily increase before and during the event, making Jackson Hole a key item to watch on traders’ radars.
“They’re so determined to do this, partly because they did it last year with the whole ‘transitional’ thing, and they realize that the only thing they can do now is tighten policy, which inflation will slow,” Kevin Cummins. , chief US economist at NatWest Markets in Stamford, Connecticut, said Bloomberg.
Under these conditions, it remains to be seen whether the market will move towards a further 75 basis point hike in the funds rate in September or a lower hike of 50 basis points.
In a preview of his comments Jackson Hole that spreads online, Bank of America said it would continue to look at rate hikes of 50 basis points in September and November, as well as an additional 25 basis point hike in December.”
Rate rises in themselves make for riskier assets and, in turn, challenge bitcoin and its attempt to escape high correlation with asset classes such as US equities.Federal funds rate chart (screen). Source: Federal Reserve
BTC set for ‘ugly’ semester
Bitcoin managed to avoid extreme volatility over the weekend, but still recorded a new low for August as low-volume trading conditions over the accentuated weekend market moves.
After the sudden drop on August 19, BTC/USD spent the following days looking for a low in an overall consolidation pattern, which continues at the time of writing.
This low was followed by a trip to $20,770 on Bitstamp, with bitcoin then adding $1,000 before returning to trade roughly between the two values.
The weekly close at $21,500 was troubling, marking the lowest since the week of July 18 after last week’s bullish candle costing nearly $3,000, or 11.6%.
It looks like $BTC is getting ready to drop back below $20k soon. Don’t be caught off guard. — Ben Armstrong (@Bitboy_Crypto) August 21, 2022.
While fears of another collapse were evident among commentators, others argued that the conditions did not uniformly indicate further difficulties.
For Cointelegraph contributor Michaël van de Poppe, BTC/USD could cap any declines near the August 19 CME futures, which sits around $21,200. More challenging for the majority of the market, he suggested, would be gains, given the overall bias for the downside to enter.
“Probably around the CME open, we will see the markets fall all the way to $21.2,000, because Friday is close, and then it will be fine,” he said. declared to Twitter followers over the weekend:
“I’m still not sure we’ll see new lows. The entire period of accumulation and the sharp correction on Friday is causing panic. The pain is increasing. »
In contrast, Brian Beamish, founder of the educational series The Rational Trader, left social media with no illusions about how the rest of 2022 should unfold for bitcoin.
“The next 12 to 19 weeks are going to be ugly”, can we read in a tweet.
“Once it’s done, the floor for this cycle should be in place – then we’ll start again. »
Beamish built on the experience of two previous cryptocurrency bear markets, with a comparative chart of price action suggesting that the true macro bottom was far from over for BTC/USD.
Equally confident of a longer-term recovery, analyst Matthew Hyland said traders should not lose faith.
“The structure of bitcoin in the coming weeks/months should not scare you. It will create a lower high, a double bottom, or a cycle low,” he said. abstract.
“The end is near. »
Hash tapes indicate that miners are outside the capitulation phase
Miners are a group of participants in the Bitcoin network for whom it seems clear that the end of hard times is near.
Despite the latest price crash, on-chain data now shows that bitcoin miners en masse have emerged from a period of more than two months of “capitation”.
According to the hash tape metric, which uses two moving averages of the hash rate to determine trends in miner participation, a rebound is in the works.
This move was long overdue. At the beginning of August, the mining company Blockware predicted that the capitalization phase of the hash ribbons would end this month or next month.
The latest change was noted by Charles Edwards, CEO of asset manager Capriole, who compared this year’s selloff to others in bitcoin history.
“The bitcoin miners’ surrender officially ended today, making it the 3rd longest surrender ever at 71 days,” he said. writing in a Twitter thread:
“This cap zone was longer than 2021, and only two days shorter than that of 2018 when the price touched $3,100. »
A glance at hash rate estimates from the MiningPoolStats monitoring resource shows that a crowd of over 200 exahashes per second (EH/s) has probably been started in the past few days.
“Historically, Bitcoin miner sales have hit rock bottom prices and have been great buy signals,” Edwards continued, echoing the classic Bitcoin market mantra: “price follows hash rate.”.
“Capitulations of miners that occur late in the cycle (at least 2 years after the half) and after that, cycle peaks are the most profitable long-term signals (ex: 2012, 2015, 2018). »
Exchange balances hit a 4-year low
Price struggle over short periods has become a non-issue for buyers this time.
Behind the scenes, investors, instead of fleeingfrom the exposure of BTC, rushed into the market at a significant speed in the last few days.
According to data from the CryptoQuant chain analysis platform, on August 18, bitcoins available on 21 major exchanges fell from 2,342,662 BTC to 2,309,727 BTC on August 22.
In four days, exchange users withdrew more than 30,000 BTC from their accounts.
Glassnode, another data company, has added that the combined current balance on the exchanges it monitors hit a new four-year low on August 22.
For comparison, in August 2018, the BTC/USD pair was climbing towards $7,000, but was still several months away from its bearish floor of $3,100.
Sentiment indicator drops 40% in one week
Compared to before the price crash, sentiment is not what it was on cryptocurrency.
Also Read: Here Are 5 Cryptocurrencies With Bullish Setups That Are About To Break Out
While exchanges are seeing an acceleration in removing BTC from their books, the overall picture is now one of “fear” for bitcoin and altcoin investors.
According to Crypto & Saint Fear Indexwhich uses a series of factors to give a normalized score of market sentiment, “great fear” is just a step away.
At 29/100, the index is four points away from returning to its highly feared range, having hit 27/100 over the weekend.
The latest figure represents a 40% drop in one week – seven days earlier the index was at 45/100, recording the most optimistic levels since April.
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