Fearful Markets – 5 Things To Look For In Bitcoin This Week

Bitcoin started a new week as traders were still taking the brunt of the recent sharp decline, which brought the price down to $ 41,900.

The humble recovery move is currently struggling with massive resistance and the first level at $ 50,000.

Given the extreme fear in the markets, analysts now assume that the end of the fourth quarter of 2021 is unlikely to reach the predicted peak of the recession.

Plus, there are also people who fear that Bitcoin will drop lower before they find a bottom and actually bounce back.

Will all of this speculation happen in the last few weeks of this year? The article analyzes 5 factors that need to be monitored over the next week.

“Price increase” in the first quarter of 2022?

After hitting nearly $ 50,000 earlier this week, BTC is now back at around $ 48,000 – still up 16% in a week.

Compared to the all-time high of $ 69,000, the price is currently 30% lower – a respectable, but by no means record-breaking level for Bitcoin.

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After the price predictions, attention is now turning to resilience as it moves into 2022.

“My basic prediction is to consolidate / trade margin for the remainder of the year to create negative funding / arbitrage before it becomes bullish in the first quarter,” William Clemente predicted in a panel discussion on Twitter.

BTC / USD 4-Hour Candlestick Chart | Source: TradingView

The sustainability of the price rally will depend on the futures market after a large number of positions have been liquidated.

1 day change open interest in futures | The source: Twitter

Friday’s events pushed the Open Interest (OI) of Bitcoin futures back to levels last seen in September at similar prices during the recent decline.

Bitcoin Futures Open Interest Chart | Source: Coinglass

New CPI data, new inflationary catastrophe

Macro markets are also struggling, but new consumer price index (CPI) data this week could fuel the fire.

The US CPI is expected to beat the shocking 6.2% year-over-year in October in November.

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“Economists, on average, forecast next week’s CPI for what happened in November at 6.7% year over year (up from 6.2% last month) and for one month at 0.7% (down from 0.9% last month) % last month)”.

The economists’ predictions were noted by Lyn Alden, financial commentator and founder of Lyn Alden Investment Strategy. She added that home construction, a slower indicator that didn’t show up in the last month, is likely to be a factor in these results.

Inflation hit the headlines again last week after Federal Reserve Chairman Jerome Powell suggested that the term “temporarily” no longer applies.

Bitcoin responded immediately. As a result, the bulls will be keeping an eye on the new CPI data in hopes of a similar reaction to October.

Despite the recent volatility, the leading cryptocurrency is arguably the best possible solution to protecting purchasing power, especially since inflation is actually much higher due to the assets that do not count towards the CPI.

“Everyone experiences double-digit inflation when measured correctly and needs Bitcoin more than they realize,” said Michael Saylor, CEO of MicroStrategy, a well-known CPI critic in the Bitcoin world. warning At the end of last month.

Meanwhile, the central bank’s money printing practice was recently criticized by the head of another sovereign state.

“Can you stop printing more money? You will only make things worse. It is thoughtless, “said Nayib Bukele, President of El Salvador, in response to Powell’s” no longer passing “speech.

Loophole in futures contracts

According to analyst Michaël van de Poppe, Bitcoin faces a “huge” futures void this week – a void so large that it cannot be filled immediately and should not be ignored by traders.

Although derivatives traders added downward pressure over the weekend, futures could be a target for positive momentum.

CME futures closed at $ 53,545- $ 5,000 above the spot price at press time on Friday.

Traditionally, BTC could also bounce back to “fill” that void, paving the way for a recapture of at least $ 50,000 in support and possibly even a market cap of $ 1 trillion.

“By the end of today, there will be a large CME gap at $ 53,500. Very often, almost 99% of the time, they’ll be closed at some point. At least an important level to watch out for in the coming weeks if the market for Bitcoin continues to rise, ”predicted van de Poppe on Sunday.

1-hour CME Bitcoin futures show gaps | Source: TradingView

Meanwhile, the downside successfully closed the previous gap that appeared in late November.

“There was little volatility in the market over the weekend, but I expect there will be real volatility at the start of the week and the resumption of US futures,” added van de Poppe.

Sentiment hits 5-month low, reminiscent of March 2020

Even if prices fluctuated for only a few months in September, the turbulence of the past week reminds many people of the events of March 2020.

Back then, the coronavirus caused unrest, leading to a significant sell-off of BTC, which resulted in a 60% price drop in just one week.

One key difference is the composition of the market: 18 months ago traders had less leverage and their impact on the market was much less.

The source: Daan Crypto Trades

Danny Scott, CEO of the CoinCorner exchange, said on a number of tweet Saturday:

“This decline in Bitcoin is not being driven by sentiment, but by gamers using leverage and being liquidated. The mood is still very optimistic. ”

Scott argues that while the sentiment remains intact, time is weakening sentiment and hopes 2021 will end in a boom rather than a crash. There was a slow recovery from the lows in March 2020, only to rise rapidly about eight months later.

Meanwhile, a look at the Fear and Greed Index showed that many participants were shocked. 16 out of 100 marked “extreme fear” and the lowest score since July.

Van de Poppe added to this indicator:

“The mood of fear has not been so low since the crash in May, comparable to a funeral. I love it”.

Fear and Greed Index | Source: alternative.me

Hashrate is at an all time high

Spot trader panic and the headlines of the mainstream press about the end of the world had no impact on Bitcoin’s critical network activity, underscoring the miners’ long-term view.

Even a drop to $ 42,000 has no impact on performance and hashrate – a measure of network-specific computing power – remains near all-time highs.

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“Hashrate highest since April”.

Different estimates give different definitions of the highest bitcoin hashrate ever. follow MiningPoolStatswho have favourited hashrate holds its all time high.

Bitcoin Hash Rate Chart | Source: MiningPoolStats

Blockchain.com’s 7-day average is now 162 exahashes / s (EH / s) – 18 EH / s less than the record before China’s May raid.

Bitcoin 7 Day Average Hashrate Chart | Source: Blockchain.com

However, the prevailing trend is that spot price action inevitably follows hashrate trends.

The difficulty of keeping Bitcoin in balance no matter how the hashrate changes will now increase by less than 1% over a period of 6 days. Previously, a decline in the index was assumed.

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