Let’s examine 5 factors that will affect Bitcoin price performance this week, as Easter causes pain for Bitcoin bulls. Analyst Willliam Suberg discusses the market climate for the coming days…
Easter holiday has resulted in Bitcoin (BTC) under $40,000
It is a frustrating time for Bitcoin spot investors. Without traditional market guidance, Bitcoin is facing four days of “off-the-clock” trading, meaning liquidity is weaker than usual. This has a habit of fluctuating any sudden price action and causing larger-than-normal knock-on effects. For example, if buyer support is withdrawn at a certain price, when there are fewer participants and less cash, panic can occur more easily and less cash is available to mitigate it.
Such a scenario played out several times over the Easter weekend. While trading mostly sideways, BTC/USD experienced spikes as it struggled to recover. On Sunday night, the market rallied above $1,000 in a matter of minutes, including a loss of $800 on a single one-minute candle. However, $39,000 support has been lost, according to data from on-chain data source Material Indicators. On Friday, he noted that the indicator’s buyer support block is just below the spot price, which is currently absent and opens the possibility of a much deeper pullback, potentially involving Bitcoin’s 200-week moving average (200 WMA).
200 WMA is currently just over $21,000, according to data from TradingView is on. The level is quite important, in bear markets it is never broken by the spot price and has been rising steadily throughout Bitcoin history. Meanwhile, Material Indicators continued in Twitter comments that “50, 100 and 200-Week MA are key levels”:
Bull Markets happen when the price is above the 50 WMA. 100 could give a relief rally, but it has never been held in a downtrend since 2011. The 200 WMA has always marked the bottom + where it converges with the lifetime support channel.
100 WMA “help rally” at $35,740 as of Monday.
Few seem surprised to find that despite potentially unreliable holiday price performance, the crypto markets are collectively poised for new losses. Popular analyst Pierre flagged multiple targets hit in altcoins on Monday as BTC wobbled, and previously warned that such a bearish move would be a “nail in the coffin” for weaker tokens.
Macro has many surprises in hand that will impact Bitcoin, SHIB and altcoins
With western markets closed until Tuesday, there is little room for macro-driven action in crypto. Asian markets were mostly sideways throughout Monday, with Hong Kong Hang Seng gaining a modest 0.67% and the Shanghai Composite Index, on the contrary, fell 0.67% at the time of writing. That said, global financial markets are nothing short of remarkable this month, as undefined territory defines the current order. Rising inflation with the lowest interest rates is one such new feature.
For market commentator Holger Zschaepitz, the focus was on international bond markets, which have wiped $6.4 trillion from their value since hitting all-time highs last year. The biggest bond bubble of 800 years continues to deflate after rising US inflation data (CPI and PPI) shook the bond markets. Zschaepitz says:
The value of global bonds fell another $400 billion this week, bringing the total loss from ATH to $6.4 trillion.
Japan’s central bank balance sheet expansion, which Zschaepitz previously called “the greatest monetary policy experiment in history”, meanwhile, introduces new phenomena in the form of rising inflation. Inflation is a double-edged sword for Bitcoin investors, with rising prices and central bank reactions initially putting serious pressure on both stocks and risk assets. But later on, various theories claim that the tide will turn in favor of Bitcoin as a store of value.
An advocate of this viewpoint, Bloomberg Intelligence senior commodity strategist Mike McGlone said in his latest update last week:
The contrast between higher stock prices on a 10-year basis and tame commodities is making it more for stocks. may indicate major bearish rates…The S&P 500 is up nearly 280% at the end of 2021, and our rate-of-change chart shows the index as the highest potential risk of reversal against the Fed.
DXY faced with a “do or die” decision
A benchmark for traditional economics, meanwhile, is what may turn out to be an important inflection point. The US dollar currency index (DXY), an important measure of the dollar’s strength, remains at the 100-point threshold, facing a choice between continuing the upside and a major correction. As
Kriptokoin.com, the last time DXY was so bullish was in April 2020 at the height of the coronavirus market shock. DXY has a habit of moving against Bitcoin price, and although this inverse correlation has been broken to some extent over the past year, the possibility of a major drop for the USD remains to benefit BTC. Market commentator Johal Miles said on Sunday:
If we see DXY tipping again on this trendline, be prepared for a strong bearish. Naturally, the Fed is key here, as any change in course will put pressure on the dollar.
The chart below highlights the impact of DXY corrections on BTC/USD since late 2014.
But on Monday, there was no sign of a real reversal and a brief drop in DXY last week – coinciding with an equally short rally in BTC – was short. decreased completely over time. “Many want a correction in DXY but still in an uptrend,” added popular chartist Jesse Olson.
Currency balances at lowest level since mid-2018
What are the bullish signals from Bitcoin in the current environment? Look no further than swaps as their falling balances signal continued determination to “hodl” BTC.
According to the latest data, not only are buyers continuing to move large amounts of coins from exchanges to cold wallets, but the overall BTC balance of these exchanges is currently at several-year lows. Figures from on-chain analytics firm CyptoQuant confirmed the balance of 21 major exchanges to be 2,274 million BTC on Sunday. The last time the level was this low was in July 2018.
The effect of such buyer trends has not yet been seen in practice. Despite the current supply dwindling, no real scramble for BTC has yet taken place, with sellers on the contrary trying to break out of levels approaching $50,000 in recent weeks. The result is a tight room for BTC price action as buyers and sellers are moving in a closely guarded range. CryptoQuant CEO Ki Young Ju drew attention to the phenomenon that happened last week. Meanwhile, the likely source of the drop in stock market supply is institutional rather than retail investors.
Crypto sentiment tends towards “extreme fear”
Is crypto market sentiment really indicative of a shock in the making? Bitcoin has been lauded as the “only” truly honest market available to investors, and its drop from its all-time high heralded this year’s inflationary environment hostile to stocks, commodities and more. If that’s true, the current state of the Crypto Fear and Greed Index could give investors a new pause to ponder. At 24/100 on Monday, the Index is back in “extreme fear” territory, down more than half since early April.
By contrast, the traditional market Fear and Greed Index is “neutral,” a region where it has remained since exiting the “fear” region late last month.
While equally famous for its fickle nature, crypto market sentiment can still be a warning to those hoping that the good times will continue no matter what.
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