Bitcoin (BTC) is starting another week in a dangerous position around $20,000 ahead of new macro turmoil. After capping its best weekly gains since March, the biggest cryptocurrency is struggling to maintain its recently regained levels. With major resilience zones overhead and inflation data to be released later in the week, the coming days could be frustrating for risk assets. So, what are the things that will affect the potential moves in the market this week?
The 200-week moving average for Bitcoin is causing a headache
At around $20,850, the June 10 weekly close was nothing special for BTC/USD. However, the pair still managed to achieve its best seven-day growth in a few months. Bitcoin, which finished Sunday at exactly $ 1,600 higher than its position at the beginning of the week, thus made a progress that has not been seen since March. However, the success did not last long as the hours following the weekly close turned negative. BTC/USD was targeting $20,400 at the time of writing.
The relief in global equities provides an opportunity to erase some of the crypto’s losses in recent months. Bitcoin’s ability to hold current levels could play a key role in setting the mood this summer. Various commentators, including the trading package Decentrader, therefore watched the weekly chart with interest. Others pointed out that BTC/USD made another close below the key 200-week moving average (WMA) around $22,500. That is, he was less enthusiastic. Meanwhile, popular trader TechDev defended a more optimistic outlook for the rest of 2022.
Over the weekend, he argued, by the end of the year, the rollback of more substantial WMAs should end Bitcoin’s “re-accumulation phase” altogether. “Bitcoin topping $32,000-35,000 confirms the end of re-accumulation and correction,” TechDev told Twitter followers. Meanwhile, the ongoing asset liquidation from embattled crypto lending platform Celsius has increased selling pressure.
Brutal dollar bounces back as Asian markets plummet
Asian stocks were down on July 11 as the start of the macro week was marred by news of social unrest in China. Markets felt pressure as protesters demanded the release of frozen funds amid a scandal involving both banking officials and local officials accused of misusing COVID-19 monitoring apps. At the time of writing, the Shanghai Composite Index was down 1.5 percent, while Hong Kong’s Hang Seng was 3.1 percent lower.
Europe is doing slightly better with modest growth for the FTSE 100 and Germany’s DAX. Meanwhile, the United States continued to open up. However, before Wall Street bounced back, the US dollar index (DXY) was already making new strides. It canceled a pullback that ended the past week on a colder note. DXY was at 107.4 on July 11, just 0.4 points behind two-year highs seen days ago. An analyst at trading firm The Rock, which analyzed the situation, described DXY as “extreme as can be” in terms of year-to-date growth. Bitcoin managed to beat its traditional inverse correlation with DXY last week and rose with the index.
Inflation provided a ‘messy week’ for Bitcoin
If that’s not enough, the age-old topic of inflation is well suited to provide further tests of market elasticity this week. The US Consumer Price Index (CPI) data for June will be released on July 13, and the expectations are for the monthly figure to be higher year-over-year. The higher the inflation and the further it deviates from already high expectations, the more risk assets tend to react in anticipation of a response from policymakers.
For macro analyst Alex Krueger, the likely trajectory of this week is therefore clear. The CPI caught the attention of mainstream commentators over the weekend as it stripped away most of the leading inflation indicators. “Some will point out that this measure is retroactive, as next week’s US CPI inflation could get very close to 9%,” said economist Mohamed El-Erian. Meanwhile, any immediate reaction could definitively scare the Bitcoin markets in line with other risk assets, or at least lead to massive volatility as seen in previous CPI events.
MACD prices continue to bottom
With multiple Bitcoin price metrics flashing “bottoms” or even hitting all-time lows, the signals that a BTC investment at current prices have historically unrivaled risk/reward are not scanty. This week, the latest metric to join the herd is the MACD. MACD actively tracks a chart trend that is currently playing. It involves subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.
When the resulting value is below zero, Bitcoin tends to be in a bottoming scenario. So if the historical norms repeat, the last trip to $ 17,600 could be like that. Meanwhile, commentator Matthew Hyland noted that a similar MACD structure still persists on the 3-day chart. “The 3-Day MACD is still in a bullish trend,” added market analyst Kevin Svenson.
Bitcoin’s relative strength index (RSI) is already at the most “oversold” levels in history, as we have reported on Kriptokoin.com. Meanwhile, last week, a trader named July 15 as the key date another chart feature would call a bottom. This consisted of two separate MAs.
2-month highs for Crypto Fear and Greed Index
According to recent data, as a positive factor, the average crypto investor is slowly regaining his confidence. Building on previous strength, crypto market sentiment hit its highest levels since early May over the weekend and is now at 22/100. While still in the “extreme fear” zone, the level of the Crypto Fear & Greed Index is in stark contrast to the events of the past two months, where it fell as low as 8/100, below even some previous bear market lows.
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