Bitcoin (BTC) continues to go downhill after the Jackson Hole debacle of the US markets. The Fed strengthened its hawkish comments on the inflation outlook in Jackson Hole. After that, risk assets like cryptocurrencies saw massive liquidations across the market. Despite the passage of time, the effects of Jackson Hole continue to shake the cryptocurrency market.
The weekend, when we saw quite a few price changes, did nothing to improve the market. Thus, BTC price action has returned to focus on areas below $20,000. In doing so, the multi-week rally has effectively vanished. Therefore, analysts expect a retest of the macro lows seen in June.
Expected developments in Bitcoin, SHIB and altcoins this week
Until the decision to increase the interest rate in September, everything about the Fed is calm. However, inflation continues to rise in Europe as geopolitical uncertainty and recession persist. However, as in the past week, Bitcoin sees fundamentally inelastic. On-chain data tells a different story than what we see about price. Therefore, any development has the potential to affect the price in both directions. We, as Kriptokoin.com, have compiled the events that are expected to affect BTC, SHIB and altcoin prices this week.
Spot price triggers $18,000 target
After the uneventful weekend, Bitcoin saw significant liquidation. Therefore, the price made the lowest weekly close since the beginning of July. A $2,000 one-week red candle formed and a miserable August close for the bulls. This is notable as it comes after the first $3,000 loss the previous week. Days before the completion of the monthly candle, the mood among analysts was not visibly optimistic in the short term.
“We hope we can see a rebound this week, but the way stocks closed Friday isn’t holding up that well,” trader Josh Rager told his Twitter followers. Popular trader Il Cap nevertheless saw the possibility of a short squeeze to the upside before the downtrend resumed. He predicted that $23,000 could re-emerge in BTC. Replying to this, another trader, Mark Cullen, stated that investors are adding “more BTC shorts in the region between 20.1 and 20.3k.” However, technical analysts continue to wait for the 17.500 and 18.400 levels.
Expectations for fall in share prices rise
The bombshell of the Fed chairman’s speech last week sent shockwaves through risk assets around the world. Powell’s eight-minute speech wiped $2 trillion from global stocks. “At some point, as the monetary policy stance gets tighter, it will probably become appropriate to slow the pace of increases,” Powell said. Bitcoin and altcoins felt tightness in the Wall Street trading session on August 29. Wells Fargo official warned that stocks will continue to decline as the S&P 500 falls below 4,000.
US dollar targets September 2002 levels
An important accompaniment to the turmoil in equities remains the strength of the US dollar this week. There is a classic inverse correlation between the dollar’s performance and risky assets. The dollar posted two-year highs this week. Therefore, it seems reasonable to expect a drop in Bitcoin, SHIB, and altcoins. The Dollar Strength Index (DXY) hit 109.47, its highest gain since September 2002. As of August 29, these peaks continue.
“If the dollar holds up, it’s going to really mess things up,” says Raoul Pal, founder of Global Macro Investor. Then it warns that there is “really nothing up to 120” in terms of resistance on the DXY chart. Renowned analyst Poppe, on the other hand, was worried that DXY was a factor creating “a moment of truth for the entire crypto market.”
MVRV-Z score turns green
Going back into the “buy” zone is a classic Bitcoin strength indicator that has hit macro bottoms over Bitcoin’s lifetime. The MVRV-Z score indicator was starting to prepare analysts for a price bottom in July. The indicator has now dropped again, hitting a one-month low. MVRV-Z is used to determine how close Bitcoin is to its “fair value”. The indicator basically analyzes the market cap and the realized price.
In July, it briefly exited the buy zone before returning in the second half of August. Then, it signaled a potential BTC price floor of $15,600. The actual price and the last moving average of BTC supply are currently around $21,600. This also confirms data from on-chain analytics firm Glassnode.
Market returns to ‘extreme fear’ territory
Bitcoin’s plunge below $20,000 caused the key market sentiment indicator to return to the most bearish category. As of August 29, the Crypto Fear and Greed Index has returned to the “extreme fear” zone at 24/100. Having reached 47/100 during the relief rally, the Index is now in brackets that characterize several months of 2022. This year, we saw 6/100 lows as an overall market sentiment score. However, he saw his longest ever run in “extreme fear.”
However, Santiment noted that large volume investors are raising their Bitcoin, SHIB and altcoins instead of selling them. In an August chart, Santiment said, “Bitcoin is dancing around $20,000 this weekend. Therefore, the growth in the amount of important whale addresses is positive.” However, others say we have to wait longer before we get a real surge in crypto demand. On-chain analytics firm Material Indicators is one of them.
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