Bitcoin (BTC) is entering another key macro week with a welcome break to the upside in the United States. After avoiding a now familiar breakout around the weekly close, BTC/USD rallied on August 8 to once again struggle with resistance in place for two months. So what’s next for BTC price action and altcoins? Here are the five main factors for the week ahead…
Bitcoin closes week 2 of key bear market support
Unlike in recent weeks, Bitcoin allowed investors to breathe a sigh of relief on the August 7 weekly close. Instead of going bearish at candle close or just after, BTC/USD started gaining instead. These gains include an impressive hourly candle that saw almost $500 added.
Data says Bitcoin has created the highest weekly candle close since June. In addition, the price of BTC defended its key 200-week moving average (MA) in two consecutive closes, strengthening the likelihood that this trendline is now forming support. This is despite multiple retests throughout the week, the 200-week MA is sitting around $22,900. For TraderSZ, the popular trading account on Twitter, this will take the form of a “big violent move” and eventually reverse.
big violent move soon. pic.twitter.com/a5NoTSlN72
— TraderSZ (@trader1sz) August 7, 2022
Meanwhile, trading resource Stockmoney Lizards, which analyzes the separate data governing the two exponential moving averages (EMAs), agreed that it has already recorded a completed macro bottom for Bitcoin.
US inflation picture complicated by falling commodities
As the Consumer Price Index (CPI) figures for July hit the radar, U.S. inflation will top the discussion in crypto and beyond on August 10. The program is already entrenched in the minds of risk asset traders everywhere – while not in itself indicative of a particular trend, market volatility reliably accompanies CPI releases before, during and after the event. But this time, the question on everyone’s lips is whether inflation has peaked.
The decline in commodities is used as a basis to suggest that the trend will drop from there. This is an important reason for the optimism of Tesla CEO Elon Musk. “This clearly may change, but the trend has dropped, suggesting we’re past peak inflation,” he said during Tesla’s Annual Shareholders Meeting last week. After months of key interest rates, the Federal Reserve won’t make a decision on additional monetary policy moves until September. More broadly, commentators argue that they cannot raise interest rates any further without undesirable side effects.
Former Bitcoin investors hold their BTC
According to on-chain monitoring sources, after months of dips, recent spikes in BTC price action are putting buyers on the line. While this is nothing unusual, it remains interesting to see how the determination of their long-term holders will be tested if more gains come in. In automatic updates this week, Glassnode said that the amount of active BTC supply over the past 24 hours has dropped on average. He said it potentially reflects his lack of immediate reaction to price movements.
Likewise, the seven-day MA of trading volume has hit one-month lows on its own during the day, surpassing the previous August 1 lows. On higher timeframes, the trend is also noticeably shifting towards “pragmatism”. The portion of the BTC supply that had been dormant in the wallet for three years or more continued to increase. It hit an all-time high of 38,426 percent on the day.
Changes can be more easily viewed in the HODL Waves metric, which provides an overview of how much of the BTC supply has been dormant over certain periods of time. 2022 shows a marked increase in stablecoins for one to two years.
Coinbase order book “dead”
On the subject of hodling, current conditions look absolutely lackluster for exchanges amid little real interest in buying crypto assets. As the world’s largest asset manager, BlackRock, announced a partnership with US exchange Coinbase last week, one commenter says the order book remains “dead” as there has been no retail selling interest this summer.
Data from the Binance order book provided by on-chain tracking resource Material Indicators similarly highlights gaps in activity well above $24,000. However, this can change quickly as the spot price moves up and down the trading range.
Market sentiment marks price bottoms
In the case of a bear market rally, sentiment data can offer a possible clue as to whether the real bottom is really in. As noted by research firm Santiment and macro analyst Alex Krueger, mainstream interest in Bitcoin bear markets actually tends to peak just after macro asset price lows rather than before.
While Kruger compared the events of March 2020 to 2009 in the S&P 500, Santiment pointed to Bitcoin-related social media content around BTC price floors. According to the sentiment indicator, the Crypto Fear and Greed Index, meanwhile, support rises above the market’s “extreme fear” zone, which has not been present since mid-July.
The index measures 30/100 on August 8, representing the general market mood “fear”, which is stagnant compared to the previous day. “Extreme fear” corresponds to a score of less than 25.
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