Bitcoin (BTC) starts a new week in a precarious place as global macro instability dictates the mood.
After sealing a weekly close just inches above $19,000, the biggest cryptocurrency remains directionless as nerves rise over resistance in the global financial system.
Last week was a testing time for investors in risk assets, with gloomy economic data coming out of the United States and also Europe.
Thus, the Eurozone provides the backdrop to the latest concerns of market participants, who see the financial dynamism of major banks being called into question.
With the war in Ukraine only escalating and winter approaching, it is perhaps understandable that almost no one is optimistic – what could be the impact on Bitcoin and crypto?
BTC/USD remains below the all-time high of its previous halving cycle, and compared to the bear market of 2018, there is also talk of a new multi-year low.
Cointelegaph takes a look at five BTC price drivers to watch in the coming days with Bitcoin still below $20,000.
The spot price avoids the minimum weekly close of several years
Despite the bearish mood, Bitcoin’s weekly close could have been worse: At just over $19,000, the biggest cryptocurrency managed to add a modest $250 to last week’s closing price, data shows from Cointelegraph Markets Pro and TradingView.
However, this prior close had been the lowest since November 2020 on a weekly basis, and as such, traders continue to fear that the worst is yet to come.
“The bears remained in full swing last night during Asia, while the bulls didn’t give us any good rally to work with,” said popular Crypto trader Tony. he wrote in part of a Twitter update of the day.
others agreed with a summary concluding that BTC/USD was in a “low volatility” zone that would require a breakout sooner or later. All that remained was to decide the direction.
“The Next Big Move Is Ready,” Credible Crypto answered.
“Typically before these big moves and after the capitulation we see a period of low volatility before the next big move starts.”
As reported by Cointelegraph, the weekend was already set for increased volatility, as Bollinger Bands data suggests. This went hand in hand with increased volume, a key ingredient in sustaining a potential move.
“The BTC weekly chart shows a massive increase in volume since the start of the third quarter + a weekly bullish divergence in one of the most reliable time frames,” said Doctor Profit. he concluded.
“Bitcoin price rise is only a matter of time.”
However, not everyone was looking at an imminent comeback. In predictions Over the weekend, meanwhile, Crypto trader Il Capo gave the area $14,000-$16,000 as a long-term target.
“If this was the real bottom…bitcoin should be trading near 25k-26k by now,” trading account Profit Blue arguedwhich shows a chart with a double bottom structure potentially in the making on the 2-day chart.
Credit Suisse baffles as dollar strength isn’t going anywhere
Beyond crypto, attention is centering around the fate of major global banks, notably Credit Suisse and Deutsche Bank.
Liquidity concerns led to emergency public reassurances from the former’s chief executive, with executives reported to have spent the weekend reassuring major investors.
Bank failures are a sore point for underwater owners: it was government bailouts of lenders in 2008 that originally spawned the creation of Bitcoin.
With history increasingly looking to rhyme nearly fifteen years later, the saga of Credit Suisse does not go unnoticed.
“We can’t see inside the CeFi Credit Suisse company, just like we couldn’t see inside the CeFi Celsius, 3AC, etc. companies,” entrepreneur Mark Jeffery he tweeted the day, comparing the situation to the crypto fund crisis earlier this year.
For Samson Mow, CEO of Bitcoin startup JAN3, the current environment could still give Bitcoin its time to shine in a crisis rather than remaining tied to other risk assets.
“Bitcoin price is already cut to the limit, well below the 200 WMA,” he said arguedreferring to the long lost 200-week moving average as bear market support.
“We’ve had contagion from UST/3AC and leverage has already been removed. BTC is massively shorted as a hedge. Even if Credit Suisse / Deutsche Bank collapses and triggers a financial crisis, we can’t see that we go down a lot.”
However, with instability already rampant throughout the global economy and geopolitical tensions only rising, Bitcoin markets are voting with their feet.
The US Dollar Index (DXY), still just 3 points off its recent 20-year highs, continues to circle for a potential rally after capping corrective moves in recent days.
Looking further ahead, macroeconomist Henrik Zeberg echoed a theory that sees DXY temporarily losing ground in a big push for stocks. This, however, would not last.
“In early 2023, DXY will rally back to the target of ~120. This will be a deflationary fall, and stocks will crash into a bigger fall than during 2007-09,” he said. he wrote in part of a tweet.
“Biggest Deflationary Bust Since 1929”.
The measure of miners’ income is nearing an all-time low
With Bitcoin price suppression underway, it’s less than surprising to see miners struggling to stay profitable.
At one point in September, miners’ monthly sales topped 8,500 BTC, and while that number later cooled, the data shows that for many, the situation is precarious.
“TeraHash Bitcoin miner earnings on the brink of all-time lows,” Dylan LeClair, senior analyst at digital asset fund UTXO Management, revealed on the weekend.
“Margin Expression”.
The scenario is interesting for the mining ecosystem, which is currently deploying more hash rate than at almost any time in history.
Estimates from tracking resource MiningPoolStats put the current Bitcoin network hash rate at 261 exahashes per second (EH/s), only marginally below the all-time high of 298 EH/s seen in September.
Competition among miners also remains healthy, as evidenced by the difficulty adjustments. Although it saw its first decrease since July last week, the difficulty is estimated to increase by 3.7% in seven days, taking it to new all-time highs.
However, for economist, trader and entrepreneur Alex Krueger, it may still be premature to breathe a sigh of relief.
“Bitcoin Hash Rate Hits All-Time Highs While Price Drops Is A Recipe For Disaster Rather Than A Cause For Celebration,” he wrote in a wire on miner data last month.
“As miners’ profitability shrinks, the odds of another round of miner capitulations increase in the event of a downturn. But the Hopi never dies.”
GBTC ‘Discount’ Hits New All-Time Low
Echoing the institutional exodus from BTC exposure this year, the largest institutional investment vehicle in the space has never been a bargain.
The Grayscale Bitcoin Trust (GBTC), which traded well above the spot price of Bitcoin in the good old days, is now being offered at the biggest discount to BTC/USD.
According to data from Coinglass, on September 30, GBTC “Premium” – now in fact a discount – reached -36.38%, which implies a BTC price of only $11,330.
The Premium is now negative as of February 2021.
Analyzing the data, Venturefounder, contributor to the CryptoQuant on-chain analytics platform, described the GBTC crash as “absolutely wild”.
“However, there is still no sign of the GBTC discount bottoming out or reversing,” he said he commented.
“Institutions are not even biting for $12K BTC (locked for 6 months).”
Cointelegraph tracks GBTC, with owner Grayscale trying to get legal permission to convert and launch it as a spot exchange-traded fund (ETF), something still prohibited by US regulators.
In the meantime, however, the lack of institutional appetite for exposure to BTC is something of an elephant in the room.
“Objectively, I’d say there isn’t much interest in $BTC from US-based institutional investors until $GBTC starts to approach net asset value,” LeClair. he wrote last week.
Bitcoin ‘Maximum Pain’ Scenario Charts
While it’s safe to say that another fall in the price of Bitcoin would cause many hodlers to question their investment strategy, it remains to be seen whether this bear market will copy those that have come before.
Related: Analyst at BTC $17.6K Bottom Price: Bitcoin ‘Not There Yet’
For analyst and statistician Willy Woo, creator of the Woobull data resource, the following fund could be closely related to Hodler’s capitulation.
Previously in Bitcoin’s history, bear market funds were accompanied by at least 60% of the BTC supply trading at a loss.
So far, the market has almost, but not quite, copied this trend, leading Woo to conclude that “peak pain” may still be around the corner.
“This is a way to visualize maximum pain,” he said he wrote next to one of his charts showing submarine supply.
“Past cycles bottomed out when about 60% of coins traded below their buy price. Will we hit that again? I don’t know. The structure of this current market this time is very different.”
According to on-chain analytics firm Glassnode, as of October 2nd, 9.52 million BTC were held in losses. Last month, the metric in terms of BTC reached its highest since March 2020.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.
