Bitcoin (BTC) begins a “significant” week in a vulnerable situation as bulls are unable to access crucial support.
Following fresh losses in the crypto markets over the weekend, the BTC/USD pair ended the week below $26,000, the first time in three months.
The ongoing legal disputes in the U.S. and their effects on investor sentiment have caused both Bitcoin and altcoins to remain in a difficult position.
Fragile markets will now be faced with a number of sources of volatility, as U.S. macroeconomic data releases coincide with the further developments in the crypto legal situation.
Traders can expect to be met with five days of unexpected developments, rather than the usual uneventful sideways movement that had become customary in the crypto markets prior to the recent changes.
What will the upcoming week bring? Cointelegraph examines the major factors to bear in mind when considering the price performance of Bitcoin and the wider cryptocurrency market.
Bitcoin loses key trend line, but some remain bullish
Bitcoin’s weekly candle closed in a disheartening spot due to a late decrease that erased value from the cryptocurrency market as a whole.
The prices of various altcoins saw a sharp decline due to certain trading platforms removing them in light of potential U.S. legal issues, causing BTC/USD to close at its lowest weekly rate since mid-March, according to Cointelegraph Markets Pro and TradingView.
By taking this action, the two also prevented the 200-week moving average (MA) from offering support.
“Prior to the event, trader and analyst Rekt Capital cautioned that a BTC Weekly Candle Close below the 200-week MA would signify it as a lost support.”
Michaël van de Poppe, the founder and CEO of trading firm Eight, shared similar worries about what will become of the whole crypto market capitalization.
As traders have already set downside targets at $24,000 and lower, some have seized the chance to take a more optimistic view of both the short-term and long-term outlook.
Daan Crypto Trades observed that the weekend losses created a CME futures gap, which could lead to a potential upside.
The difference between $26,150 and $26,500 was quickly filled, as BTC/USD had previously filled another gap in a short amount of time.
Credible Crypto, a well-known trader, maintained that, in the long run, Bitcoin’s resistance levels would not be a major issue. He reiterated that $40,000 was still a desirable goal.
“When a major decline occurs and people are losing money, there is resistance to the market going up as those who are ‘holding the bag’ sell their positions. However, when capitulation sets in and everyone has been forced to sell at the bottom, the sell pressure is no longer present as the market moves up because ‘there is no one left to sell,'” part of a weekend Twitter commentary read.
Bitcoin runs gauntlet ahead of “massive” macro week
The upcoming week presents a unique abundance of possible catalysts for crypto prices from the overall economic and political environment.
The U.S. Securities and Exchange Commission (SEC) vs. multiple exchanges case has already had far-reaching effects, and macroeconomic data is likely to cause further volatility.
On June 13, the May print of the Consumer Price Index (CPI) inflation will be released, and this time, markets anticipate that the Federal Reserve will hold off on raising interest rates.
This would conclude a continuous hiking cycle that started in late 2021, coinciding with Bitcoin reaching its highest ever value.
At the time of writing on June 12, CME Group’s FedWatch Tool indicated that there was a 75% chance of a pause.
As economic conditions appear to be improving, analysts in the cryptocurrency market and beyond are contemplating the possibility of a surge in risky investments.
“Traderhc, a popular trader, informed their Twitter followers that they are ‘pretty convinced’ that the money-maker this week will be a ‘Fed Pause/Skip’ which will propel Bitcoin past the $30k mark.”
Skew, another trader, suggested that the CPI event would most likely be the determinant of the week’s price movements.
Additionally, the June meeting of the Federal Open Market Committee could result in market-influencing remarks from Fed chair Jerome Powell.
The decision on rates is scheduled for June 14, with the European Central Bank making an announcement the following day. Further macroeconomic data will be released on June 15.
Prior to all that, the repercussions of the SEC’s case against Binance and Coinbase may already be influencing prices.
On June 11, Philip Swift, co-founder of trading suite DecenTrader, declared that the following day would be a significant one for the market.
Bitcoin fundamentals to the moon
Short-term Bitcoin price movements are not being reflected in the underlying network data, which is showing a different trend altogether.
This week, as is typical for the year 2023, network difficulty and hash rate are reaching unprecedented levels.
Some estimates suggest that the hash rate is higher than ever, and difficulty is expected to rise by around 2.5% on June 14, pushing it past 53 trillion for the first time.
Data from the monitoring resource BTC.com reveals that despite the downward pressure on the price of BTC, network fundamentals remain in an upward trajectory, with only three difficulty reductions out of the twelve total adjustments occurring in 2023.
Mitchell Askew, social media associate at Blockware, expressed astonishment at the fact that the Bitcoin hashrate will not cease increasing, stating, “This is insane.”
As Cointelegraph has regularly reported, industry veterans, including the well-known and vocal Bitcoin advocate Max Keiser, have long held that Bitcoin spot price is linked to hash rate.
Miner exchange inflows jump
Phillip Swift, founder of LookIntoBitcoin, nevertheless characterized the current difficulty levels as “exceedingly difficult” for all but the most powerful miners.
Glassnode, an on-chain analytics firm, records and monitors the addition of miners in real time.
Researchers noted that despite a volatile macroeconomic landscape and increasing regulatory oversight, ASICs are still being activated, pushing the Bitcoin Hash Rate (7DMA) to an all-time high of 381 EH/s.
Last week, according to Glassnode data, miner inflows to exchanges reached their highest daily levels since 2019.
James Straten, a research and data analyst at the crypto news and insights platform CryptoSlate, followed up by identifying Poolin, a mining pool, as the most probable source of the transactions.
Whales boost BTC exposure during altcoin sell-off
Examining the consequences of the most recent crypto market disturbance, the research company Santiment had grounds for optimism.
A potential sideways movement in the Bitcoin price could result in surges in the values of ETH, XRP, LDO, and RNDR.
It was argued in findings published on June 11 that this is due to the strong belief in Bitcoin held by its biggest investors, the whales.
As previously reported by Cointelegraph, since May the largest group of whales has been accumulating Bitcoin while other investors have been selling, diverging from the rest of the investor base.
At the weekend, while altcoins were dropping in value, whales seemed to take advantage of the situation by increasing their Bitcoin holdings instead of reducing them.
“Amidst the fervor of altcoin trading, there is a positive divergence between Bitcoin’s accumulating whales and its declining price,” noted Santiment.
At the same time, the overall crypto market is not responding impulsively to the news.
The Crypto Fear & Greed Index has stayed in a “neutral” state, not shifting much in the past few weeks, and is currently situated right in the middle of its 0-100 range.
Magazine: The Competition to Construct Secure and Legitimate Coin Mixers with Tornado Cash 2.0
Subscribe to our email newsletter to get the latest posts delivered right to your email.