“Best Bear Market Ever” - 5 Things To Watch In Bitcoin This Week

Bitcoin ( BTC ) starts a new week with a decidedly bearish movement, but one that does not shake investor confidence in the bull run. A ...

Bitcoin (BTC) starts a new week with a decidedly bearish movement, but one that does not shake investor confidence in the bull run.

A mixed weekend saw BTC / USD close above $ 47,000, only to lose all of its previous gains to challenge 45,000 hours of support later.

It’s a sticky situation – not just Bitcoin, but stocks and sentiment take a hit as Evergrande’s implosion in China unwinds. What could affect the cryptocurrency market?

As analysts expect a “choppy” week for BTC price action, Cointelegraph examines five factors to consider when charting the direction Bitcoin could take in the near term.

El Salvador “buys the dip”

Bitcoin’s spot price action is hardly inspiring for traders at the start of the week.

A reversal of the previous strength on Sunday worsened overnight, and BTC / USD fell the $ 46,000 mark.

Amidst the bustle of traditional markets, run by the The Evergrande saga in China, this week may not offer profitable trades. For popular trader Pentoshi, now is the time to take stock and wait for the situation to resolve.

Like Cointelegraph reported, $ 44,000 represents a wall of support that Bitcoin now looks set to retest. A deeper dive could still net $ 41,000 or even $ 38,000, with the latter being a key Fibonacci retracement level.

Overall, however, the mood remains firmly in favor of a resurgence in the cryptocurrency markets in the fourth quarter.

Among those “buying the drop” is the government of El Salvador, which on Monday confirmed it had bought an additional 150 BTC for a total of 700 BTC.

“They can never beat you if you buy the dips”, President Nayib Bukele noted in a series of characteristic ironic tweets about his country Bitcoin Policy.

1-day candle chart BTC / USD (Bitstamp). Source: TradingView

Bitcoin holds up “like an absolute champion”

It’s a tough environment, and all things considered, Bitcoin is performing much better than expected, analysts say.

Whether it’s equities or safe haven gold, the picture is decidedly less rosy this week. The S&P 500, for example, is on track to close below its 50-day moving average for the first time since June.

Gold is heading towards its April lows, while against the Nasdaq 100 index, notes veteran trader Peter Brandt, the precious metal is near its low from 20 years ago.

“Considering the rising dollar (it’s near cycle high), weakness in stocks, falling metals, BTC is acting like an absolute champion as it rejects the idea of ​​entering a cycle.” deep bottom. Relatively v.strong, ”wrote trader, entrepreneur and investor Bob Lukas in a recent summary of the situation.

The strength of the US dollar is indeed clearly noticeable, with the US dollar exchange rate index (DXY) nearly 94 in a classic headwind for Bitcoin.

If the status quo starts to change, then the momentum for BTC to perform much better is clearly in place.

1-day candle chart of the US dollar currency index. Source: TradingView

Bitcoin prepares the first 5 consecutive difficulty increases since 2019

Bitcoin fundamentals have never looked better – a cliché, perhaps, but this week the numbers speak for themselves.

The two difficulty and hash rate stubbornly refuse to follow a downtrend, indicating that the underlying conviction of miners remains steadfastly bullish.

The mining difficulty, which tempered the impact of China’s May mining rout for months, is now expected to register its fifth straight increase on Tuesday.

This is a rare event – the last time the difficulty has increased five times in a row, started in late 2019, before the inter-market crash of March 2020 helped the mood. Even the bull market that followed and hit all-time highs of $ 64,500 couldn’t duplicate the feat.

As such, for those who believe price action should follow network fundamentals, the outlook looks more bullish than ever.

The hash rate confirms this – despite average price performance over the past week, estimates continue to show 140 exahashs per second (EH / s) for the network, which equates to only 17% below all-time highs .

For investor Vince Prince, a regulator commentator on hash rate performance, the latest contrast between the metric price and the spot price is a source of confidence.

“While Bitcoin has massively emptied the hash rate actually increased,” he abstract Last week.

“This shows a relative strength of bullish demand.”

7-day Bitcoin hash rate average graph. Source: Blockchain

Zoom out, it’s “up only”

Bitcoin’s realized cap is now above the all-time spot price high in 2017 at $ 21,000. Its 200-week moving average (WMA), widely regarded as a final floor price and a level BTC / USD has never breached, now stands at $ 15,600.

Bitcoin 200WMA vs. ceiling achieved vs. BTC / USD chart. Source: PlanB / Twitter

These aren’t just numbers, says analyst PlanB, creator of the stock-to-flow Bitcoin price models.

The relationship between the realized cap – an expression of market cap based on the price at which each bitcoin was last moved – and 200WMA is a useful indicator of the market’s growth potential.

The previous highs of the price cycles, notably at the end of 2013 and 2017, were accompanied by a significant gap between the two metrics. This time around, however, the opposite is true – and there’s a good chance Bitcoin will be a solid ‘buy’.

Like Cointelegraph reported, estimates call for a six-figure BTC price by the end of the year. The fourth quarter should be the springboard, with October forming a solid base with a minimum monthly close of $ 63,000.

“October $ 63,000 is only + 31% as of today”, PlanB added Last week.

The “worst case scenario” for September stands at $ 43,000 for the monthly close.

“The best bear market ever”

It’s a classic setup that has historically ruled out major periods of bullish price action – Bitcoin is relatively close to all-time highs, but no one is interested.

Related: Top 5 cryptocurrencies to watch this week: BTC, DOT, LUNA, ATOM, FTT

Despite trading near $ 50,000, BTC / USD is a topic on the lips of fewer and fewer people this month – a trend also apparent among internet users.

Data google trends shows that “Bitcoin” is just as unpopular as it was in mid-July, when BTC / USD was trading at just over $ 30,000.

Google Trends data for “Bitcoin”. Source: Google Trends

It wasn’t until December 2020 that the relative interest in research waned, before the main phase of Bitcoin’s bull run really took off.

As analyst William Clemente suggests, however, such conditions are perfect for BTC price action to cause a surprise upset.

“Bitcoin came out of a bullish flag last night, set a higher high, 0.01% funding, and my flow is quiet. Excellent,” he said. tweeted Sunday, ironically before describing current circumstances like the “best bear market ever”.

Crypto Fear & Greed Index as of September 19. Source: Alternative.me

Investor sentiment is also ideally placed at the moment, with the Crypto fear and greed index in “neutral” territory as Bitcoin circles final resistance before $ 50,000.

“Greed” has yet to make a significant return to crypto markets, suggests the metric, according to erasure of speculative trading seen earlier in September.