Wednesday , August 4 2021

5 things to keep in mind about Bitcoin this week

Bitcoin (BTC) begins a new week with mediocre price action and optimistic fundamentals, What could they offer in the coming days?

Bitcoin, which still maintains the $ 30,000 support, has little to excite traders aboutBut volatility has already reminded them of their presence over the past week.

As mining recovery continues, everyone is playing “wait and see” for the 2021 Bitcoin bullish market.

Cointelegraph took a look at five things that could give BTC’s price action some short-term direction.

The dollar strengthens as stocks move calmly

It’s a classic summer chart in equities, a slight drop last week followed all steady gains, with caution coming from Covid-19, inflation and other triggers.

However, this time of year is famous for its lack of action, and even recent changes mean little on a larger scale.

“Covid’s backdrop is just one of several factors that may be negatively affecting the reflation operation”, Wrote Lori Calvasina, head of US equity strategy at RBC Capital Markets, in a note quoted by Bloomberg.

The US dollar gained some strength with the modest shaking of stocks; the US dollar index (DXY) rose to 93.

As reported by Cointelegraph, the reverse correlation of the DXY with Bitcoin remains the focus of attention for some; a short-term peak for the index may correspond to price pressure for the BTC / € pair.

Another focus of attention is oil, after the reduction of tensions between OPEC + members and a new agreement to increase production. Although it traditionally has less impact on Bitcoin behavior, any unexpected volatility can provide fuel for a low-volume digital currency market.

This was seen last week, when Bank of America reports gave the green light to Bitcoin futures trading for select clients, which caused the BTC / USD pair to rise rapidly $ 1,000.

Shares of another bank, the U.S. Federal Reserve, may be more important this week. A working group on stablecoins will receive the attention of Treasury Secretary Janet Yellen when convened with the aim of “working within the agency”.

Weekly sailing increases the risk of falling by $ 29,000

In spot markets, Monday began with hope for the future rather than with confidence in current price events.

The weekend witnessed the ups and downs of the BTC / USD pair, still unable to overcome the resistance of $ 32,000 or more, But equally apt to avoid evidence of the $ 31,000 support.

At the time of writing, the $ 31,750 mark formed a focus of attention in lower time frames, With a firmly defined range in the time graph.

1 hour BTC / USD (Bitstamp) candlestick chart. Source: TradingView

“It’s time for a green week for Bitcoin”, to venture the popular merchant Michael van de Poppe.

Talking about whether and when a minimum in the price of Bitcoin could occur is still an important topic of conversation. As Cointelegraph pointed out on Sunday, the fall from the last all-time high of $ 64,500 has lasted three months, the second longest in history in a bullish cycle.

Popular opinion favors a return below $ 30,000, but Van de Poppe argued that a background may not be as dramatic as expectations demand.

“A background doesn’t usually look good because most people expect more downward movements in the markets “, el he said to his Twitter followers.

“A bad weekly candle doesn’t have to mean prices are going to fall further.”

This candle actually disappointed, and the weekly closing on Sunday of the BTC / USD pair was the lowest of 2021 so far.

For trader and analyst Rekt Capital, lthe ability to recover the $ 32,000 is a problem in itself, paving the way for levels around $ 29,000.

“Bitcoin is threatening to lose its weekly support (~ $ 32,000). Today is the last day for $ BTC to recover this support “, he warned Sunday next to a chart that accompanied it.

“There is a higher minimum time frame support to prevent BTC from revisiting the green zone.”

BTC / USD pair scenario with support and resistance areas. Source: Rekt Capital / Twitter

The difficulty exceeds expectations

In contrast to the price, the foundations of the Bitcoin network continue their march towards strength after the unprecedented events of May and June.

The network hash rate, Which remains above its local minimum of 83 exahashes per second (EH / s), it has not suffered further major setbacks as miners move out of China.

However, the true signs of progress come from difficulty.

This weekend’s automatic readjustment reduced the difficulty by a modest 4.8%, which is a nice contrast to previous estimates.. Two weeks earlier, the difficulty was expected to decrease more than ever, by almost 29%, which slowly improved over the two-week difficulty cycle.

currently Bitcoin is on track to have its first positive readjustment since before the May price drop.

The changes speak to Bitcoin’s indestructible ability to control itself and encourage miners to return to the net while still processing barrier-free transactions.

Therefore, commentators believe that the worst of the recent unrest is firmly in the past.

“The hangover of a downward difficulty adjustment by China’s vigorous measures should conclude after this adjustment,” he said the weekend Kevin Zhang, vice president of Digital Currency Group’s mining advisory subsidiary, Foundry Services.

“Hashrate and difficulty are expected to recover slowly from here.”

Bitcoin difficulty chart. Source: Blockchain

In the other hand, both the hashrate rate and difficulty have fallen below their levels in the May 2020 halving.

Funding rates remain cold

On-chain indicators are anything but bearish, though it’s the sustained nuanced signals that are on the radar this week.

Specifically, Financing rates on all Exchanges have remained neutral or slightly negative throughout recent price volatility, A hopeful view of the mindset of traders.

As reported by Cointelegraph, large whales appear to be the only ones suitable to sell at current levels, while other profiles of investors who, on the contrary, buy the offer.

In terms of volume, however, having Bitcoin cost $ 30,000 is predictably uninteresting. Both futures and PayPal volumes have declined significantly, and the former have returned to late-year levels.

Open interest graph and volume of cryptocurrencies. Source: Bybt

Bitfinex’s infamous shorts “unravel”

The price action over the weekend was accompanied by fluctuating bets among high-volume investors.

Short positions in Bitfinex, a driver of short-term volatility as seen over the past few weeks, flowed and ebb..

On Monday, shorts fell even further, While the market waited for signals about the general direction.

1-day chart of BTC / USD (Bitfinex) shorts. Source: TradingView

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