Bitcoin (BTC) starts a new week and is barely holding on to the $30,000 level as a “bearish divergence” sets the tone.
After a quiet weekend, BTC price action is facing a possible pullback phase as part of its broader uptrend, according to traders.
What could be on the market menu this week?
After a period of relative calm, external triggers for risky assets have returned, with a string of macroeconomic data releases from the US and several speeches by Federal Reserve officials.
Add to that some interesting dynamics surrounding the US BTC buying currently in play and the recipe for volatility is there.
Cointelegraph addresses these factors and more in its weekly overview of what could be moving the markets in the coming days.
The weak $30,000 support is making traders hungry for a BTC price drop
Bitcoin may have ended the week just above $30,000, confirmed by data from Cointelegraph Markets Pro and TradingView, but its strength now seems less convincing.
A break into the $20,000 zone immediately afterwards set the tone for traders who believe a retracement phase may begin before the uptrend resumes.
BTC/USD 1 hour chart. Source: TradingView
“We will watch for a continuation of the trend, that is, another higher low between the current price and $28,000,” trader Skew stated in his short-term forecast.
“Else apparent weakness leads to a break in the 1W structure (same high and LL below USD 25,000).” Annotated BTC/USD chart. Source: Skew/Twitter
Fellow trader Jelle noticed a warning sign for weekly timeframes.
“Bitcoin is caught in a weekly bearish divergence overnight,” he told Twitter followers of the Relative Strength Index (RSI) behavior after the candle close.
“It’s time to play defense for a while. The bull market is upon us, but setbacks are part of the game. Lower bid, let’s see.” BTC/USD annotated chart with RSI. Source: Jelle/Twitter
Crypto Tony could limit the downtrend to $29,500, adding to a previous trip to fresh yearly highs the week before.
“A sweep of $29,500 makes sense to me as the bulls just seem weaker and weaker at the moment. We’ve got a handle on the liquidity above us, so now is the time to grab the liquidity below us. If you’re not able yet, by all means wait for that test and reclaim it,” he summarized.
Another post zoomed out that BTC/USD will surge up to 40% in 2023, followed by a “major correction.”
Annotated BTC/USD chart. Source: Crypto Tony/Twitter
8 Fed spokesmen accompany the important macro data week
Macro commentators have their hands full this week as the Consumer Price Index (CPI) leads US economic data.
The CPI due July 12th, which will show a fall in inflation, will help moderate the Fed’s still hawkish stance.
Markets are almost in agreement that interest rates will rise again after last month’s pause, although last-minute trend-setting data could add some uncertainty.
The consumer price index (CPI) will be followed a day later by the producer price index (PPI) while a total of eight Fed officials will comment on the economy and politics.
“Volatility will return in the markets this week,” predicted financial commentary source The Kobeissi Letter while summarizing the calendar.
According to the latest data from CME Group’s FedWatch tool, the probability of a rate hike at the time of writing was 92%, down slightly from last week’s 95%.
Chart showing the Fed’s target rate probabilities. Source: CME Group
Financial commentator Tedtalksmacro further argued that core CPI is the number the Fed should be watching.
“The headline is expected to drop to 3.20% yoy, which would mark its lowest reading since March 2021. The Cleveland Fed, the University of Michigan and Truflation are all forecasting a similar number,” he noted in a Twitter thread.
“Core CPI is expected to decline to 5.1% yoy, its lowest level since November 2021. Core CPI remains the concern for the market and I expect the market to follow it in its Response will be given more weight on Wednesday.” US Core CPI Forecast chart. Source: Tedtalksmacro/Twitter
Bitcoin mining difficulties after hash rate hits new record high
In a refreshing turnaround, Bitcoin network fundamentals are preparing to set new all-time highs in the coming days.
BTC.com’s latest estimates see network difficulties rising more than 5% — the largest single upward adjustment since late March.
Overview of the basics of the Bitcoin network (screenshot). Source: BTC.com
Given the stagnant price trend, this is significant as it indicates ongoing competition in the mining sector and increasing belief in future profitability. As a result, the difficulty level will reverse its previous drop and reach new record highs of around 53.2 trillion.
A similar story concerns the hash rate, which according to some estimates has surpassed 400 exahashes per second (EH/s) for the first time in the past few days.
Chart of the estimated total hash rate of bitcoin. Source: Blockchain.com
BTC price remains more than 50% below its 2021 peak, adding weight to the classic adage “price follows hash rate.”
Commenting on what may be to come, Blockware mining analyst Joe Burnett hinted that Bitcoin would return and finish what it started after breaking out in 2020 and surpassing its all-time highs three years earlier.
“During the 2017 bull market, there was no national mining ban that put half of the total network hashrate out of business, nor were there any counterfeit coins sold by FTX, BlockFi, and Celsius,” he reasoned.
“Most are not ready for the next parabola run.”
BTC supply shock ‘inevitable’
Recent filings for exchange-traded bitcoin spot price ETFs (ETFs) in the US have sparked a buying frenzy.
As Cointelegraph reported over the weekend, U.S. activity is back on the uptrend, competing with Asia for ownership of BTC supplies.
The impact of the dwindling supply becomes apparent over longer timeframes, according to the analysis, with only 7.5% of the immutable 21 million Bitcoin coins left to mine.
“During this Bitcoin cycle different than the previous three cycles. “The amount of bitcoin available for trading has decreased over time,” commentator Alessandro Ottaviani argued this weekend.
“If the trend continues, a supply shock is inevitable. It’s only a matter of time, we just don’t know when. As bitcoiners we can wait because when we are bitcoiners our time preference is low.”
Ottaviani uploaded a chart known as the “HODL model” – a popular tool that plots supply availability versus future price development.
Bitcoin HODL model diagram. Source: Alessandro Ottaviani/Twitter
On the subject of ETFs, particularly that of the largest global asset manager BlackRock, Ottaviani added that the mainstream narrative has already shifted to condoning rather than denigrating Bitcoin.
Big fish increase exposure
It’s not just miners who are showing “confidence” when it comes to Bitcoin’s future profitability.
Related: AI Has The Potential To Push Bitcoin Price Above $750,000 – Arthur Hayes
As research firm Santiment noted this weekend, the highest-volume Bitcoin investor cohorts are buying eagerly, even in stagnant BTC price conditions.
Since mid-June, so-called sharks and whales — companies with between 10 and 10,000 BTC — have increased their exposure by over 70,000 BTC.
“Bitcoin sharks and whales are showing no signs of slowing down, even as prices begin to “bore” in this $30,000-$31,000 range,” commented Santiment.
“Since June 17, $10,000-$10,000 BTC addresses have accumulated 71,000 more coins, worth $2.15 billion.” Bitcoin Shark and Whale data annotated chart. Source: Santiment/Twitter
Separate data from on-chain analytics firm Glassnode shows the number of whales — those with at least 1,000 BTC — is at its highest level in eight months.
Chart of bitcoin whale entities. Source: Glassnode
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This article does not contain any investment advice or recommendations. Every investment and trading activity involves risk and readers should do their own research in making their decision.
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