Bitcoin (BTC) starts a new week with completely different emotions to end as BTC / USD seals its lowest week close since December 2020.
The nightly loss until June 13 means that the largest cryptocurrency is now approaching the ten-month low from May.
The weakness has been speculated – inflation figures from the US last week caused a chain reaction over risky assets and low liquidity on weekends seemed to increase the consequences for cryptocurrencies.
Macroeconomic pain continues this week – US Federal Reserve to provide information on interest rate hikes and the economy wider, the first official policy update since the inflation figures.
The mood among experts on both Bitcoin and altcoins – though not unanimously bearish – is therefore dismissive. The era of painful trading and restraint conditions may have to endure before returning, something that at least rhymes with the historical pattern of the Bitcoin half-life process.
What could be the market that lights up next week? Cointelegraph looks at five things to keep in mind as a Bitcoin trader.
Celsius “crashes” looms, causing Bitcoin to collapse
It took a long time to come, but Bitcoin has finally broken out of the narrow range in which it has traded since it first dropped to a ten-month low last month.
After bouncing from $ 23,800, BTC / USD then went around the $ 30,000 range for weeks, with no significant up or down movement. Now, though not what investors would want, the strategy seems clear.
– Rekt Capital (@rektcapital) June 12, 2022
It’s not just one area that Bitcoin has left – as trader and analyst Rekt Capital pointed out on June 12, when he left the area close to $ 30,000, BTC / USD is also canceling the macroeconomic trade that has been in place since the beginning of 2021 .
As such, the last weekly close, at $ 26,600, was the lowest since December 2020, according to Cointelegraph Markets Pro and TradingView.
“The worst is over. $ BTC 25k spent. Think can only squeeze now, continue to sell tomorrow with stocks, “economist, trader and entrepreneur Alex Krueger predicted.
The accompanying chart showed support for the $ 25,000 purchase, which helped fix a 24-hour loss of 12%.
The market at the time of writing was still in motion as the dust settled on a vicious reminder of what happened when May rose below $ 24,000.
As it was then that the Blockchain protocol of Terra’s LUNA and TerraUSD (UST) symbols exploded, this weekend it was the turn of the FinTech platform Celsius and its CEL symbols to follow.
Falling by 40% on the day in US dollars, CEL predictably suffered from Celsius’ decision to suspend withdrawals and transfers altogether in order to “establish liquidity”.
“Due to difficult market conditions, we announce today that Celsius is pausing all withdrawals, exchanges and transfers between accounts. “We are taking this action today to put Celsius in a better position to honor his withdrawal commitment over time,” he said in a blog post published on June 13.
In response to Bitcoin pundits already questioning the altcoin space in the wake of the Terra crisis, spend no time blaming the extent of BTC’s loss on Celsius events.
gox hack was rough, ICO bubble was annoying, but celsius strikes the most because it’s like we have not learned anything since 2008
it was literally on the first page of the bitcoin white paper
and yet time sometimes feels like a flat circle
– juthica (@juthica) June 13, 2022
“Celsius looks like it could collapse and take a lot of customers’ money with it,” added Robert Breedlove, director of What is Money. Twitter comments.
The Central Bank of Iceland’s policy looms over 40 years of record inflation
A black swan event that replicates Terra is probably the last thing Bitcoin needs given the already shaky macroeconomic situation.
Nevertheless, there is still room for new turmoil this week as the Fed’s Federal Open Markets Committee (FOMC) prepares for its June June meeting.
After 8.6% inflation on Friday, expectations are that the meeting will accelerate the pace of policy rate hikes – something that neither stocks nor cryptocurrencies would welcome.
Capitulation -> Retest -> Rinse Repeat #Bitcoin has seen this 31 day pattern repeatedly in 2022
If Jay Powell & FOMC surprises with something more than a 50-point rate hike, then it’s definitely a new leg down mynd.twitter.com/qMUeGp3gjR
– Matt C⚡️ (@mithcoons) June 12, 2022
Krueger, like others, added that the central bank was probably the factor in determining the remaining disadvantages of risky assets.
“The bottom line is that we have to wait for the Fed (or equities) to turn around,” he said wrote.
“Can scalp, but seriously doubts that some point will lead to a change of direction by itself. There is a small chance that the central bank will not be hawked on Wednesday and if so, it will fall sharply. Hawkish acceleration more likely.
Sales in Asia made equities worse earlier this week, affecting risky currencies such as the Japanese yen and the Australian dollar.
“At some point, financial conditions will tighten enough and / or growth will weaken enough for the central bank to pause the rise,” Goldman Sachs analysts, including Zach Pandl, wrote in a statement quoted by Bloomberg on June 13.
“But we still seem to be far from the point where there is a risk in bond yields, continued pressure on risky assets and probably a broad US dollar for the time being.
Bloomberg also reported that a 75 basis point rise in interest rates could be on the table as markets price base rates of 3% or more at the end of the year.
The US dollar spends no time challenging 20-year highs
As risky assets suffer, the US dollar has made the most of its strength over the past two years.
This trend appears to be continuing, as macroeconomic conditions are putting pressure on almost every other currency in the world and risk assets do not provide a viable haven.
The US Dollar Index (DXY), despite falling backwards in recent weeks, is now back on track, targeting the highest 105 seen in May. This reflects the maximum strength of the USD since 2002, and at the time of writing it is only 0.5 points away.
“$ DXY is getting strong, no wonder assets are filling up,” Tony Edward, host of the Thinking Crypto Podcast, answered.
Since the collapse of the cross-market in March 2020, the strength of the DXY has been a reliable indicator of BTC price performance. Until a significant development changes, the outlook for Bitcoin could therefore be skewed to the sales side.
“The strength of the dollar often leads to a contraction in corporate profits worldwide. Today’s inflation crisis adds even more pressure on profit margins that need to be squeezed out, “said Otavio Costa, founder of Crescat Capital, an international macroeconomic asset management firm. said Twitter followers on the dollar against the central bank’s inflation report on 12 June.
“It’s only a matter of time before the ‘soft landing’ story turns into the same old ‘temporary’ nonsense.”
The Misery Index underscores the market’s fears
This comes as no surprise when it comes to the cryptocurrency market this week, as the national economy is also turning for the worse.
The Crypto Fear & Greed Index, which uses a basket of factors to determine the overall situation among traders, is on the verge of a dip in single figures.
After spending much of 2022 in an area that is normally reserved for market bottoms, Fear & Greed has yet to convince anyone that there could be a floor.
On June 13, it measured 11/100, only three points higher than the national recession from March 2020.
Last week’s inflation print also took its toll on the traditional Fear & Greed Index, which is now back in its “fear” zone of 28/100, according to CNN.
It’s not just the financial world that is feeling the pinch – the so-called “Misery Index”, which measures inflation and unemployment, gives a signal that economist Lyn Alden describes as “not great”.
“Given how much debt / GDP there is now compared to the past, it is no wonder that consumer sentiment is at a minimum,” she said. comment on Fed data.
“Opportunity of a lifetime?”
Given the current situation, it could be as if there are no Bitcoin bulls left to offer silver feed to many clouds on the horizon.
Related: Top 5 Currencies to Watch This Week: BTC, FTT, XTZ, KCS, HNT
However, many people view the current market structure as a golden investment opportunity if it is utilized properly.
Among them is Filbfilb, another founder of the business suite Decentrader, which over the weekend called Bitcoin “the opportunity of a lifetime”.
“Just to be clear, despite the short-term and medium-term problems that unfortunately exist in many places, if you can survive and play your moves right without blowing up or stopping too much so you have no resources, then this is IMO opportunities of a lifetime, “he wrote as part of a Twitter thread.
Like others, Filbfilb linked BTC’s performance to equities, warning that the average hodler is blind to the “over-indebtedness” conditions that still exist in stock exchanges.
“They will feel the pinch,” he continued.
By putting Bitcoin in context now within its four-year half-life, the Venturefounder analyst meanwhile maintained that maximum pain could come in the coming weeks.
#Bitcoin The end of the cycle may be happening now.
– venturefounder (@venturefounder) June 13, 2022
At the moment, BTC is in the middle of its round at a place that has twice before suffered a bearish capitulation – both 2014 and 2018.
The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.
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