After a disappointing but uninspiring weekend, BTC/USD opened Monday for the first time since the 22nd. April again with a value of $53,000. What could be stored?
Cointelegraph takes a look at five factors that could determine BTC’s price action in the coming days.
1 week candlestick chart BTC/USD (Bitstamp). Source: View of the shop
Stable stocks, but dollar down
Stock prices are still tepid this week, with the macro picture being the usual mix of hope and misery caused by the Corona virus.
Although Asian markets as a whole had a quiet day, India’s viral problems and Turkey’s financial woes caused concern.
Moreover, as the US prepares to send tourists to the EU this summer, new economic incentives for traders are beginning to emerge.
However, without an overall direction, there is little pressure for bitcoin to follow the macro story – and daily price movements already prove this.
What makes the future? Tesla and SpaceX engineer Elon Musk summed it up Saturday in a tweet that will break the hearts of many marketers. Tesla, one of the largest investors in BTC, is expected to announce its results after the close of Wall Street.
As for the dollar, bitcoin is more likely to move higher as the U.S. Dollar Index (DXY) continues to decline after closing below 91 on Friday. As Cointelegraph often reports, the index tends to be negatively correlated with BTC/USD, especially in the past year.
BTC returns $53,000 to thechip
The spot price of bitcoin is already offering surprises, and unlike last week, it’s the bears that are getting overrun.
Data from Cointelegraph Markets Pro and Tradingview shows that BTC/USD has climbed back to $53,000 for the first time after losing the same level last week on its way down.
The level itself is significant because it matches bitcoin’s $1 trillion market capitalization, a line that analysts say should have been maintained.
In this case, $46,000 was the bottom, but it is not yet clear if the recent price decline is over. This is evidenced by the trading positions, with no less than 53,000 short selling transactions being liquidated at a rate of $150 million per hour.
It looks like the midterm sell-off is coming to an end, assumed podcast host Preston Pysch on Sunday.
The magnitude of the drop came as a shock to some investors, despite hordes of new buyers reporting. Channels have generally remained in the green, reinforcing the theory that the current situation is a temporary anomaly in an otherwise bullish market.
The market is very emotional about the 2%+/- surge at the close, Decentrider trading complex co-founder Philbfilb told Telegram subscribers last week.
Message: Volatility is coming. I’m optimistic, but I think we need to shake things up a bit before we go higher. Maybe there’s a problem… with the direction, but not so much with the volatility as the bands.
The difficulty is ready for the biggest rehearsal since November
For the most part, miners are still recovering from power outages in China that caused hash values on the grid to drop overnight in April.
The flood crippled much of China’s mining industry, as it did earlier in bitcoin’s history, leading to a drop in hash values that at one point approached 25% of historical highs.
Since then, the miners have begun to adapt. Reducing the complexity of mining allows smaller operators to operate mines more profitably and provides an incentive to maintain the safety of the system.
This decline, which is expected to occur in about five days, will be the largest negative move since Q3. November, when BTC/USD was still at $13,000.
7-day average bitcoin hash rate. Source: Blockchain.com.
Complex adaptations are an important, if not the most important, part of bitcoin’s ability to sustain itself regardless of the external factors affecting its modus operandi.
In recent months, the difficulty has increased, which along with the hash rate has led to higher and higher records. If history repeats itself, stock prices should also rebound as the recovery continues.
Commenting on recent events, Adam Beck, CEO of Blockstream, cautioned observers not to rely on a single statistical source, stating that the decline was in fact not as large as some had suspected.
Bitcoin has fallen back to the 157-EH level, about 5% below the peak of 168-EH. He essentially recovered from a 25 percent drop to 125 EH, he tweeted Sunday.
moods are subject to extreme anxiety
With shorts and overlengths, it seems that the irrational mood of the crypt has finally been shaken.
This is the conclusion of the popular Crypto Fear & Greed Index, which uses a basket of factors to determine trader sentiment and thus what might happen to BTC/USD as a result of their actions.
Earlier, when new all-time highs surfaced at $65,000, Fear & Greed approached all-time highs in line with past bull market tops.
At about 80/100, there was clearly an impending decline, which according to the metric took about a week to respond to the $46,000 price drop.
But today, the pressure has dissipated and the index has gone from extreme greed to fear – in effect, a reset of sentiment that provides opportunities for further price gains.
Analyst sees price drop as a good thing
It’s not just individuals who have had a serious change of heart. According to other indicators, the erratic behavior of professional traders has actually disappeared from the market.
In his latest update to Anthony Pompliano, co-founder of Morgan Creek Digital, analyst William Clemente noted that long-term interest rates have become attractive again.
There was a silver lining in this event, greed and leverage were wiped out, he wrote.
This is reflected not only in sales but also in production quotas. The refinancing rate is used to link the perpetual swap contract to the bitcoin spot price. When most traders open long positions, it becomes profitable to open short positions and vice versa. During the event, refinancing rates turned negative, meaning it became advantageous for traders to take the long side of the trade. This signal was a buy signal the last two times it occurred during this bull market.
The Spent Outcome Profit Ratio (SOPR), a metric which, as Cointelegraph has previously noted, tends to dictate the bottom of the local market, is also about to be completely reset.
The SOPR is now approaching the full reset mark, meaning the price has reached or is very close to reaching the bottom of the current correction, Clemente added.
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