Bitcoin (BTC) is entering a new week with fanfare after closing its highest weekly close since mid-June – can the good times continue?
After a volatile weekend, the BTC/USD pair managed to constrain losses in the latter part of the weekend to produce a solid green candle on the weekly time frames.
In what could be the last “quiet” week of summer, the bulls have time on their hands in the absence of major major market drivers that include the US Federal Reserve.
Fundamentals remain strong on Bitcoin, due to the mining difficulty increasing for the second time in a row in the coming days.
In the derivatives markets, there are encouraging signs as well, with higher price levels accompanied by bullish data on sentiment.
The question now is how strong the rally will be and if it is: a bullish countermove within a broader bear market.
Cointelegraph presents five factors that may influence the price this week and help decide on Bitcoin’s next steps.
Bitcoin Embraces Volatility After Multi-Week Close
At around $24,300, the weekly close on August 14 was the best in two months for BTC/USD.
The weekly chart shows that a persistent bullish grind continues to take shape after the June lows, and last week’s candlestick totaled around $1,100, or 4.8%.
An impressive move by 2022, gains triggered some overnight volatility on the first Wall Street trading day of the week, and BTC/USD continued to hit $25,200 on exchanges before reversing significantly below the weekly close.
BTC/USD 1-week candle chart (Bitstamp). Source: TradingView
Such moves have characterized recent days, bringing little surprise to traders who continue to act cautiously on shorter time frames.
Popular Crypto trading account Tony summed up part of his latest Twitter update that day: “A new week begins, with bears so far in to retest some key levels”:
“Once again we should see an interesting week with the price action. Scattered all over the store on the lower time frames.”
If the unpredictability persists, the chances of a downward movement are clear, according to the material indicators of the on-chain monitoring resource.
After the close, the weekly chart started showing “downward momentum,” he warned, while the daily time frames were “flat” according to his trading tools.
Its creator, Materials Scientist, described this week as “the final week of the Bear Walk” in his own comments.
A much deeper correction remains – perhaps unsurprisingly – is gold expert Peter Schiff, who has confirmed that $10,000 is still on the cards.
Just to put the #Bitcoin rally in perspective, take a look at this chart. The pattern is still very bearish. There is a double top and a head and shoulder. There is a rising wedge forming below the neckline. At a minimum, the support will be tested at less than $10,000. see below! pic.twitter.com/OHNhwsgxxs
– Peter Schiff (@PeterSchiff) August 14, 2022
However, in the longer term, fellow trader and analyst Rekt Capital has been quiet about BTC’s price action.
He said that the spot rate below $25,000 should be used for the dollar cost average (DCA) to bitcoin — buying a set amount for each specified period — until the next subsidy halving occurred in 2024.
“To succeed in Crypto, you need a dollar-cost averaging strategy, investment thesis, vision, and patience,” he told his Twitter followers over the weekend:
“My DCA strategy is anything under $25,000. My pitch is based on the 2024 halving event which sees a bull peak a year later than the halving. Right now I’m just impatient.”
The macro is still on the ‘knife edge’
After reading last week’s US inflation, the next five trading days look relatively calm from a macro perspective.
The Fed is calm, letting only unexpected events in Europe or Asia affect market performance.
However, the likelihood that cryptocurrencies will continue to react quickly to the macro stimuli behind inflation may actually be lower than many believe, according to a popular analyst.
In a new market update for his trading suite, DecenTrader Filbfilb looks at the decreasing correlation between BTC and what he calls “old markets” more broadly.
“Bitcoin has been highly correlated with the legacy markets as shown below with the S&P500 in white and the NASDAQ in blue, but since the recent bottom all the downside has been restored in the legacy markets and Bitcoin has failed to follow suit,” he wrote, along with Comparative graph.
BTC/USD vs Nasdaq mini futures chart vs S&P 500 mini futures chart. Source: TradingView
Filbfilb added that since its June lows at $17,600, bitcoin has not actually risen as strongly as the previous relationship would have dictated, noting that the spot price should be above $30,000.
The reason lies in the Terra and Celsius disaster, providing something of a perfect storm if taken together with concerns about inflation and the Fed’s reaction to it.
What hasn’t changed is bitcoin’s tendency to be at the mercy of the Fed’s anti-inflation policy. Better inflation than expected.