Bitcoin (BTC) starts a new week with a bearish or flat “buyer” depending on the source – what’s next?
After a week of boring price calculations, the biggest cryptocurrency is still stuck in the low $30K range.
Given that inflation worries traditional markets and the traditionally friendly summer months, there is still reason to celebrate. However, anything can happen in Bitcoin, and surprises can be two-way.
Cointelegraph Markets considers five factors to consider when mapping where BTC/USD might move
Inflation weakens the overall mood
It’s a quiet day for stocks and commodities thanks to holidays in the US, UK and other western countries.
However, Asian markets are largely stable no matter when traders prepare for the start of the traditionally slow summer period.
When zoomed out, the image is clearly less stable. Sources say inflation is the culprit.
Protracted anxiety amid the international economic recovery from the coronavirus driven by the central bank’s massive liquidity creation, the long-term impact of planned “refunds” around the world is becoming increasingly evident.
Some notable features are already in place, such as high production costs, which cannot be fully reflected.
“Political decision makers are committed to dealing with rising inflation, rising inflation, and when that happens, you will see a structural increase in inflation,” Mixo Das, equity analyst at JPMorgan Asia, told Bloomberg.
“I don’t think it’s still in price.”
A detailed chart of the Federal Reserve’s balance sheet. Source: PlanB / Twitter
Inflation is inherently the opposite of the Bitcoin standard, given the constant access to the cryptocurrency and the declining emission curve that cannot be manipulated.
Thus, demand from institutions and those who are highly exposed to cash should continue to increase in line with inflation, which central banks increasingly tolerate at higher levels.
During a debate on Bitcoin’s energy use earlier this month, Saifidan Ammous, author of The Bitcoin Standard, suggested that around 10% of the world’s wealth is actually destroyed by inflation each year.
Weak hands can’t stop selling
This is a somewhat bleak picture for bitcoin practitioners on Monday, as the weekend showed no signs of an upward recovery in prices.
At the time of writing, BTC/USD is below $36,000, declining slowly since hitting a local high of $41,000 last week.
These highs were reached shortly after the retest of the $30,000 support, which saw bitcoin surge to $31,000, and restore the well-known trading corridor it has moved into since capitulating earlier in May.
Depending on who you ask, such a situation is either a golden opportunity for hoarding or a nightmare – and the split seems to align with market experience.
At the current level, old hands are adding to BTC, while new buyers keep selling to them, according to recent data from chain monitoring supplier Glassnode.
There is nothing new in this classic trend of “weak hands – strong”, but the pace of development is constantly increasing.
Miners also returned to buying, reversing the streak of short sales that followed the initial drop to $30,000.
Bitcoin accumulation and BTC/USD token chart. Source: Glassnode / Twitter
“This graph is crazy!” Popular Twitter account Lark Davis responded by highlighting the sense of excitement among longtime market participants.
Miners and long-term contract holders accumulate, and only short-term contract holders sell them. Nothing new under the sun! ”
The Bitcoin Weekly Relative Strength Index (RSI), a key indicator for identifying overbought and oversold territory, is approaching the lows that were only breached due to the March 2020 crash and the $3,100 capitulation in December 2018.
Important average prices give the bulls a headache
When it comes to bulls or bears, there are “lines in the sand” for traders that Bitcoin still has to maintain in order to maintain its bull market crown.
In the most recent market overview, the decentralized trading package identified the 200-day moving average (DMA) and the 20-week moving average (WMA) as important levels to watch.
The 200 DMA is currently just over $40,000 – where BTC/USD was rejected last week – while the 20 WMA is higher at around $49,000.
Decentrader concluded that “if Bitcoin finds enough demand in the 1930s, the 20 WMA is expected to act as resistance.”