5 things to watch out for in Bitcoin

Bitcoin (Bitcoin) Starting a new week bearish or determined as a firm “buy” based on the source, what will happen next?

After a week of encouraging price performance, the largest cryptocurrency is still stuck in the lower $30,000 range.

As inflation worries traditional markets, and the summer has traditionally been beneficial to the bulls, there may still be reason to celebrate. However, in Bitcoin, anything can happen, and surprises can happen in both directions.

United Electrographics Market Five factors to consider when drawing the next move of BTC/USD.

Inflation frightens the macro sentiment

Due to holidays in the United States, the United Kingdom and other parts of the West, today is a quiet day for stocks and commodities.

In other words, in any case, the Asian market remains stable for most of the time, as traders are preparing for the traditionally slow start of summer.

However, reducing it will significantly reduce the stability of the image. The source told the mainstream media that the reason was inflation.

For a long time, driven by the huge liquidity creation of the central bank, the coronavirus has caused an international rebound, and the long-term impact of the carefully planned “recovery” on a global scale has become increasingly prominent.

Some obvious signs have emerged, such as rising manufacturing costs, which may not be fully reflected.

Mixo Das, Asian equity strategist at JPMorgan Chase, said: “Policy makers have promised to accept higher levels of inflation and higher inflation volatility. In this case, you will see inflation develop in a higher direction structurally. ” tell Bloomberg

“I don’t think this is in the price yet.”

Annotated chart of the Fed’s balance sheet. Source: PlanB / Twitter

Considering the fixed supply of cryptocurrency and the diminishing issuance curve, inflation is essentially the antithesis of the Bitcoin standard.

Therefore, the demand for institutions and institutions with large cash exposures should continue to expand with inflation, and the central bank is increasingly tolerant of inflation at a higher level.

In the debate on Bitcoin’s energy use earlier this month, Saifeean Ammous, author of the “Bitcoin Standard” suggested Annual inflation has eliminated approximately 10% of global wealth.

Weak hands cannot stop selling

On Monday, it was a frustrating sight for Bitcoin traders as it failed to produce a bullish price rebound over the weekend.

At the time of writing, BTC/USD is below $36,000 and has been slowly falling since hitting a local high of $41,000 last week.

After retesting the $30,000 support level again, these highs soon appeared, and Bitcoin bounced back at a price of $31,000, re-establishing the support level. Familiar trading corridor It has moved in since the surrender in early May.

Depending on who you ask, this setting is either a once-in-a-lifetime opportunity or a nightmare, and this split seems to be consistent with market experience.

According to the latest data from the on-chain monitoring resource Glassnode, at the current level, old players are increasing their BTC stacks, while recent buyers continue to sell to them.

The direction of this classic “weak hand is strong” is Nothing new, But the pace is accelerating.

The miners also repurchased, reversing the short sell-off process, accompanied by the first drop to $30,000.

Annotated graph of Bitcoin accumulation and BTC/USD. Source: Glassnode/Twitter

“This picture is crazy!” Popular Twitter account Lark Davis Respond to, Highlighting the excitement among long-term market participants.

“Miners and long-term holders keep accumulating, and only short-term holders are selling. There is nothing new under the sun!”

Bitcoin’s weekly relative strength index (RSI), Key indicators It is also used to calculate lows, which were only broken during the crash in March 2020 and the surrender of $3,100 in December 2018.

Key average prices make bulls headaches

In terms of a bull market or a bear market,Line in the sandFor traders who still need to keep Bitcoin to maintain its bullish crown.

In its Latest market update, The trading suite Decentrader emphasized that the 200-day moving average (DMA) and the 20-week moving average (WMA) are important levels that deserve attention.

The 200 DMA is currently at a position slightly above $40,000 (the position where BTC/USD was rejected last week), while the 20 WMA is higher, close to $49,000.

Decentrader concluded: “If Bitcoin finds enough demand at the low end of the 1930s, then 20 WMA will be expected to become resistance.”

“The decline may make the low $20 or 78.6% retracement a possible target. Therefore, next week’s price movement is particularly important.”

The idea that Bitcoin may return to the high of $20,000 in 2017 is not popular among many people, including PlanB, the creator of a price model based on the liquidity of stocks (S2F).

Although acknowledging that his model is still “tested” by price fluctuations, he believes it is unlikely that the new surrender will be lowered to $20,000.

“Of course, I disagree, the price of S2F and on-chain pointing is much higher ($100-288K). Time will prove everything,” he Say In the Twitter presentation last week.

He added that Bitcoin’s “realized price” (BTC/USD calculated based on the price of the last move of each coin) is now $23,000. In the bull market of 2013 and 2017, realized prices soared by an order of magnitude, and this year has not replicated.

He said: “At a price of 23,000 US dollars, we still have a certain way to go IMO.” Commented And a chart showing the realized price for 200 WMA.

Bitcoin has achieved a halving event of price and BTC/USD relative to a few months. Source: PlanB / Twitter

Funding interest rate eases people’s concerns

For some kind of opposition, an implicitly bullish example that can be used to characterize recent price movements is the foreign exchange financing interest rate.

From the current health point of view, this shows that under the current circumstances, this is a situation where shorts pay long.

“The open positions failed to recover, and leveraged participants were largely eliminated during the sell-off and were unable to re-enter. Funds have also been kept at low/negative levels, which further echoes the market,” Decentrader added.

As a repetition diagram Reported, The surrender of leverage bets in the $30,000 sell-off effectively reset the market composition because traders avoided taking risks.

This should allow more organic price growth to be driven by long-term demand rather than short-term speculative betting real demand, and real demand comes from countries that are more likely to hold BTC.

Bitcoin funding rate chart.Source: Bibert

Is it the worst ever?

Is this the worst ever? As far as Bitcoiners’ monthly income is concerned, it certainly looks like it.

On the last day of May 2021, this sentiment may not be optimistic, as the monthly losses of riders total nearly 40%.

In contrast, May tends to be a lucrative month for BTC/USD-for example, in 2017 and 2019, the pair rose by more than 50% in May.

2018 was an outlier, with a loss of 19%, but compared with this year, these losses are still pale. Judging from the performance in the first and second quarters, May 2021 is currently expected to be the worst month since 2013.

Percentage of Bitcoin’s monthly earnings. Source: Bybt.com

However, doom and depression are far from everywhere. In addition to Bitcoin, the altcoin market also showed signs of vitality, leading to a continuous rebound in currency prices. XRP, An increase of 13% that day.

As pointed out by traders, the largest altcoin Ethereum (ETH) Is especially promising, and there is almost no trading activity compared to the behavior of the bear market.

Trader Cypto Ed: “We shouldn’t worry too much about the weak BTC because it may follow the stronger alt/usd pair, or continue its chopped/sideways consolidation when alt rises,” to sum up.