“The best bear market ever”-5 things to watch for Bitcoin this week

Bitcoin (Bitcoin) Start a new week with a clear bearish trend-but this has not shaken investors’ confidence in the bull market.

On a mixed weekend, BTC/USD closed above 47,000 USD, but lost all previous gains a few hours later, challenging the 45,000 USD support level.

This is a delicate situation-not only Bitcoin, with the outbreak of Evergrande in China, stocks and sentiment have been hit. What will affect the cryptocurrency market?

As analysts expect the BTC price trend to be a “turbulent” week, Cointelegraph will consider five factors worth considering when drawing where Bitcoin may go in the short term.

El Salvador “buy on dips”

At the beginning of the week, the Bitcoin spot price movement had little inspiration for traders.

The strong reversal before Sunday intensified overnight, with BTC/USD falling below the $46,000 mark.

In the turmoil of the traditional market, Evergrande Legend In China, it is likely that no profitable deals will be offered this week. For the popular trader Pentoshi, now is the time to take stock and wait for the situation to resolve itself.

As Cointelegraph Report, US$44,000 represents the supporting wall that Bitcoin now looks to be retested. A deeper dive may generate $41,000 or even $38,000, which forms a key Fibonacci retracement level.

However, overall, market sentiment still firmly supports the return of the cryptocurrency market in the fourth quarter.

At the same time, among those who “buy on dips” is the Salvadoran government, which confirmed on Monday that it bought another 150 BTC, with a total holdings of 700 BTC.

“If you buy on dips, they will never be able to beat you,” President Nayib Bukele (Nayib Bukele) Said In a series of typical witty tweets in his country Bitcoin policy.

BTC/USD 1-day candlestick chart (Bitstamp). Source: TradingView

Bitcoin “is like an absolute champion”

Analysts said that this is a difficult environment, considering all factors, Bitcoin’s performance is far better than expected.

Whether it is stocks or safe-haven gold, the situation this week is obviously not so optimistic. For example, the S&P 500 index is expected to close below the 50-day moving average for the first time since June.

Veteran trader Peter Brandt pointed out that gold is falling to a low point since April, and compared with the Nasdaq 100 index, precious metals are at a low point almost 20 years ago.

“Given the rise in the U.S. dollar (close to cyclical highs), the weak stock market, and the collapse of metals, BTC behaves like an absolute champion because it rejects the idea of ​​entering deep cyclical lows. Relative to v.strong,” Traders, Entrepreneurs and Investors Author Bob Lucas wrote in an article. Recent summary Case.

The strength of the U.S. dollar is indeed clearly visible, as the U.S. dollar currency index (DXY) Close to 94 Classic headwind For Bitcoin.

If the status quo begins to change, the driving force for BTC’s stronger performance is clearly in place.

1 day candlestick chart of the US dollar currency index. Source: TradingView

Bitcoin prepares to increase difficulty 5 times in a row for the first time since 2019

Bitcoin’s fundamentals have never been better—perhaps clichés, but this week, these numbers speak for themselves.

Both difficulty with Hash rate The stubborn rejection of the downward trend indicates that the basic beliefs of miners are still unswervingly bullish.

The difficulty of mining, which has been easing the impact of the Chinese mining crash in May for months, will now increase for the fifth consecutive time on Tuesday.

This is a rare event-the last time difficulty increased five times in a row at the end of 2019, before the cross-market crash in March 2020 worsened sentiment. Even the subsequent bull market and a record high of $64,500 cannot replicate this achievement.

Therefore, for those who believe that price action must follow the fundamentals of the Internet, the outlook seems more optimistic than ever.

The hash rate confirms this-despite the moderate price performance in the past week, it is estimated that the network still shows 140 exahashes per second (EH/s), which is only 17% below the historical high.

For Vince Prince, an investor and a commentator on hash rate performance regulators, the latest comparison between the indicator and the spot price is full of confidence.

“Although Bitcoin has sold off in large numbers, the hash rate has actually increased,” he Summarize last week.

“This shows the relative strength of bullish demand.”

7-day average chart of Bitcoin hash rate.Source: Blockchain

Zoom out, it’s “up only”

The realized upper limit of Bitcoin is now higher than the record high of the spot price in 2017, at $21,000. Its 200-week moving average (WMA) is usually considered to be the definite lower price limit, and BTC/USD has never breached this level and is now $15,600.

Bitcoin 200WMA and realized upper limit and BTC/USD chart.Source: PlanB/Twitter

According to PlanB, the creator of the stock-to-flow Bitcoin price model, these are not just numbers.

The relationship between the realized cap (an expression of the market value based on the last move price of each Bitcoin) and the 200WMA is a useful indicator of the market’s growth potential.

The top of the previous price cycle, especially in late 2013 and 2017, was accompanied by a huge gap between the two indicators. However, this time, the situation is the opposite-Bitcoin is likely to be a reliable “buy.”

As Cointelegraph Report, It is estimated that a six-figure BTC price will be realized before the end of the year. Q4 should be a springboard. A solid foundation was formed in October, with the lowest monthly closing price of US$63,000.

“The $63,000 in October was only 31% more than today,” PlanB Add to last week.

At the same time, September’s “worst case” monthly closing price was $43,000.

“The best bear market ever”

This is a classic setting. Historically, it excludes the main period of bullish price action-Bitcoin is relatively close to all-time highs, but no one is interested.

related: The 5 most noteworthy cryptocurrencies this week: BTC, DOT, LUNA, ATOM, FTT

Although the transaction price is close to 50,000 U.S. dollars, BTC/USD is a topic that less and less people talk about this month-this trend is also obvious among Internet users.

Data from Google Trends It shows that “Bitcoin” is as unpopular as in mid-July, when the trading price of BTC/USD was slightly higher than $30,000.

Google Trends data for “Bitcoin”.Source: Google Trends

Only in December 2020 will search interest be relatively low, which is before the main phase of the Bitcoin bull market really takes off.

However, as suggested by analyst William Clement, such conditions are very suitable for unexpected adjustments caused by BTC price movements.

“Bitcoin broke the bull market flag last night and hit a higher high with 0.01% funding, and my news was completely silent. Great,” he Tweet Sunday, it was ironic before describe The current situation is “the best bear market ever.”

Crypto Fear and Greed Index as of September 19. Source: Alternative.me

At present, investor sentiment is also in an ideal state, Crypto Fear and Greed Index It is in the “neutral” zone because Bitcoin hovered in the final resistance before $50,000.

This indicator shows that “greed” has not yet returned significantly in the crypto market Speculative trading disappeared See you in early September.