‘Lower wave’ for all markets? 5 things to know about Bitcoin this week

bitcoin (BTC) begins the week before Christmas with a whimper, as a tight trading range gives BTC bulls little joy.

A weekly close just above $16,700 means that BTC/USD remains without major volatility amid a lack of overall market direction.

Having seen erratic trading behavior around the latest US macro data printout, the pair has since returned to an all-too-familiar status quo. What could change it?

That’s the question on every analyst’s lips as markets hobble into Christmas with little to offer.

The reality is stark for the average Bitcoin hodler: BTC is trading below where it was two years and even five years ago. “FUD” is barely in short supply thanks to the fallout from FTX and concerns over Binance.

At the same time, there are signs that the miners are recoveringwhile on-chain indicators indicate that the time is right for a classic macro price bottom.

Will Bitcoin disappoint more in the new year, or will the bulls get the Santa rally they so desperately need? Cointelegraph takes a look at the factors behind the upcoming BTC price action.

BTC Spot Price: “Capitulation” or “Slow Grind”?

Closing the week at just under $16,750, Bitcoin escaped without further bout of volatility on December 18.

Even the accompanying US inflation data and Federal Reserve comments were short-lived, and BTC/USD has since returned to a possibly frustrating status quo.

Data of Cointelegraph Pro Markets Y TradingView It proves the point: since the FTX scandal broke in early November, Bitcoin has hardly seen any notable price movements.

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

For market commentators, the question is what it will take for things to take a different turn, up or down.

looking Fibonacci retracement levels on the weekly chart, analysis resource Stockmoney Lizards ventured that BTC/USD was at “key support.”

If the area around $16,800 starts to disappear, the next one will be around $12,500.

Another chart from the weekend compared what he called “final washes” for Bitcoin during previous bear markets. This reinforced the idea that BTC/USD may be almost done “copying” previous macro bottom structures.

BTC/USD chart comparison. Source: Stockmoney Lizards/Twitter

Others believe that the worst is yet to come for the current cycle. Among them is popular Crypto trader and analyst Tony, who is among those targeting a low. potentially around $10,000.

“So in 2023, I expect BTC to start to form a bottoming pattern at the lower limits of the range we are currently in, along with volume support around $11,000 – $9,000,” he reiterated in a statement. Twitter thread this weekend.

“Whether we capitulate or if we capitulate slowly remains to be seen.”

He added that the “accumulation stage” after the mass capitulation would only move forward in 2023, as Bitcoin prepares for its next block subsidy halving event.

New US data as analysis predicts a fall in risky assets

after last week drama Courtesy of inflation data and the Federal Reserve, it is safe to say that next week will provide somewhat less pressure for Bitcoiners.

That being said, third quarter US gross domestic product (GDP) growth is due, and is projected to turn positive after the second quarter saw a 0.9% retraction.

This is significant, as in Q2 printing, the US technically fell into a recessiondespite the best efforts of politicians to deny that the financial outlook was as dire as the data implies.

However, as market investor Ajay Bagga points out, too sharp a reversal in GDP would give the Federal Reserve the license to continue aggressive interest rate hikes to rein in inflation, something not welcome for assets. risk across the board, including crypto.

“The US Fed Atlanta GDPNow model estimate for US real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 is 3.2% on December 9, below 3.4% on December 6,” he said. wrote in an update last week.

“Very strong reading for US GDP from a mostly accurate estimator. The Fed will go up and keep going up.”

Beyond GDP, you should also know the personal consumption expenditure (PCE) price index, a measure the Fed watches closely when considering policy changes.

in his last market update on December 17, the trading firm QCP Capital also drew attention to the impact of the PCE.

“Thanks to the Federal Reserve, regardless of what we are trading now, we are only trading inflation impressions (and wages),” he summarized.

However, QCP had a word of warning for risk asset markets, which came in the form of an upside for everyone, including cryptocurrencies, for the foreseeable future.

“As we have been writing, this Q4 rally has set up the perfect fourth wave, with a trailing lower fifth wave incoming for all markets: S&P/Nasdaq, 2Y/10Y, USD, and BTC/ETH,” he stated.

Annotated chart of NASDAQ 100 futures. Source: QCP Capital

Crypto Tony shared that sentiment, predicting what he called a “momentum low” in stock indices before a bounce.

“I was looking for momentum to create a double top around 4320, but we didn’t get there and we said goodbye early,” the S&P 500 performance analysis read.

“Same picture here where I’m looking for another push low to complete the WXY pattern I’m looking at.”

Annotated chart of the S&P 500. Source: Crypto Tony/Twitter

Binance CEO Calls Out “FUD” as Foul Play Claims Continue

Where FTX started, Binance is now following.

That’s the prevailing impression from a crypto media sweep at the start of the week, with Binance firmly on the radar as it battles what CEO Changpeng Zhao has. called repeatedly “FUD”.

The world’s largest cryptocurrency exchange by volume has been met with backlash from both the media and users in recent weeks as its attempts to prove its reserves fail to convince.

Like Cointelegraph reportedAmong the latest events is the Binance auditor removing its supplemental findings on the exchange’s financial promises.

Reuters, a report from which Binance publicly rejectedmeanwhile, has given way to a series of new doubts, including a blog post alleging suspicious activity between Binance and its US counterpart, Binance US

“These findings fit perfectly with previous reports by Forbes and Reuters indicating that Binance.US was a clever hack designed to mislead regulators and customers,” the post, from an entity calling itself Dirty Bubble Media, concludes.

“However, with the collapse of FTX, everyone is taking a closer look at the cryptocurrency industry. We doubt that Binance’s regulatory Tai Chi will allow them to evade the long arm of the law for much longer.”

Meanwhile, Zhao continues without giving time for any type of accusation, on December 17. reiterating his “FUD” perspective. Later, he retweeted the words of Ryan Selkis, founder of the Messari analysis platform, in which he stated that there was an element of “xenophobia” in the criticism of Binance.

“A good part of Binance FUD is just thinly veiled xenophobia,” Selkis wrote in two tweets.

“I am in favor of stress testing on deposits and I think it is bad that such a high percentage of volumes are executed through a single exchange. I also don’t like the tone of some of the reviews. Forgiveness!”

Nonetheless, Binance remains one of the top potential price triggers for BTC, as Cointelegraph noted In the past week.

Miners turn up the competition

After its biggest decline in almost 18 months, the difficulty of the Bitcoin network will begin to increase again this week.

According to estimates of BTC.comthe next bi-weekly difficulty reset will see an increase of around 3.8%.

Overview of the fundamentals of the Bitcoin network (screenshot). Source: BTC.com

This has implications for miners, who have seen considerable turmoil in the weeks since FTX sent BTC/USD tumbling as much as 25%.

With the profits squeezed, worries It began to look as if the miners were in for another major capitulation event and would withdraw en masse from their activities.

As Cointelegraph recently reportedHowever, not everyone agrees: the latest interpretations of the data have led to the conclusion that most of the acclimatization has already taken place.

With the difficulty going up again, this theory is still a valid observation, as increased difficulty implies more pronounced competition among miners, rather than a retreat.

On-chain analytics company data glass node furthermore, it shows the 30-day decline in miners’ BTC holdings receding as sales cool off.

Bitcoin miners 30 day net position change chart. Source: Glassnode

Meanwhile, when discussing the overall share of miners in supplying BTC, journalist Colin Wu argued that his position was not necessarily meaningful.

“It is estimated that Bitcoin miners currently have a maximum of 820,000 Bitcoins, a minimum of 120,000 Bitcoins, only 1% to 4% of Bitcoin circulation, even if publicly traded mining companies sell production in June of this year 350%, the impact has also weakened”, part of the comments on Twitter read weekend.

Chart of estimated BTC stocks from Bitcoin miners. Source: Colin Wu/Twitter

Sentiment is forecast to fall to 2022 lows

It’s no secret that cold feet is the name of the game when it comes to crypto sentiment this quarter.

Related: Bitcoin still lacks this on-chain signal for the BTC bull market — David Puell

Thanks to FTX and now Binance, there is a clear sense of doom hanging over social media, and price action in crypto assets still doesn’t paint a different picture.

That being said, the Crypto Fear and Greed Index he’s performing noticeably better than expected, still above his low of “extreme greed.”

At 29/100, one could even say that the index is somewhat disconnected from the mood.

For Crypto Tony, however, it will be short lived as the Index will return to this year’s lows of just 6/100 in 2023.

“When we have extreme fear, it looks like a good buy area. If we are in extreme greed, it is a selling zone. Based on human psychology ”, explained part of the comments.

“In June we hit 6 ‼️ I hope we revisit that next year.”

Fear & Greed came out of “extreme fear” at the end of November and has yet to return, hitting a high of 31 on December 15, its best performance since November 8.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

The views, thoughts and opinions expressed here are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.