Bitcoin is still recovering from the China mining disaster, but the price action in a low volume market remains delicate.
The new week begins with Bitcoin ( ETH0_) and a moderate price action. What are the future prospects for the cryptocurrency?
Despite still holding $30,000 support for Bitcoin, traders aren’t excited by it. However, volatility has reminded them of its existence over the past week.
Everyone is waiting and watching as the mining recovery continues.
Cointelegraph looks at five factors that could give BTC price action direction in the near term.
As stocks advance, the dollar gains strength
It’s the classic summer picture of equities: a slight decline last week was followed by all but continuous gains. The caution came from Covid-19, inflation, and other triggers.
However, this time of year is known for its inaction and recent changes have been limited.
Lori Calvasina (head of U.S equity strategy at RBC Capital Markets), wrote that the Covid backdrop was just one of many factors that could be negatively impacting reflation trade.
The modest stock market shakeup gave the U.S. Dollar some strength, with the U.S. currency index (DXY), climbing to 93.
Cointelegraph reported that DXY’s inverted correlation to Bitcoin is still under the spotlight. A short-term peak of the index could indicate price pressure for Bitcoin/USD.
Oil is another focus, thanks to a decrease in tensions among OPEC+ member countries and a new agreement to increase output. Although it is less likely that Bitcoin behavior will be affected, unexpected volatility could fuel a low-volume cryptocurrency marketplace.
Last week’s news that Bank of America had approved Bitcoin futures trading for a select group of clients quickly sent BTC/USD $1,000 up.
The U.S. Federal Reserve may take more action this week than another bank. Janet Yellen will pay attention to a working group on stablecoins when it is formed with the aim of “intra-agency” work.
Weekly candle increases risk of $29,000 drop
Monday started on spot markets with optimism for the future and less confidence in current price events.
BTC/USD saw volatility over the weekend, unable to overcome resistance at $32,000 or greater but also able to avoid tests for $31,000 support.
The hourly chart was centered on the lower timeframes at the time of writing. Ranging is the dominant feature of the hourly charts.
Michael van de Poppe declared, “It’s time to have a green week in Bitcoin,”.
The topic of when and if a Bitcoin price bottom might occur is still a hot topic. Cointelegraph reported on Sunday that the drawdown from the latest all-time high at $64,500 has lasted three months. This is the second-longest drawdown in a bull market.
Van de Poppe suggested that the bottom might not be as dramatic, despite popular opinion favoring a return of below $30,000
He shared this message with Twitter followers: “A bottom doesn’t always look great, because the majority of people are expecting further downwards moves of the markets.”
“A bad weekly candle does not necessarily mean that prices will fall further,”
This candle disappointed, as Sunday’s close on BTC/USD was its lowest since 2021.
Rekt Capital analyst and trader, a $32,000 reclaim is an issue in and of itself. This opens up the possibility to reach $29,000.
“Bitcoin is in danger of losing its Weekly support ($32000). He warned Sunday that today is the last day $BTC can reclaim this support.
“Lose them and there is no higher timeframe support for stopping BTC from another visit of the green space.”
Expectations are exceeded by difficulty
Bitcoin’s fundamentals are continuing to recover from the extraordinary events of May and Juni, which is in contrast to its price.
While the network hashrate is still above its low of 83 exahashes/second (EH/s), it has not suffered any major setbacks due to miners moving away from China.
However, the true signs of progress come from difficulties.
The automated readjustment this weekend saw difficulty drop by just 4.8%, which is a pleasant contrast to previous estimates. Two weeks before, difficulty was predicted to drop more than ever — by nearly 29% — but it slowly improved over the two-week cycle.
Bitcoin is now on track for its first positive adjustment since the May price crash.
These changes reflect Bitcoin’s indomitable ability to monitor itself, and incentivize miners to return to the network while continuing transactions unhindered.
Commentators agree that the worst of recent turmoil is now over.
“The hangover from a difficulty adjustment downs from the China crackdowns ought to conclude after this adjustment,” Kevin Zhang (Vice President of Digital Currency Group mining advisory subsidiary Foundry Services), stated at the weekend.