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Table Of Contents
- Bears in control as Bitcoin (BTC) struggles to regain control of $20K in the second week of September
- Global macroeconomic forces are still at play; focus on Europe
- Bitcoin’s movement northward is subdued by negative sentiment combined with risk appetite in the near term
Bitcoin (BTC) price showed a lack of volatility in the market on Monday following taming of the bull’s defensive efforts to hold support at $20,000 over the weekend. The coin continued tracing sideways movement coming off the weekend and remained under this level yesterday. The loss of support around the psychological $20K mark potentially sets up the price of the leading cryptocurrency for a turbulent ride in a week full of macroeconomic influence.
Here’s what to take note of going into week two of a month with a striking history of overall downside.
Macroeconomic factors to remain at play despite lack of direction in crypto markets
Bitcoin has hovered between $19,700 and $20,100 for the past three days, leading other altcoins in trading around a tight range. Macro BTC signals suggest that the Satoshi coin could be looking to print its lowest price yet, which will come in the form of a retest of June lows of around $17,700. Markedly, several external forces, more so soaring inflation, have weighed heavily on the price for the better part of the year.
This week, Europe’s energy troubles and the recent plunge of the euro against the US dollar are the key events to keep track of as they act to limit recovery and a bounce back in the crypto prices. The US macro picture is expected to come into focus next week on Sept 13, when the Federal Reserve releases Consumer Price Index (CPI) figures for August.
On Monday, the euro, which has been eroding since the start of the year, slumped to a twenty-year low exchange rate against the US dollar.
The dip isn’t the only cause of concern, with analysts projecting that more losses are still favored as a rebound remains an elusive goal. It also has to be noted that most equity markets aren’t doing any better and their correlation with crypto assets hampers a breakout north.
Bitcoin (BTC) holders accumulate, research says this could be positive
The majority of Bitcoin holders have become resilient, as evidenced by recent on-chain data, which indicates that even BTC last bought a dozen months ago is hardly seeing any movement. Blockchain insights platform Glassnode recently reported local records in the stationary BTC supply – a trend that analysts contend could trigger a parabolic Bitcoin run.
In a research newsletter, ‘Ebbing HODL Waves Signal Bitcoin Bottoms,’ researcher Joe Consorti observed that “dormant supply peaks are springboards” upside momentum. Fellow co-author Nik Bhatia opined in the same post that Bitcoin could be poised for a price upswing if a significant chunk stays dormant.
“If two-thirds of bitcoin is off the market for an extremely long period of time, the price is driven up when more buyers enter the market bidding for a finite supply—a scenario that has played out in bitcoin twice before.”
While the correlation between dormant BTC supply and price movement is not entirely clear-cut, Bhatia advised that the current trend is worth tracking. On the underlying reason, the researcher concluded that there is no fundamental cause.
“Is this causal [coins being illiquid and new market entrants bidding up for a lower amount of available coins] or circumstantial [a proxy of the reflexivity between market drawdowns making for unfavorable selling prices]? We don’t know,” Bhatia noted, “But when data moves in inverse-tandem in previous cycles, it catches our eye and demands attention,”
BTC signals bottom as sentiment revisits ‘Extreme Fear’
The current Bitcoin price action could be setting up for a bottom as far as on-chain metrics shows. The MVRV ratio particularly suggests that the leading cryptocurrency is looking to print a bottom given its extended streak of trading below the 200-week moving average realized price.
Last week, popular market analyst Michaël van de Poppe highlighted the test of the 200-week MA as one of the indicators that will define the Bitcoin (BTC) price course. Meanwhile, the Crypto Fear & Greed Index, has retraced even further into the ‘Extreme Fear’ zone after the weekend’s drop to 22 points barely three weeks after reaching a multi-month high of 47.
To learn more, visit our Investing in Bitcoin guide.
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Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.