Bitcoin (BTC) is starting the week before Christmas with excitement. The price is limited and the bulls don’t like it.
The weekly close just above $16,700 means BTC/USD is seeing little volatility as the market as a whole is not heading in any particular direction.
The pair calmed down after experiencing high volatility following the latest macro data from the United States. What could this change?
That’s the question every analyst asks as the market drags into the holiday season with little to offer.
These are tough times for the average bitcoin trader. BTC is below its levels of two or even five years ago. FUD, which stands for Fear, Uncertainty and Doubt, is rampant thanks to the collapse of FTX and Binance concerns.
At the same time, there are signs that the miners are recovering, while the on-chain indicators signal that now is the time for a classic macro bottom.
Will Bitcoin continue to disappoint in the new year or will the Bulls get the Santa Claus rally they crave? Cointelegraph takes a look at the factors that could affect BTC price action over the next few days.
BTC spot price: ‘Capitulation’ or ‘slow downturn’?
Closing the week just under $16,750, Bitcoin escaped with no further volatility on December 18th.
Even the volatility that accompanied US inflation data and Fed commentary was short-lived. BTC/USD has since returned to what has been a frustrating balance for some.
Data from Cointelegraph Markets Pro and TradingView shows that Bitcoin has seen little price action since FTX collapsed in early November.
Market watchers are therefore faced with the question of what would be needed for this to change.
The Stockmoney Lizards analysis platform has the Fibonacci retracement levels on the weekly chart considered and said BTC/USD is at “key support.”
If the $16,800 area clears, the next key support is around $12,500.
In another chart, Bitcoin’s “latest washes” in past bear markets were linked compared with. This reinforced the claim that the BTC/USD pair is almost done “copying” previous macroeconomic background structures.
Others think the worst is yet to come for the current cycle. Well-known Crypto trader and analyst Tony believes in a possible low of around US$10,000.
“So I expect BTC to start bottoming out in 2023 at the lower bounds of the range we are currently in with volume support around $11,000 and $9,000,” he said. he repeated on Twitter. affirmed.
“It remains to be seen if we capitulate or slowly descend.”
He added that the “accumulation phase” after the mass surrender would not continue until 2023, when Bitcoin would prepare for the next block reward halving.
New data due from the United States: analysts expect a collapse in risky assets
After last week’s drama sparked by inflation data and the Fed, it’s safe to say that the week ahead will bring bitcoiners a bit less pressure.
US gross domestic product (GDP) growth in the third quarter is expected to be positive after falling 0.9% in the second quarter.
This matters because the United States technically slipped into a recession in the second quarter, despite policymakers adamantly denying that fiscal conditions are as dire as the data suggests.
However, as market investor Ajay Bagga explained, too sharp a turn in GDP would give the US Federal Reserve carte blanche for further aggressive rate hikes to rein in inflation. For risky assets, including cryptocurrencies, this would not be desirable.
“The Atlanta Fed’s GDPNow model estimate for U.S. real GDP growth (seasonally-adjusted annual) for the fourth quarter of 2022 is 3.2% on Dec. 9, down from 3.4% on Dec. 6. “, he said last week. wrote.
“Very good reading of US GDP from a source that is largely correct. The Fed will and will continue to raise rates.”
In addition to the GDP, the Personal Consumption Expenditure (PCE) index is also due. The Fed looks very closely at this value when it decides to change its monetary policy.
Trading firm QCP Capital also said in its Dec. 17 market update that PCE could have an impact.
“Thanks to the Fed, we now only trade on inflation (and wages) data for everything,” was the conclusion.
However, QCP warned that risk asset markets will all see a downturn in the near future. This also applies to cryptocurrencies.
“As we wrote previously, this fourth quarter rally formed the perfect fourth wave, followed by a final fifth wave down for all markets i.e. S&P/Nasdaq, US bonds, Long term state, USD and BTC/ETH,” he said.
Crypto Tony shared this sentiment, predicting an “impulse bottom” in stock indices. Then it will go up.
“I was hoping for a rally to form a double top at 4,320, but we missed that target and fell before that,” the S&P 500 analysis said.
“Same image here, waiting for another low pulse to complete the WXY pattern I see.”
Binance CEO Talks ‘FUD’: Pursuing Fierce Allegations Against the Exchange
After FTX, Binance is also getting shot.
That’s the impression one gets browsing through crypto media. Binance is fighting allegations that CEO Changpeng Zhao repeatedly dismisses as “FUD,” meaning fear, uncertainty, and doubt.
The world’s largest crypto exchange by volume has received widespread criticism from media and users in recent weeks for failing to prove its reserves.
As Cointelegraph reported, a Binance audit firm has removed its additional findings on the financial health of the exchange.
Reuters published a report that Binance has publicly denied. This raises more concerns, including a blog post detailing suspicious activity between Binance and its US counterpart, Binance US.
“These findings are consistent with previous reports from Forbes and Reuters suggesting that Binance.US was a shrewd ploy to deceive regulators and customers,” according to the post, by an organization dubbed Dirty Bubble Media.
“However, with the collapse of FTX, the crypto industry is now under greater scrutiny. We doubt Binance’s regulatory tricks will escape the long arm of the law for much longer.”
Zhao, meanwhile, does not leave any allegation of any kind without comment and say again on December 17 that it was all just “FUD”. He then retweeted a quote from Ryan Selkis, founder of analytics platform Messari, who said criticism of Binance was seen as “xenophobic”.
“Much of Binance FUD is just thinly veiled xenophobia,” Selkis said. in two tweets.
“I’m in favor of deposit stress testing and hate that such a high percentage of volume goes through a single exchange. I also don’t like the tone of some reviewers. Sorry!”
Nonetheless, Binance remains a key potential BTC price trigger, as Cointelegraph noted last week.
Miners in stronger competition
After the biggest drop in almost 18 months, the difficulty of the Bitcoin network is expected to increase further this week.
BTC.com estimates that the next bi-weekly difficulty adjustment should increase by around 3.8%.
This has implications for miners, who experienced significant turbulence in the weeks following the FTX crash and BTC/USD plummeting as much as 25%.
With lower profits, there are fears that miners will face another major sellout and go bankrupt en masse.
However, as Cointelegraph recently reported, not everyone thinks so. Current analyzes suggest that most of the acclimatization has already been accomplished.
Since the difficulty will further increase, this theory is still entirely possible. Increasing difficulty means more competition between miners rather than closures.
Data from on-chain analytics firm Glassnode also shows that the 30-day decline in miners’ BTC holdings is ending.
According to journalist Colin Wu, if we analyze the overall share of miners in the BTC supply, we see that their position is not necessarily significant.
“Bitcoin miners are estimated to currently hold a maximum of 820,000 bitcoins or a minimum of 120,000 bitcoins. This represents only 1-4% of bitcoin circulation, even though publicly traded miners have sold off their production massively. in June of this year. The effects have also weakened”, as stated on Twitter in the comments has been called.
Sentiment set to return to 2022 low
It is nothing new that crypto market sentiment is very depressed this quarter.
Due to the collapse of FTX and the current situation and Binance, social media is clearly pessimistic. The price development of cryptocurrencies shows this very clearly.
Nevertheless, the Crypto Fear & Greed Index is significantly better than expected. It is still above its lowest level.
At 29/100, one could even say that the index does not quite reflect the sentiment.
However, crypto Tony believes this will be short-lived as the index returns to lows around 6/100 in 2023.
“When we’re in extreme fear, it’s considered a good buy zone. When we’re in extreme greed, it’s a sell zone. Based on human psychology,” the comments read.
“In June we were down to 6. I think we will start again next year.”
The fear and greed index climbed into the “extreme fear” zone in late November and has not returned to date. It peaked at 31 on December 15, its best performance since November 8.
The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.