BTC price hints support new downsides. That being said, here are 5 things to know about Bitcoin this week. cryptocoin.comIn this article, we have listed the events that will price Bitcoin and altcoins.
Bitcoin price action is stagnant
Bitcoin starts the first week of 2023 in a dim place as volatility stays away with investors. Unable to move during the Christmas and New Year holidays, BTC remains locked in the narrow gap. Closing annual losses of about 65% in 2022, Bitcoin has arguably seen a classic bear market year.
But for now, few actively anticipate a recovery. The situation is complex for the average hodler, who watches the macro triggers provided by the US Federal Reserve and the economic policy impact on the strength of the dollar.
Bitcoin investors fear new lows
According to the data received, Bitcoin holders may want volatility. But so far, BTC price action has been noticeably comatose. It seems that nothing is going to change the status quo such as low-volume Christmas trading, quarterly and annual candle closes, or even the macro data pressures before that. According to the Bitcoin historical volatility index (BVOL), Bitcoin volatility has even managed to hit new record lows by the end of the year. Looking ahead, traders are therefore conservative about what to expect BTC/USD. The reason is that the signs of a fundamental shift are completely absent in market behavior. Capo of Crypto said, “It takes a small pump to come up with resistance to get everyone back on the upswing. The same bull trap is happening throughout 2022, but people aren’t learning.” said.
These comments came with the modest rise for Bitcoin, which crossed $16,700 a few days later. Likewise, it was echoed by popular trader and analyst Pentoshi, who marked $12,000 as a key support zone for Bitcoin to revisit in terms of volume on higher timeframes. Meanwhile, fellow analyst Toni Ghinea doubled the $11,000-14,000 base for BTC/USD once again. “We expect all these levels to be reached within 2-3 months,” he said on January 1 in his Twitter comment.
Michael Burry warns inflation will return
The United States CPI has another week to print for December hits, while the first days of January are relatively quiet when it comes to macro BTC price catalysts. However, that doesn’t mean there isn’t anything to watch out for. Purchasing Managers Index (PMI) and nonfarm payroll data are all expected to be released next week. According to CME Group’s FedWatch tool, the short- and medium-term trend remains falling inflation. This gives risky assets room to maneuver. The rate of these increases began to slow, the Federal Reserve said. However, there has been no signal yet that it will focus on rate hikes. As soon as these signals arrive, risk sensitivity should become noticeably stronger. The Fed will release the minutes of the Federal Open Market Committee (FOMC) meeting on Jan. It will then provide clear guidance on policy going forward. However, for ‘Big Short’ investor Michael Burry, even this more permissive scenario is not the end of the inflation story.
The consequences of Fed policy are evident for stock market performance in 2022, for example, with the S&P 500 ending the year 1,000 points below many of the most popular forecasts. As markets await the first Wall Street trading day of 2023, the US Dollar Index (DXY) is already battling what could be the first glimmer of hope of the year for crypto assets. DXY is currently threatening to decline through unbeatable support for more than six months. Then the 100-point level re-enters. Callum Thomas, founder and head of research at macro research firm Top Down Charts, tweeted that day, “Markets: DXY on the verge of breaking again, 10-year yields reaching resistance. “WTI crude recovered to resistance, gold faltered at resistance, stocks surfaced,” he said.
Drop in hash rate data
In the haphazard world of Bitcoin fundamentals, things continue as usual as soon as the year starts. Bitcoin’s difficulty adjustment on January 3 will erase gains made two weeks ago in a sign that miners continue to be under pressure on BTC price performance. After rising 3.27% on Dec. 19, the difficulty will drop an estimated 3.5% this week, according to data from BTC.com. Thus, it will not be able to reach all-time highs. The difficulty data itself provides an interesting insight into Bitcoin’s ‘hidden’ health. Despite concerns about the financial stability of miners, competition for block subsidies is remarkably high. The data for late December, however, captured a grim snapshot for the average network participant. The hash rate and the estimated total processing power dedicated to mining hit year-on-year lows.
A chart showed that Bitcoin’s hash ribbons indicator has entered another ‘surrender’ zone where miners are capping the hash rate en masse. A similar event took place in July 2022 and a year ago. Bitcoin’s publicly traded mining companies also continue to feel the pressure, with Core Scientific taking a temporary bankruptcy loan of about $40 million from creditors, including BlackRock.
BTC supply goes to sleep
With no volatility in Bitcoin for weeks, there is understandably little driving force among investors. On-chain data supports this theory as the BTC supply becomes more and more stagnant. According to on-chain analytics firm Glassnode, the amount of supply stable in his wallet for the past five to seven years has reached its highest level since January 2018. This trend has continued for most of the past year as those who bought BTC in the last halving cycle saw their purchase price return. As the supply ages, the volume of coins moving on a short-term basis likewise decreases. This indicates that there is no speculative trade per se. Glassnode confirmed that the BTC supply is currently at a five-year low. Supply that was active three to five years ago is now at a one-year low.
Analytical resource Stockmoney Lizards responded to similar recession data at the end of last month, ‘Supply is getting sparse again’. The chart showed the relationship between idle supply and macro highs and lows for BTC price action.
Lands where no one is
This is a reading of the sentiment indicator Crypto Fear and Greed Index, just above ‘extreme fear’. A story that has already characterized much of the period after the FTX meltdown seems to be confusing about how bad the crypto situation really is. Of the index’s five emotional brackets, only ‘fear’ has endured in recent weeks. Also, the last trip to ‘extreme fear’ took place at the end of November.
Fear & Greed can provide important insights into market activity based on investor behavior. In 2022, it dropped to 6/100, a score rarely seen in Bitcoin’s lifetime. Daniel Cheung, co-founder of investment firm Syncacy Capital, said:
“Despite a brutal 2022 for crypto in terms of sentiment, I have never been more excited about the long-term fundamentals for the industry.”