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What Could Influence Bitcoin Price Action This Week?

Bitcoin (BTC) price makes a cautious start to the week when macro markets fluctuated and the Turkish lira lost 15% overnight.

After BTC bulls disappointingly met rejection at $60,000 over the weekend, the premier cryptocurrency is yet to impress traders, who expect sideways movement this week.

At EarnForex, we take a look at five factors that can affect the Bitcoin price action as the new week begins.

1. Stocks are silent

Concerns about bond yields and the continuation of the Coronavirus outbreak created a hesitant picture across stocks.

The Asian market has opened with a modest move. With yields on 10-year bonds in the US 1.7%, the increase in economic activity will likely fuel bond concerns.

Taking a different path, China revealed that there is enough money to spend on financial easing. According to some officials, this move will reduce risk, rather than add to it.

“This will not only provide positive incentives for economic players, but also will reduce the likelihood of creating financial risks,” Chairman of People’s Bank of China (PBOC) Yi Gang said during the weekend.

In a separate development, the financial turmoil in Turkey has led to the depreciation of the Turkish lira by 15%. President Recep Tayyip Erdogan dismissed another head of the central bank, and this tension reflected negatively on the market.

According to a market commentator, Holger Zschaepitz, Turkey has chosen the worst time in expelling the central bank chief.

2. The excitement in BTC price wanes

Investors, who were expecting a rally during the weekend were disappointed in the last two days.

Although analysts expected a breakout on Saturdays and Sundays, the BTC/USD pair met stiff resistance near the $60,000 level. As a result, some traders were taken by surprise when Bitcoin dip below $56,000 before a modest recovery to $57,700.

At the time of writing, however, the price of one bitcoin has dropped sharply to $54,593.

1-Hour chart (Bitfinex) for BTC/USD. Source: Tradingview

Crypto analyst Michaël van de Poppe said Bitcoin is moving in the region where it was expected.

https://twitter.com/CryptoMichNL/status/1373677029737041920

Analyst and trader Crypto Ed said that if the BTC/USD pair does not fall below $52,000, it will continue to recover.

3. The difficulty continues to increase

At the time of writing, both the hash rate and difficulty were clearly rising. The hash rate was 4% away from an all-time high, while the difficulty was moving at peak levels.

Bitcoin hash rate graph (7-day average). Source: Blockchain

Increasing hash rate and mining difficulty may signal that the price will go up as well. In the last adjustment on March 19, the difficulty increased by 1.95%, and after the previous correction turned negative, it began to move to a region it had not reached before.

While such adjustments are not the most important economic feature of the Bitcoin network, they constitute an economic structure that supports mining activity to change and increased security.

4. “Young” coins indicate bull run is far from over

On-chain indicators paint a mixed picture of exactly where Bitcoin is in the bull market and how far the uptrend will continue.

Regarding investor sentiment, however, there is plenty of room to move as investors who have held Bitcoin for a long time do not sell in bulk, even at $60,000.

As data source Glassnode pointed out over the weekend, coins belonging to older investors have not yet decreased in line with the peaks of the previous bull cycle. This indicates that there is longer to go before 2021 tops out.

The circulating Bitcoin supply and HODL chart. Source: Glassnode / Twitter

Bitcoin market capitalization reached $1 trillion when the price was about $53,000. However, this amount is not a sufficient incentive to awaken funds held in wallets for a long time.

Commenting on Glassnode data, statisticians Willy Woo, said that “this is quite a robust price verification; $1 trillion already supported strongly by investors.”

“We probably won’t see Bitcoin under $1 trillion again.”

Meanwhile, last week, EarnForex reported the views of PlanB, the developer of the stock-flow price model, which predicts that the Bitcoin will not stop at $100,000 and will advance to an average of $288,000 this year.

5. Exchange reserves plunge

According to data from stock exchanges, many long-term investors (hodlers) do not plan to sell in the near term.

Compiled by the on-chain data source CryptoQuant, the entry and exit of major trading platforms points to a lack of willingness to sell in the short term.

Bitcoin had its biggest breakout since early March, just before reaching its current high of $61,700.

Last week, CryptoQuant CEO Ki Young Ju drew attention to the lack of entry into the stock markets as part of the overall market picture. He said it would take “some time” for Bitcoin to break its $61,700 record.

It will take some time for BTC to take another step in terms of demand/supply.

.Net flow of Bitcoin (green) on exchanges, exchange reserves (blue), and BTC/USD pair (red). Source: CryptoQuant

If you have any questions and comments on Bitcoin today, use the form below to reply.


© MarkStevenson for Commodity News, 2021. | Permalink | No comment |
Published under: Bitcoin, Forecasts

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