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Source: Сointеlеgrаph

Bitcoin (BTC) faces another week of “huge” macro announcements after its lowest weekly close since July.

After several days of losses following the latest US inflation data, BTC/USD, like altcoins and risk assets in general, failed to recover.

The biggest cryptocurrency has yet to flip $20,000 to convincing support, and with the start of the third full week of September, there is again a danger that this level could function as resistance.

The bulls have something to worry about – in the coming days, the Federal Reserve will decide on the next increase in the key rate, which will affect the market far from just sentiment.

Additionally, the effects of the Ethereum (ETH) merger continue to surface, while on the defunct Mt.Gox exchange, reimbursement to creditors adds another potential cloud to the bitcoin price landscape.

looks at five potential factors affecting the bitcoin market to keep an eye on over the coming week.

Fed rate hike with a sledgehammer in the spotlight

The main event of the week is the Fed’s decision on key interest rates.

After the consumer price index (CPI) for August turned out to be “hotter” than expected, the Fed will be forced to react.

As such, the market has now fully priced in a Fed fund rate hike of at least 75 basis points and is not discounting the chances of a 100 basis point hike, according to a September 19 CME FedWatch tool.

A 100-point hike would be the first such move by the Fed since the early 1980s.

Chart of Fed target rate probabilities as of September 19, 2022. Source: CME Group

The Federal Open Market Committee (FOMC) is due to meet September 20-21 and release a statement confirming the Fed’s increase and support for the corresponding figure.

“The Fed won’t be easing anytime soon and that’s classic human nature because we now know how far they’ve gone wrong by easing too much,” Mike McGlone, senior commodities strategist at Bloomberg Intelligence, said in a report. interview with Kitko over the weekend.

Growth in risky assets since the March 2020 crash “veered too much to one side,” he said, and it is now “quite clear” that a reversal is about to take place.

Cryptocurrency will feature in a general market reset, and Bitcoin will eventually come out ahead, McGlone continued, reiterating a long-standing theory about the future of cryptocurrencies. Gold will also be better, but for both, pain will come first.

“Unfortunately, in order for the Fed to stop this sledgehammer, risk assets have to stop them by tightening them,” he concluded.

A 100 basis point hike this week will speed up that process, which has now witnessed catalysts from central banks outside the US after they were initially slow to raise rates to fight inflation.

Meanwhile, the popular analytics Twitter account Games of Trades said the S&P 500 is at a critical time ahead of trading on Wall Street.

“At times like these, when there is serious uncertainty across the board, the crypto market is not going to do anything without stock permission,” added analyst and commentator Kevin Swanson.

Spot price falls after weekly close

Last week, there were tailwinds for bitcoin, which led to a natural fall in the price of BTC.

BTC/USD lost over $2,000 in a single weekly candle to close below $20,000, its lowest close since July, data from Markets Pro and TradingView show.

Weekly candlestick chart BTC/USD (Bitstamp). Source: Trading View

The close was followed by a sharp decline as the pair dropped below $19,000.

Hourly candlestick chart BTC/USD (Bitstamp). Source: Trading View

The bearish sentiment is perhaps understandable – the Ethereum merger was a “selling news” event and, along with macro triggers, contributed to a new flight of risky assets.

Analysts are now looking at the chances of the downtrend continuing, at least until the Fed’s rate announcement.

“BTC survived the weekend, but there is always potential for some volatility before the close,” online analytics resource Material Indicators told Twitter followers in part of a September 18 post.

“Huge economic and Fed announcements next week will make things escalate again.”

The attached chart shows the state of the Binance order book with support at around $19,800 due to the inability to sustain the price action.

On the eve of Material Indicators reasoned that it also makes no sense to imagine that it will be possible to avoid a deeper fall. Judging by the order book, the trading activity was still not strong enough to support the current levels.

Meanwhile, given when a macro bottom could occur, popular trader Chads has bet on the fourth quarter of this year, describing Bitcoin as the “right way” to get there.

“$BTC is starting to hit range lows on a weekly basis,” he added in a tweet after the week closed.

At the time of writing, short positions on both Binance and FTX were piling up, indicating a concerted effort by derivatives traders to drive the market down. This, as another popular Ninja account claimed, will not end up being successful once Wall Street reopens.

US dollar falls below multi-year high

Meanwhile, the US dollar is keeping a close eye on a potential macro high, which has recovered from post-CPI losses.

A classic headwind for crypto, the US Dollar Index (DXY) is currently sitting just below 110, having consolidated for several days.

The index reached 110.78, its highest level since 2002, earlier this month, while avoiding significant pullbacks.

Analyzing the near future last week, Hyland warned that a “new crash” for DXY would accompany a “surrender event” in risky assets.

Meanwhile, looking at the inverse correlation between DXY and BTC/USD confirms the impact of the former’s sharp upward move on the latter.

US dollar index (DXY) against BTC/USD on a 1-day chart. Source: Trading View

Ethereum gets the blues after the merger

A week after the much-lauded merger, Ethereum is in a major slump due to the hype.

A move that could skew market cap share in favor of Bitcoin, ETH/USD is down 25% last week.

The pair is currently trading below $1,300, its lowest level since July 16, with analysts and traders around the world looking bearish.

Hourly candlestick chart ETH/USD (Binance). Source: Trading View

“Ethereum cannot hold critical support,” Swanson warned as the week’s close failed to draw a line under losses.

Meanwhile, analyst Matthew Hyland set a $1,000 target for ETH/USD, adding that $1,250 “should be some support.”

Against BTC, Ethereum fell by 19% in a week, while the share of bitcoin in the total cryptocurrency market capitalization increased by 1.2% since September 14.

However, for renowned trader CryptoGodJohn, things were heading towards the possibility of a “generation entry” into the pair.

Less enthusiastic was Samson Moe, CEO of Bitcoin adoption startup JAN3, who noted that while ETH/USD was still above its 200-week moving average (WMA) at current levels, Bitcoin was below its own equivalent.

The 200 WMA functions as an important trend line during cryptocurrency bear markets, and recovering from its loss as support has historically meant a return to strength.

The dormant Bitcoin supply continues to age

Even though the recent price volatility is indicative of an increase in activity on the network, hodlers remain determined, data on the network confirms.

Related: Here’s why a 0.75% Fed rate hike could be optimistic for Bitcoin and altcoins

According to analytics firm Glassnode, coins held for at least five years show only one trend – up.

In a daily update, Glassnode confirmed that the percentage of BTC supply that was last active in September 2017 or earlier hit a new all-time high of 24.8%.

Bitcoin % supply chart, last active 5+ years ago. Source: Glassnode/Twitter

Meanwhile, supply volume, which was last active between five and seven years ago, reached its highest level in nearly two years at 1.01 million BTC.

Bitcoin supply was last active 5-7 years ago. Source: Glassnode/Twitter

At the same time, the “younger” coins are also in motion, and in the range of 6-12 months, their own five-month highs are observed.

However, the long-term trend among savvy investors is clear when it comes to bitcoin, as evidenced by the share of supply held by long-term holders (LTH).

“LTH supply is the amount of bitcoin that has been idle for 155 days and is statistically the least likely to be spent during market volatility,” Glassnode explained last week when the metric reached all-time highs of 13.62 million BTC.

Following the CPI event, as reported by , bitcoin flows to exchanges hit their biggest single-day reading in months.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of . Every investment and trading step involves risk, you should do your own research when making a decision.

Source: Сointеlеgrаph

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