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Source: Сointеlеgrаph

Bitcoin (BTC) is starting the new week in a dangerous place as global macroeconomic volatility dictates the mood.

After a week-long close a few inches above $19,000, the biggest cryptocurrency still lacks direction as nerves mount over the resilience of the global financial system.

The past week proved to be a testing time for investors in risky assets, as gloomy economic data came from the US and, moreover, from Europe.

Thus, the Eurozone serves as a backdrop for the latest fears of market participants, who are watching as the financial stability of large banks is called into question.

With the war in Ukraine only escalating and winter approaching, it is perhaps understandable that hardly anyone is optimistic – what impact could this have on bitcoin and cryptocurrencies?

BTC/USD remains below the all-time high of the previous halving and compared to the 2018 bear market, there is also talk of a new multi-year low.

Cointelegaph looks at five BTC price factors to watch out for in the coming days with Bitcoin still below $20,000.

Spot Price Avoids Multi-Year Weekly Closing Low

Despite the bearish sentiment, Bitcoin’s weekly close could have been worse – just above $19,000, the biggest cryptocurrency managed to add a modest $250 to last week’s closing price, data from Markets Pro and TradingView shows.

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

However, this previous close was the lowest since November 2020 on weekly timeframes, and so traders continue to fear that the worst is yet to come.

“The bears remained in full swing last night during the Asian session while the bulls failed to give us good rallies to work off,” popular Crypto trader Tony wrote in part of a Twitter update that day.

Others agreed with the conclusion that BTC/USD is in a “low volatility” zone, which will require a breakout sooner or later. All that remained was to decide on the direction.

“The next big move is ready,” Credible Crypto responded.

“Typically before these big moves and after capitulation, we see a period of low volatility before the next big move starts.”

As reported, the weekend was already heralding higher volatility, as evidenced by the Bollinger Bands data. This went hand-in-hand with rising volume, which is a key factor in sustaining a potential move.

“The weekly BTC chart shows a significant increase in volume since the beginning of the third quarter + a weekly bullish divergence on one of the most reliable timeframes,” concluded Doctor Profit trading account colleague.

“Bitcoin price increase is just a matter of time.”

However, not everyone foresaw the upcoming return. Meanwhile, in the weekend predictions, Crypto trader Il Capo cited a $14,000 to $16,000 range as a long-term target.

Annotated BTC/USD chart. Source: Il Capo at Crypto/Twitter

“If this were a real bottom… bitcoin should be trading around 25k-26k right now,” a Profit Blue trading account said, showing a chart with a potentially emerging double bottom structure on a two-day chart.

Credit Suisse unnerving as dollar strength remains

In addition to cryptocurrencies, attention is drawn to the fate of the world’s major banks, in particular Credit Suisse and Deutsche Bank.

Liquidity concerns led to emergency public reassurances from the former’s CEO, with executives reportedly spending the weekend reassuring big investors.

The collapse of banks is a sore spot for undersea hodlers — it was government bailouts of creditors in 2008 that spawned the creation of Bitcoin.

Since history is increasingly looking for rhymes almost fifteen years later, the Credit Suisse saga has not gone unnoticed.

“We can’t look inside CeFi Credit Suisse — THE SAME WAY we couldn’t look inside CeFi Celsius, 3AC, etc.,” entrepreneur Mark Jeffery tweeted that day, comparing the situation to the collapse of a cryptocurrency fund in the beginning of this year. .

For Samson Moe, CEO of bitcoin startup JAN3, the current environment could give bitcoin time to shine in a crisis instead of remaining correlated with other risky assets.

“Bitcoin’s price is already all the way down, well below 200 WMA,” he said, referring to the long-lost 200-week moving average as bear market support.

“We had an infection from UST/3AC and the leverage has already been washed away. BTC is widely used as a hedge. Even if Credit Suisse/Deutsche Bank collapses and triggers a financial crisis, we won’t see ourselves drop much lower.”

However, with the volatility already rampant throughout the global economy and geopolitical tensions only growing, the bitcoin markets are voting with their feet.

The US Dollar Index (DXY), still just 3 pips off its recent twenty-year highs, continues to revolve around a potential rematch after limited corrective moves in recent days.

Looking further, macro economist Henrik Seberg has reiterated the theory that the DXY is temporarily losing ground due to significant stock gains. However, this did not last long.

“In early 2023, DXY will rise again with a target of ~120. It will be a deflationary recession and the stock market will crash more than in 2007-2009,” he tweeted.

“The biggest deflationary recession since 1929”.

US dollar index (DXY) 1-day candlestick chart. Source: Trading View

Miner income is approaching an all-time low

With bitcoin’s price crackdown, it’s no surprise that miners are struggling to maintain profitability.

At one point in September, monthly miner sales exceeded 8,500 BTC, and while that figure has subsequently declined, the data shows that the situation is shaky for many.

“Bitcoin miner revenue per TeraHash is on the verge of an all-time low,” Dylan Leclerc, senior analyst at digital asset fund UTXO Management, said over the weekend.

“Margin Compression”.

Bitcoin miner income on terahash chart. Source: Dylan Leclerc/Twitter

The scenario is interesting for a mining ecosystem that is currently using more hash rates than almost at any other time in history.

Monitoring resource MiningPoolStats estimates that the current hash rate of the Bitcoin network is 261 exahash per second (EH/s), which is only marginally lower than the all-time high of 298 EH/s seen in September.

Competition among miners also remains healthy, as evidenced by difficulty adjustments. Despite the first decline since July last week, the difficulty should increase by about 3.7% in seven days, which in itself will lead to new all-time highs.

However, for economist, trader and entrepreneur Alex Krueger, it may be premature to breathe a sigh of relief.

“Bitcoin’s hash rate reaching all-time highs while the price is falling is more of a recipe for disaster than something to celebrate,” he wrote in a miner data thread last month.

“As miner profitability shrinks, the chances of another round of miner capitulation increase in the event of a fall. But opium never dies.”

An overview of the basics of the Bitcoin network (screenshot). Source: BTC.com

GBTC ‘discount’ hits new all-time low

Echoing the institutional exodus from BTC this year, the largest institutional investment vehicle in the space has never been such a great deal.

The Grayscale Bitcoin Trust (GBTC), which traded well above the spot price of Bitcoin in good times, is now offered at the biggest discount against BTC/USD.

On September 30, GBTC “Premium” — now effectively a discount — hit -36.38%, according to data from Coinglass, which translates into a BTC price of just $11,330.

The premium is now negative as of February 2021.

Analyzing the data, Venturefounder, a member of the online analytics platform CryptoQuant, called the fall in GBTC “absolutely wild.”

“However, there is still no sign of the GBTC discount lowering or reversing,” he commented.

“Institutions don’t even bite for $12k BTC (locked for 6 months).”

GBTC premium versus assets versus BTC/USD chart. Source: Coinglass

has been tracking GBTC for a long time, and owner Grayscale is trying to get legal permission to convert and launch it as a spot exchange-traded fund (ETF), which is still prohibited by US regulators.

In the meantime, however, the lack of institutional appetite for staking BTC is something of an elephant in the room.

“Objectively, I would say that US institutional investors are not showing much interest in $BTC until $GBTC supply starts approaching net asset value,” Leclerc wrote last week.

Chart of Bitcoin’s “Maximum Pain” Scenario

While it’s safe to say that a new drop in the price of bitcoin will make many hodlers question their investment strategy, it remains to be seen if this bear market will replicate those that came before.

Related: Analyst on $17.6k BTC price bottom US: Bitcoin ‘not there yet’

For analyst and statistician Willy Wu, creator of data resource Woobull, the next bottom could be closely related to hodlers capitulating.

Earlier in the history of Bitcoin, a bear market bottom was accompanied by at least 60% of the BTC supply selling at a loss.

So far, the market has almost, but not quite, replicated this trend, leading Wu to conclude that “maximum pain” may still be around the corner.

“This is one way to visualize maximum pain,” he wrote next to one of his charts showing underwater nutrition.

“Past cycles bottomed out with roughly 60% of the coins trading below their purchase price. Will we strike again? I dont know. The structure of the current market this time is quite different.”

As of October 2, 9.52 million BTC was in loss, according to network analytics firm Glassnode. Last month, BTC hit its highest level since March 2020.

Bitcoin supply in loss chart. Source: glassnode

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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