BTC Markets

Bitcoin, altcoins sell-off on record-high inflation, but traders still expect BTC to consolidate

Global financial markets and crypto sold off after June 10’s 8.6% CPI print showed inflation remains a persistent challenge.

Global financial markets once again find themselves trending lower on June 10 after the Consumer Price Index (CPI) came in at a blistering 8.6% year-over-year increase, the highest print since 1981.

The hotter-than-expected CPI print resulted in a collapse of the $30,000 support and Bitcoin (BTC) price sold off to a daily low of $28,852 before dip buyers managed to bid the price back above $29,000.

*BTC/USDT 1-day chart. Source: TradingView*

Here’s what several analysts in the market are saying about the outlook for Bitcoin moving forward since there appears to be little relief on the inflation front and the Federal Reserve is still determined to raise interest rates.

Dollar strength weighs heavily on risk assets

The effect of the high CPI print on two benchmarks of financial markets, the dollar index (DXY) and the S&P 500 (SPX), was touched on by il Capo of Crypto, who posted the following charts noting that “After CPI results, #DXY continues its pump and #SPX keeps free-falling.”

*DXY 4-hour chart vs. SPX 2-hour chart. Source: Twitter*

Market analyst Kevin Svenson also said that the Fed’s inability to curb inflation is likely to translate to choppy price action for the next year.

With inflation, at 8.6% that means increased rate hikes are likely. $DXY is going parabolic. #BTC and most asset classes are likely going to have to deal with lots of ranging at the lows. Sideways for a year possibly.

Instant recovery is not likely.

— Kevin Svenson (@KevinSvenson_) June 10, 2022

There’s potential for a pullback below $28,000

Should the price of BTC continue to trend lower, crypto trader and pseudonymous Twitter user Altcoin Sherpa says trading below $28,000 is possible.

Altcoin Sherpa said,

“$BTC: EMAs look the best they’ve looked in a while on the 4h but the overall high time frame market structure remains bearish. Not really doing anything active rn, just observing. Seems clear that $28K> is next up if this current area gets lost.

BTC needs to reclaim $30K to prevent further downside

Insight into what it would take to avoid a pullback to the support at $28,000 was provided by market analyst and pseudonymous Twitter user CrediBULL Crypto, who posted the following chart showing the “unfortunate” retrace from $30,000, the area. The analyst suggested that this “was the moment where we needed to see follow through.”

CrediBULL Crypto said,

“On support, but it’s been tested four times now, so more likely it gives way to $28K. IF we can get back above $30K, then $28K may be avoided.”

The overall cryptocurrency market cap now stands at $1.192 trillion and Bitcoin’s dominance rate is 46.6%.

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

Bitcoin price recovers $31.5K, but traders say ‘scam’ price action will bring more downside

BTC price rallied back to a strong resistance level at $31,500, but traders caution that another whipsaw is the most likely outcome.

Bitcoin’s (BTC) short-term price action has been dominated by whipsaws that trigger around the $31,000 to $32,000 level and the June 6 reversal at this point triggered a quick sell-off that pushed the price down to $29,200.

Surprisingly, on June 7, the price rapidly reversed course as Bitcoin rallied back to $31,500, but given the current rejection at this level, traders are likely to proceed cautiously, rather than expect a quick surge to $35,000.

Here’s what several analysts are saying about the short-term outlook for BTC and what support levels to keep an eye on moving forward.

A clear redistribution range

The range-bound trading currently impacting Bitcoin was addressed by crypto analyst and pseudonymous Twitter user il Capo of Crypto, who posted the following chart highlighting the “clean range” that BTC has been stuck in for nearly a month.

The analyst said,

“What is happening inside the range and what has happened at the range high, shows that this is [a] clear redistribution range. Clean break of the range low = last leg down confirmed = 21K–23K.”

Ongoing flip-flop price action

A slightly different outcome to the current market chop was suggested by crypto trader and pseudonymous Twitter user Phoenix, who posted the following chart lamenting the month-long range-bound trading for BTC and hinted that it will see more of the same.

Phoenix said,

“On our way towards a whole month inside a mini-range again to fully deploy the flip-flop-your-bias-non-stop-angry-pleb-and-gtfo. *Ppl fomoed the top, lows taken again after the nuke, up we go again?*”

A possible flush out to $20K

For traders trying to get some sense of where the bottom might be, market analyst and pseudonymous Twitter user Rekt Capital posted the following chart highlighting the 200-EMA (exponential moving average) as a key indicator to watch.

According to Rekt Capital, the price history for Bitcoin shows that while it “tends to confirm uptrends when it breaks above the blue 50-week EMA,” on the flip side it “tends to confirm maximum financial opportunity when it reaches and breaks down from the black 200-week EMA.”

A closer look at the recent price action around these indicators was provided in the following chart posted by Rekt Capital to provide a better picture of what support level to look out for.

Rekt Capital said,

“This area is ~confluent with the orange #BTC 200-week MA. In fact, $BTC would need to downside wick below the 200MA to reach the ~$20K area. Interestingly, downside wicking tends to occur below the 200MA to mark out generational bottoms.”

The overall cryptocurrency market cap now stands at $1.24 trillion and Bitcoin’s dominance rate is 46.4%.

Traders think Bitcoin bottomed, but on-chain metrics point to one more capitulation event

BTC price gravitates around the low $30,000 zone, luring traders to believe the bottom is in, but data from Glassnode warns of another final sell-off.

The bull market euphoria that carried prices to new highs throughout 2021 has given way to bear market doldrums for any Bitcoin (BTC) buyer who made a purchase since Jan. 1, 2021. Data from Glassnode shows these buyers “are now underwater” and the market is gearing up for a final capitulation event.

Bitcoin net unrealized profit/loss. Source: Glassnode

As seen in the graphic above, the NUPL, a metric tha is a measure of the overall unrealized profit and loss of the network as a proportion of the market cap, indicates that “less than 25% of the market cap is held in profit,” which “resembles a market structure equivalent to pre-capitulation phases in previous bear markets.”

Based on previous capitulation events, if a similar move were to occur at the current levels, the price of Bitcoin could drop into a price range of $20,560 to $25,700 in a “full-scale capitulation scenario.”

The market is in search of the bottom

With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “where is the bottom?”

One metric that can help provide some possible guidance is the Mayer Multiple, an oscillator that tracks the ratio between price and the 200-day moving average.

*Mayer Multiple model for Bitcoin. Source: Glassnode*

In previous bear markets, “oversold or undervalued conditions have coincided with the Mayer Multiple falling in the range of 0.6–0.8,” according to Glassnode and that is precisely the range where Bitcoin now finds itself.

Based on the price action from previous bear markets, the recent trading range of Bitcoin between $25,200 and $33,700 lines up with the B phase of the previous bear market cycles and could mark the low of BTC in the current cycle.

The Bitcoin realized price model also offers insight into what a potential price bottom for Bitcoin could be, with the current reading provided by the Bitcoin data provider LookIntoBitcoin suggesting the realized price for BTC is $23,601 as of June 5.

*Bitcoin realized price. Source: LookIntoBitcoin*

Combining these two metrics suggests that the low for BTC could occur in the $23,600 to $25,200 range.

Short term holder and miner capitulation

Selling in the current market conditions has largely been dominated by short-term hodlers, similar to the behavior that was seen during the two previous extended bear markets where long-term holders held more than 90% of the profit in the market.

*Long-term Bitcoin holders share from supply in profit. Source: Glassnode*

The recent drop below $30,000 for Bitcoin saw the percentage of supply in profit spike above 90% for the long-term holder cohort, suggesting short-term holders have “essentially reached a near-peak pain threshold.”

According to Glassnode, miners have also been net sellers in recent months as the decline in BTC has hampered the profitability for miners resulting in “an aggregate miner balance reduction of between 5K and 8K BTC per month.”

*Bitcoin miner net position change. Source: Glassnode*

Should the price of BTC continue to decline from here, the potential for an increase in miner capitulation is not out of the question, as demonstrated in the past by the Puell Multiple, which is the ratio of the daily issuance value of bitcoin to the 365-day moving average of this value.

*Puell multiple vs. BTC price. Source: LookIntoBitcoin*

Historical data shows that the metric has declined into the sub-0.5 zone during the late stages of previous bear markets, which has yet to occur during the current cycle. Based on the current market conditions, a BTC price decline of an additional 10% could lead to a final miner capitulation event that would resemble the price decline and selling seen at the hight of previous bear markets.