DXY

Bitcoin is cooling its rally — Here are the BTC price levels to watch next

Bulls have a lot of work left to do, say Bitcoin analysts as consolidation enters for BTC price.

Bitcoin (BTC) consolidated gains on Oct. 27 as the highest levels in six weeks gave way to sideways action.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Bitcoin impresses with stability on GDP print

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $20,500 on Bitstamp after reaching local highs of $21,012 the day prior.

The largest cryptocurrency trod water in line with United States equities at the Wall Street open, with the S&P 500 flat and the Nasdaq Composite Index down around 1% at the time of writing.

The U.S. dollar index (DXY), meanwhile, began to claw back losses on the day, providing a headwind to risk assets absent for much of the week. The DXY had seen its lowest levels since mid-September.

*U.S. dollar index (DXY) 1-hour candle chart. Source: TradingView*

Ahead of a decision on interest rates by the Federal Reserve, gross domestic product (GDP) data showed a rebound for the U.S. economy in Q3.

“This [GDP] number is weaker in terms of the signal it sends about the forward strength of the economy than the last one was, even though the headline was positive,” Eric Winograd, director of developed market economic research at AllianceBernstein, nonetheless told the Financial Times.

In Europe, the European Central Bank (ECB) raised key rates by 0.75%, as expected.

“Big day today, as the ECB comes in with their policy and GDP numbers from the U.S.,” Michaël van de Poppe, founder and CEO of trading firm Eight, summarized.

“Honestly, Bitcoin remains calm at these levels, would have expected a more significant correction since the last push.”

The latest data from CME Group’s FedWatch Tool put the odds of the Fed copying the 0.75% hike at 90.8% on the day.

*Fed target rate probabilities chart. Source: CME Group*

$14,000 return still haunts trader’s chart

Analyzing the weekly BTC/USD chart, popular trader Rekt Capital highlighted the zone immediately below $22,000 as an important one to reclaim for bullishness to continue.

“BTC is slowly approaching the red resistance area,” he wrote in an update on Oct. 26.

*BTC/USD annotated chart. Source: Rekt Capital/Twitter*

Fellow analyst Il Capo of Crypto, meanwhile, said that $21,500 would need to form the basis for consolidation should bulls want to see $23,000 materialize.

His “main scenario” remained a reversal to new macro lows for BTC/USD, potentially hitting $14,000.

*BTC/USD annotated chart. Source: Il Capo of Crypto/Twitter*

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 rises above $19.6K as US dollar strength falls to 3-week lows

Dollar weakness shows instant results for BTC price strength, with local highs coming back in for a test.

Bitcoin (BTC) returned to local highs at the Oct. 25 Wall Street open as nervous analysts kept an eye on miners.

DXY provides instant relief for BTC

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD rising to offer a modest challenge to resistance, still unable to escape an established trading range.

United States equities likewise headed modestly higher, with the S&P 500 and Nasdaq Composite Index up 1% and 1.3%, respectively at the time of writing.

The U.S. dollar index (DXY) conversely lost ground on the day, falling to its lowest levels since Oct. 6 and providing potential tailwinds for risk assets to seal opportunistic gains.

*U.S. dollar index (DXY) 1-day candle chart. Source: TradingView*

For traders, the intraday status quo remained in place amid an ongoing lack of real volatility. Popular Twitter account Crypto Tony highlighted significant range levels, with $18,900 an important zone to hold.

*BTC/USD annotated chart. Source: Crypto Tony/Twitter*

Fellow trader Crypto Ed, meanwhile, revealed that he was “still waiting” for a correction to that level, followed by a bounce past $19,100.

“It might even go a bit lower, then coming back here, that would be your entry for a long,” he said in a YouTube update.

Previously, commentators had revealed a wait-and-see approach to the market, with estimates of a breakout ranging from two to eight weeks.

Miners under surveillance

Downside risk, meanwhile, firmly focused on miners on the day.

With the hash rate at all-time highs but spot price at its lowest in nearly two years, miners continue to battle the tightest profit squeeze in history. They could soon be forced to offload hoarded coins to cover expenses, some warned.

In a dedicated research piece on the topic, Cauê Oliveira, lead on-chain analyst at BlockTrends, in particular, drew attention to hash price — miners’ revenue per exahash.

“At this moment hashprice, as the indicator is known, reached $66,500 which is the lowest value ever recorded,” he explained.

“Total revenue has strongly deviated from its average annual growth. What is common in all bears but with one difference: the costs of maintaining the operation.”

As of September, public miners’ BTC balance totaled a combined 34,509 BTC, a large tranche of liquidity that “can be unloaded as mining pressures continue,” market analyst Sam Rule commented.

“Bitcoin could conceivably capitulate to the $10k-$18k range, fueled by a final selloff from the miners. Something I definitely psychologically prepare for,” longtime analyst Tuur Demeester added.

*Bitcoin miner net position change chart. Source: Glassnode*

With miners exiting a major capitulation phase in August, however, data suggests that even prolonged distribution of coins does not necessarily impact price action negatively.

In early 2021, for example, after BTC/USD had cleared its 2017 all-time high, miners embarked on a mass profit-taking exercise, this failing to hold back Bitcoin as it hit an impulse top of $58,000 in April that year.

According to on-chain analytics firm Glassnode, the selling at that time saw roughly 30,000 BTC leave miner wallets in the month January.

*Bitcoin balance in miner wallets chart. Source: Glassnode*

‘Get ready’ for BTC volatility — 5 things to know in Bitcoin this week

Up or down, it is high time that Bitcoin made a significant move, market participants agree.

Bitcoin (BTC) starts a new week keeping everyone guessing as a tiny trading range stays in play.

A non-volatile weekend continues a familiar status quo for BTC/USD, which remains just above $19,000.

Despite calls for a rally and a run to lower macro lows next, the pair has yet to make a decision on a trajectory — or even signal that a breakout or breakdown is imminent.

After a brief spell of excitement seen on the back of last week’s United States economic data, Bitcoin is thus back at square one — literally, as price action is now exactly where it was at the same time last week.

As the market wonders what it might take to crack the range, Cointelegraph takes a look at potential catalysts in store this week.

Spot price action has traders dreaming of breakout

For Bitcoin traders, it is a case of “almost too quiet” when it comes to the BTC/USD weekly chart.

Having come down significantly in volatile conditions over the first half of 2022, recent months have seen an almost eerie lack of volatility.

Data from Cointelegraph Markets Pro and TradingView proves the point — on one-week timeframes, Bitcoin continues to print candles with almost nobody whatsoever.

Such is the stickiness of the current range that, as Cointelegraph reported, the Bitcoin historical volatility index (BVOL) is at lows only seen a handful of times.

“Equity volatility (VIX) relative to Bitcoin volatility (BVOL) is approaching all-time highs,” William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, added in comments last week:

“This illustrates just how much volatility compression Bitcoin is currently experiencing.”

An accompanying chart neatly captured Bitcoin as a curiously stablecoin-esque pick in the current climate, with Clemente implying that a return to the classic, more volatile paradigm should follow.

The week prior, economist, trader and entrepreneur Alex Krueger additionally noted that an “explosive move” had followed all prior trips to macro lows on BVOL.

He argued that United States macro data missing expectations “would do it” in terms of rekindling volatility, but in the event, the numbers remained just short of the trigger range.

Cryptocurrency research firm Delphi Digital agreed.

“Historically speaking, when the BVOL falls below a value of 25, a large spike in volatility tends to follow shortly thereafter,” it stated in part of Twitter comments.

This week, meanwhile, popular crypto investor and analyst Miles Deutscher told traders to “get ready” while commenting on the Delphi data.

*Bitcoin historical volatility index (BVOL) annotated chart. Source: Delphi Digital/ Twitter*

The question for everyone remained the direction that volatility would take the market in.

For Il Capo of Crypto, the trader who predicted Bitcoin’s descent to $20,000 levels from all-time highs, expectations remained the same.

$21,000 should feature as part of a relief bounce, only to be eclipsed by a fresh dive to multi-year lows for BTC/USD, these potentially coming in at $14,000-$16,000.

“Some shitcoins will experience scam pumps during these days, while $BTC goes to 21k. This could give you the illusion that the bull market is back,” he warned over the weekend:

“My advice: don’t be greedy. Take profits if this happens. Protect your capital.”

Fresh macro triggers line up for crypto

While little is expected from the Federal Reserve in terms of direct policy changes this week, there is still plenty of firewood for crypto volatility set to be provided by external forces.

In the United States, company earnings will be coming in thick and fast, with tech stocks particularly apt to move markets in the event of results falling wide of expectations.

Reporting firms represent over 20% of the S&P 500, which like other U.S. indexes is showing rare weakness this year.

“In my mind, the odds of a low coming in the next week or two are decently high,” Raoul Pal, founder and CEO of RealVision, predicted overnight alongside an accompanying chart:

“The SPX weekly DeMark hits next week, near the bottom of the channel and the 50% retracement, with RECORD bearish sentiment.”

*S&P 500 futures chart. Source: Raoul Pal/ Twitter*

Charting the week ahead, financial commentary resource the Kobeissi Letter likewise told subscribers to “prepare for more volatility.”

More U.S. data will join earnings this week, it explained, while Fed officials will comment on overall policy.

“The median bear market with a recession dating back to 1929 has fallen 39%,” it wrote about stock market strength in one of the various posts over the weekend:

“Furthermore, the median bear market with a recession lasts 16 months. We are currently only 10 months in and the S&P 500 is down just 28%. History continues to suggest that more pain is ahead of us.”

Beyond stocks, the U.S. dollar index (DXY) was mercifully motionless into the new week, so far avoiding another attack on twenty-year highs seen earlier.

Echoing Il Capo of Crypto’s theory, Michaël van de Poppe, founder and CEO of trading firm Eight, hinted that it could be this week or next that “some relief” enters for risk assets more broadly.

“A crucial area for Bitcoin, as it’s still hovering in the range for more than a month,” he summarized on the day:

“It needs to break $19.4-19.6K clearly. If that happens, volatility can finally kick in. Given the structure of the $DXY and the Yields, I expect this to occur in 1-2 weeks.”

RSI breakdown risk echoes 2018

Further out, the picture for Bitcoin becomes murkier, and those divining bearish scenarios from current chart data are busy channeling comparisons to the 2018 bear market bottom.

Among them is popular analyst Matthew Hyland, who even in his characteristic bullish market takes has little to celebrate when it comes to the next few months’ BTC price action.

In a tweet from this weekend, Hyland flagged Bitcoin’s relative strength index (RSI) repeating behavior seen in the build-up to the 2018 floor.

An accompanying chart clearly demonstrated familiar bear market forces in play, adding to suspicions that Q4 2022 could closely mirror the scenes from four years ago.

Trading account Stockmoney Lizards confirmed that it “100% agreed” with the idea, which uses the 3-day chart.

*BTC/USD comparison charts with RSI. Source: Matthew Hyland/ Twitter*

The 2018 RSI breakout structure involved a dive from $5,500 to $3,100 for BTC/USD — or roughly 40%.

“Obviously, we’re still waiting for this huge move to come,” Hyland added in a related video about the idea.

He additionally showed that the classic Bollinger Bands volatility indicator was still predicting an incoming storm, with narrowing bands demanding a breakout of volatility.

*BTC/USD 1-day candle chart (Bitstamp) with Bollinger Bands. Source: TradingView*

Hodlers stay as determined as ever

Taking a look at hodler behavior and it becomes apparent that the resolve of the average long-term holder (LTH) remains steadfast.

The latest data from on-chain analytics firm Glassnode confirms a five-year high in the number of Bitcoin either lost or out of circulation in cold storage.

The “hodled or lost coins” metric put the tally at 7,554,982.124 BTC — or 40% of the current supply — as of Oct. 17, meaning that more BTC is off the market than at any time since late 2017.

*BTC amount of hodled or lost coins chart. Source: Glassnode/ Twitter*

Likewise, distribution is also continuing an accelerating trend visible throughout 2022. The number of wallets with a balance of at least one whole Bitcoin is now at an all-time high of over 908,000.

While increasing overall through the latter half of 2021, the trend has gained noticeable momentum this year, Glassnode shows.

*BTC number of addresses holding 1+ coins chart. Source: Glassnode/ Twitter*

Analyzing lost coins as part of its weekly newsletter, “The Week On-Chain,” Glassnode, meanwhile, concluded that the current bear market has yet to match others in terms of intensity when it comes to hodlers.

“Network profitability has not quite hit the same level of severe financial pain as past cycles, however adjustment for lost and long HODLed coins can explain a reasonable portion of this divergence,” it explained last week.

Nonetheless, when it comes to those used to hodling through bear markets, it appears that there’s little appetite for capitulation from current price levels.

Fear enters its second consecutive month

There seems to be no shaking the fear when it comes to crypto market sentiment.

In a sign which has captured the industry this year, the Crypto Fear & Greed Index has now had sentiment in its “fear” or “extreme fear” for two months straight.

Fear & Greed uses a basket of factors to compute a normalized score for market sentiment, and 2022 has delivered results unlike most years.

Earlier, the Index saw its longest-ever stint in “extreme fear,” a feat which is currently one month away from repeating.

As of Oct. 17, the Index measured 20/100 — around 10 points higher than classic bear market bottoms but a full 14 points higher than this year’s low.

*Crypto Fear & Greed Index (screenshot). Source: Alternative.me*

BTC price wobbles on US PPI as Bitcoin futures open interest hits peak

Bitcoin-denominated futures open interest hits 660,000 BTC despite volatility remaining comparatively flat.

Bitcoin (BTC) saw flash volatility into the Oct. 12 Wall Street open as United States economic data began to move markets.

Analyst: PPI volatility a taste of things to come

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping abruptly below $19,000 as Producer Price Index numbers came in above expectations.

A hint that inflation is not abating as quickly as the Federal Reserve might expect came with the PPI’s release an hour before the market open, which saw local lows of $18,967.

The losses disappeared as quickly as they came, however, and at the time of writing, Bitcoin had already recovered above $19,000.

“Massive volatility at this number of PPI. At least inflation not acceleration,” Michaël van de Poppe, co-founder and CEO of trading platform Eight, wrote in part of a Twitter reaction.

“But, tomorrow, during CPI, the volatility will be higher. Tonight during FOMC minutes as well.”

Van de Poppe advised traders to stay away from leverage during the upcoming macro events, with CPI, in particular, tipped to provide some characteristic fakeouts both before and after release.

Bitcoin’s trading range nonetheless remained narrow, and for some market participants, there was no need to exploit the comparative small moves on the market.

In his latest update on BTC/USD trading on Oct. 11, popular trader Il Capo of Crypto described the setup as “simple.”

“Price has been ranging between 19k and 20500 for 3 weeks,” he summarized.

“If you flip flop randomly during the range, while losing money unnecessarily, that means you have no patience. Main scenario is exactly the same. 21k first, then new lows (14k–16k).”

A trip to those new macro lows would spell deep trouble for derivatives traders participating in the largest-ever buildup of open interest in Bitcoin futures ever recorded.

According to on-chain analytics resource Glassnode, the tally stood at 660,000 BTC.

“Bitcoin futures open interest at an all time high and realized volatility near all time lows. Quite the combo,” William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, commented.

*Bitcoin futures open interest chart. Source: Glassnode*

DXY steadies but yen bleeds lower

After the open, meanwhile, U.S. equities stemmed losses after initially sinking.

The U.S. dollar index (DXY) continued its latest consolidation phase, lingering near 113.3 after failing to clear 113.5 on the day.

Still more than a full point clear of recent 20-year highs, DXY provided no new headwinds for risk assets.

Dollar strength was nonetheless providing kindling for crises elsewhere, however, as the Japanese yen returned to levels not seen since the 1990s.

Despite the central bank’s efforts to prop up the currency, USD/JPY erased those gains through October, now facing new multidecade records.

“Reacquaint yourself with the concept of ‘intervention half-life,’” financial researcher Nick Bhatia responded.

“We will see it in UK yields, USDJPY Central bank freaks out, intervenes, and arb traders fade it until the central bank is forced to bring more.”

*USD/JPY 1-day candle chart. Source: TradingView*

BTC price still not at ‘max pain’ — 5 things to know in Bitcoin this week

Bitcoin has plenty of obstacles to weather in the current macro storm as two-year weekly close lows remain inches away.

Bitcoin (BTC) starts a new week in a precarious place as global macro instability dictates the mood.

After sealing a weekly close just inches above $19,000, the largest cryptocurrency still lacks direction as nerves heighten over the resilience of the global financial system.

Last week proved a testing time for risk asset investors, with gloomy economic data flowing from the United States and, moreover, Europe.

The eurozone thus provides the backdrop to the latest concerns of market participants, who are watching as the financial buoyancy of major 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 could the impact be on Bitcoin and crypto?

BTC/USD remains below its prior halving cycle’s all-time high, and as comparisons to the 2018 bear market flow in, so too is talk of a new multi-year low.

Cointelegraph takes a look at five BTC price factors to watch in the coming days, with Bitcoin still firmly below $20,000.

Spot price avoids multi-year low weekly close

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

*BTC/USD 1-week candle chart (Bitstamp). Source: TradingView*

That prior close had nonetheless been the lowest since November 2020 on weekly timeframes, and as such, traders continue to fear that the worst is yet to come.

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

Others agreed with a summary that concluded that BTC/USD was in a “low volatility” zone, which would necessitate a breakout sooner or later. All that was left was to decide on the direction.

“Next big move is up,” Credible Crypto responded:

“Typically prior to these major moves and after capitulation we see a period of low volatility before the next big move begins.”

As Cointelegraph reported, the weekend was already tipped to provide a boost of volatility as suggested by Bollinger Bands data. This came hand in hand with rising volume, a key ingredient in sustaining a potential move.

“Weekly chart BTC shows a massive increased volume since the beginning of the third quarter + weekly bullish divergence on one of the most reliable time frames,” fellow trading account Doctor Profit concluded:

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

Not everyone eyed an impending comeback, however. In predictions over the weekend, meanwhile, trader Il Capo of Crypto gave the area between $14,000 and $16,000 as a longer-term target.

“If this was the real bottom… bitcoin should be trading close to 25k- 26k by now,” trading account Profit Blue argued, showing a chart with a double bottom structure potentially in the making on the 2-day chart.

Credit Suisse unnerves as dollar strength goes nowhere

Beyond crypto, attention is coalescing around the fate of major global banks, in particular Credit Suisse and Deutsche Bank.

Worries over liquidity resulted in emergency public reassurances from the CEO of the former, with executives reportedly spending the weekend calming major investors.

Bank failures are a sore spot for underwater hodlers — it was government bailouts of lenders in 2008 which originally spawned Bitcoin’s creation.

With history increasingly looking to rhyme nearly fifteen years later, the Credit Suisse saga is not going unnoticed.

“We can’t see inside CeFi firm Credit Suisse JUST LIKE we could not see inside of CeFi firms Celsius, 3AC, etc.,” entrepreneur Mark Jeffery tweeted on the day, comparing the situation to the crypto fund meltdowns earlier this year.

For Samson Mow, CEO of Bitcoin startup JAN3, the current environment could yet give Bitcoin its time to shine in a crisis instead of staying correlated to other risk assets.

“Bitcoin price is already pushed down to the limit, well below 200 WMA,” he argued, referring to the 200-week moving average long lost as bear market support.

“We’ve had contagion from UST/3AC and leverage flushed already. BTC is massively shorted as a hedge. Even if Credit Suisse / Deutsche Bank collapse & trigger a financial crisis, can’t see us going much lower.”

Nonetheless, with instability already rampant throughout the global economy and geopolitical tensions only increasing, Bitcoin markets are voting with their feet.

The U.S. dollar index (DXY), still just three points off its latest twenty-year highs, continues to circle around for a potential rematch after limiting corrective moves in recent days.

Looking further out, macroeconomist Henrik Zeberg repeated a theory that sees DXY temporarily losing ground in a major boost for equities. This, however, would not last.

“In early 2023 DXY will once again rally with target of ~120. This will be Deflationary Bust – and Equities will crash in a larger bust than during 2007-09,” he wrote in part of a tweet:

“Largest Deflationary Bust since 1929.”

Miner revenue measure nears all-time low

With Bitcoin price suppression grinding on, it is less than surprising to see miners struggle to maintain profitability.

At one point in September, monthly selling from miners was in excess of 8,500 BTC, and while this number subsequently cooled, data shows that for many, the situation is precarious.

“Bitcoin miner revenue per TeraHash on the edge of all time lows,” Dylan LeClair, senior analyst at digital asset fund UTXO Management, revealed at the weekend:

“Margin squeeze.”

*Bitcoin miner revenue per terahash chart. Source: Dylan LeClair/ Twitter*

The scenario is an interesting one for the mining ecosystem, which currently deploys more hash rate than at almost any time in history.

Estimates from monitoring resource MiningPoolStats put the current Bitcoin network hash rate at 261 exahashes per second (EH/s), only marginally below the all-time high of 298 EH/s seen in September.

Competition among miners also remains healthy, as evidenced by difficulty adjustments. While seeing its first decrease since July last week, difficulty is set to add an estimated 3.7% in seven days’ time, taking it to new all-time highs of its own.

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

“Bitcoin hash rate hitting all time highs while price goes down is a recipe for disaster rather than a cause for celebration,” he wrote in a thread about the miner data last month:

“As miner profitability gets squeezed, odds of another round of miner capitulation increase in the event of a downmove. But hopium never dies.”

*Bitcoin network fundamentals overview (screenshot). Source: BTC.com*

GBTC “discount” hits new all-time low

Echoing the institutional exodus from BTC exposure this year, the space’s largest institutional investment vehicle has never been such a bargain.

The Grayscale Bitcoin Trust (GBTC), which in the good times traded far above the Bitcoin spot price, is now being offered at its biggest-ever discount to BTC/USD.

According to data from Coinglass, on Sep. 30, the GBTC “Premium” — now, in fact, a discount — hit -36.38%, implying a BTC price of just $11,330.

The Premium has now been negative since February 2021.

Analyzing the data, Venturefounder, a contributor to on-chain analytics platform CryptoQuant, described the GBTC drop as “absolutely wild.”

“Yet still no sign of GBTC discount bottoming or reversing,” he commented:

“Institutions are not even biting for $12K BTC (locked for 6 months).”

*GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass*

Cointelegraph has long tracked GBTC, with owner Grayscale attempting to get legal permission to convert and launch it as a spot exchange-traded fund (ETF) — something still forbidden by U.S. regulators.

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

“Objectively, I would say there isn’t much interest in $BTC from U.S. based institutional investors until $GBTC starts getting bid closer to net asset value,” LeClair wrote last week.

Charting Bitcoin’s “max pain” scenario

While it is safe to say that a fresh Bitcoin price drop would cause many a hodler to question their investment strategy, it remains to be seen whether this bear market will copy those which have gone before.

For analyst and statistician Willy Woo, creator of data resource Woobull, the next bottom could have a close relationship with hodler capitulation.

Previously in Bitcoin’s history, bear market bottoms were accompanied by at least 60% of the BTC supply being traded at a loss.

So far, the market has almost, but not quite, copied that trend, leading Woo to conclude that “max pain” may still be around the corner.

“This is one way of visualising maximum pain,” he wrote alongside one of his charts showing underwater supply:

“Past cycles bottomed when approx 60% of the coins traded below their purchase price. Will we hit this again? I don’t know. The structure of this current market this time around is very different.”

According to on-chain analytics firm Glassnode, as of Oct. 2, 9.52 million BTC was being held at a loss. Last month, the metric in BTC terms hit its highest since March 2020.

*Bitcoin supply in loss chart. Source: Glassnode*

Bitcoin price loses $20K as trader warns US dollar ‘not quite topped out’

Bitcoin fails to avoid returning back under $20,000 after local highs prove too much to sustain.

Bitcoin (BTC) crossed under $20,000 after the Sept. 27 Wall Street open as United States equities inched higher.

U.S. dollar has room to run — trader

Data from Cointelegraph Markets Pro and TradingView confirmed the $20,000 mark barely remaining as tentative support on the day.

BTC/USD had managed local highs of $20,344 on Bitstamp overnight, while retracing U.S. dollar strength gave modest relief to risk assets across the board.

The S&P 500 and Nasdaq Composite Index had been up 0.4% and 0.65%, respectively, after two hours’ trading, but subsequently reversed.

At the same time, the U.S. dollar index (DXY) was down 0.15% on the day, back below the 114 mark but still near its highest since mid-2002.

“U.S. open coming up. Green numbers, while Yields & $DXY are correcting,” Michaël van de Poppe, founder and CEO of trading firm Eight, commented.

“Time for Q4 to be good for crypto.”

Popular trader Crypto Tony nonetheless cautioned on assuming that DXY had put in a major top.

“Bad news for the Bitcoin pump, the Dollar has not quite topped out yet, so we are looking for more pumps on the dollar and setbacks on $BTC,” he decided.

“Keep an eye on both of these if you plan on leveraging BTC.”

Binance BTC/USDT volume hits all-time high

With days to go before the monthly close, further BTC price volatility was expected, while traders demanded that October — traditionally a better month than September for crypto return — deliver the goods in 2022.

“Tracking price action over the past decade, Sept. has far and away been the worst performing month for BTC — closing positive only 20% of the time,” popular trading account Crypto Kaleo observed in a thread on Sept. 26.

“Silver lining — Oct. has been one of the best months for BTC — positive 78% of the time w/ a median gain of 28%.”

A close above $20,000 would be just enough for Bitcoin’s first “green” September since 2016.

*BTC/USD monthly returns chart (screenshot). Source: Coinglass*

In a sign of what the monthly close might have in store, meanwhile, major exchange Binance recorded its highest-ever daily trading volume for its BTC/USDT pair, with over 439,000 BTC equivalent changing hands.

*BTC/USDT 1-day candle chart (Binance) with volume. Source: TradingView*

Is it Bitcoin’s time to shine? British pound drops to all-time low against the dollar

The U.S. dollar has been the clear winner as investors seek shelter in the largest global economy, but could the British pound’s weakness be a positive for Bitcoin.

On Sept. 26, the British pound hit a record low against the U.S. dollar following the announcement of tax cuts and further debt increases to curb the impact of a possible economic recession. The volatility simply reflects investors’ doubts about the government’s capacity to withstand the growing costs of living across the region.

The U.S. dollar has been the clear winner as investors seek shelter in the largest global economy, but the British pound’s weakness could be a net positive for Bitcoin. The GBP, or British pound, is the world’s oldest currency still in use and it has been in continuous use since its inception.

Fiat currencies are a 52-year old experiment

The British pound, as we currently know, started its journey in 1971 after its convertibility with gold or theequivalent was effectively terminated. Since then, the currency issued by the Bank of England has not had a fixed valuation.

Inflation has been the centerpiece of economic debates all throughout 2022 after central banks added liquidity to the markets over the previous two years to stimulate economies. As a result, in August 2022, the United Kingdom saw a 9.9% increase in consumer prices versus the previous year.

On Sept. 22, the government announced an unprecedented tax cut, the highest since 1972, causing the British pound to reach an intraday low of $1.038 versus the U.S. dollar on Sept. 26. Analysts concluded that government bond issuance would increase to pay for the lesser tax, and interest rates would have to be aggressively increased.

While the GBP’s loss of value is shocking, one must analyze exactly how important is the global currencies market, and how relevant is the British pound to cryptocurrencies. The first part is relatively easy to answer, but it depends on whether or bank deposits, savings and certificates of deposits are accounted for. If we stick to the base money definition, exclusively measuring circulating cash and deposits at the central bank, the pound sterling stood at GBP 1.05 trillion in June 2022.

In U.S. dollar terms, the U.K. currency represents $1.11 trillion out of the global $28.2 trillion in fiat base money, or roughly 4%. On the other hand, the euro, the unified currency of the eurozone nations, leads the ranking with $6 trillion, closely followed by the U.S. dollar with $5.5 trillion. Hence, the significance of the GBP remains high, backed by the region’s $3.19 trillion gross domestic product in 2021, the fifth largest in the world.

In October 1990, the British government decided to pair the GBP based on the Deutsche Mark because Germany was the leading economic force in the region. However, the country was forced to withdraw from the pairing in September 1992 after Britain’s lackluster financial performance made the exchange rate unsustainable. As a result, during “Black Wednesday,” the interest rates suddenly increased from 10% to 15%, and the GBP currency devalued by 25% overnight.

Supply caps and scarcity could give crypto a chance to shine

Very few assets can compete with fiat money in terms of relevance. Gold has roughly $6 trillion in value, excluding jewelry and non-financial assets, is a definite contender. The tech giant, Apple, also leads the stock market valuation with a $2.45 trillion capitalization, followed by oil producer Saudi Aramco, which is at $2 trillion.

Estimating the relevance of the British pound on cryptocurrencies is not simple, but according to data from Nomics, out of the global Bitcoin fiat trading, the U.S. dollar is the absolute leader with 89%, followed by 4% from the Japanese yen, 3% for the euro and 2% for the sterling.

Consequently, the direct impact on Bitcoin trading seems relatively small, but the fact that the oldest fiat currency reached an all-time low against the U.S. dollar could be a game-changer for cryptocurrencies.

According to Porkopolis Economics, the average issuance rate of the pound sterling since 1970 has been 11.2% per year. This figure directly compares to Bitcoin’s issuance of 900 coins daily or 1.7% yearly.

Once the general population realizes their savings and investments are being devalued more aggressively by central bank stimulus measures, the benefits of a decentralized form of money could become clear. But, for now, the U.S. dollar has been the clear winner, reaching its highest level in over 20 years compared to other major global fiat currencies.

Traders brace for Bitcoin price volatility as DXY 2022 gains near 20%

It’s still all about the U.S. dollar this week as the monthly close and options expiry loom for Bitcoin.

Bitcoin (BTC) volatility edged higher during Sept. 26 as the Wall Street open avoided significant losses.

Monthly close tipped to shake up BTC price

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $19,000 on the day, with hourly candles of 1.5%–2% not uncommon.

The pair was expected to break out of its narrow trading range in the short term, having consolidated since Sept. 22.

For Michaël van de Poppe, founder and CEO of trading firm Eight, a tap of the area at the top of the range should signal acontinuation higher.

“Theory still stands for Bitcoin,” he told Twitter followers on the day.

“Crucial area at $18.6K holds for support, which we’ve been testing multiple times. Another test of the $19.4K–19.5K area (which we’ll be doing soon) is, most likely, giving a breakout to the upside. I’m targeting $20K and $22.5K.”

On-chain analytics resource Material Indicators agreed on volatility returning.

“BTC is trading in a tight range. Volatility will increase as the week progresses toward the Monthly Close, which coincides with Monthly and Quarterly Options expiry,” it wrote in a Twitter thread on the current state of the market.

“If bulls can manage a green M close above $20k, technical resistance is at the key MAs.”

Eyeing a longer-term range, meanwhile, fellow trader and analyst Josh Rager suggested that an optimistic scenario could see BTC/USD echo its growth from the first half of 2019.

“Uncertain if a bottom is in for Bitcoin but if $BTC price starts making its way back up to $24k+, I’ll certainly be paying attention,” he tweeted.

“Not saying that history will repeat but April ’19 took most people by surprise.”

Rager acknowledged that the macroeconomic environment this year was “different” from 2019.

Dollar strength sees best ever year

On the macro topic, United States equities stabilized at the Sept. 26 Wall Street open, helping highly-correlated crypto to avoid downside volatility.

The S&P 500 and Nasdaq Composite Index were down 0.35% and 0.65% on the day, respectively.

The U.S. dollar index (DXY) nonetheless looked primed to attack its latest twenty-year highs, having retraced only modestly after reaching 114.52 — its highest since May that year.

2022 has marked the best year ever for DXY, now up over 18% since Jan. 1.

“The 52-week percent change (lower-bound) is +21.3%, the highest rate of change since Q2 2015,” Caleb Franzen, senior market analyst at Cubic Analytics, noted in part of a tweet on the day.

*U.S. dollar index (DXY) 1-month candle chart. Source: TradingView*

“The trend will stabilize & the RoC will normalize, but that doesn’t necessitate a decline in the $DXY.”

‘The bond market bubble has burst’ — 5 things to know in Bitcoin this week

A time tunnel to November 2020 opens on BTC price action as the U.S. dollar lays waste to currencies and equities alike.

Bitcoin (BTC) starts a new week staring down a wild macro environment after sealing its lowest weekly close in nearly two years.

As risk assets across the global economy take a hammering and the United States dollar surges, the largest cryptocurrency is on a limp footing.

September, having started out on the bulls’ side, is now living up to its informal crypto market nickname, “Septembear,” and BTC/USD is currently down 6.2% since the start of the month.

The bad news keeps coming for hodlers, who are clinging to dormant coins in increasing numbers as the dollar runs rampant and mainstream appetite to diversify into riskier plays continues to evaporate.

With macro set to remain the key focus for everyone this week, Cointelegraph takes a look at what might lie in store for BTC price action.

In economic conditions that rival any major period of historical upheaval seen in the past century or more, here are some factors to take into account when assessing where Bitcoin could head next.

Weekly close sends BTC/USD back to November 2020

While not matching the previous week’s losses (3.1% versus 11%), the past seven days nonetheless managed to spark Bitcoin’s lowest weekly close since November 2020, data from Cointelegraph Markets Pro and TradingView shows.

As the downside keeps coming, Bitcoin has thus turned back the clock to before the breakout, which took it beyond its prior halving cycle’s all-time high.

The sense of deja vu is unwelcome to the average hodler — the vast majority buying and cold storing over the past two years is now underwater.

“$BTC just made the lowest weekly close in this zone,” popular Twitter analyst SB Investments summarized after the close:

“Looks bearish with stocks looking to break support as well. But on the other side this is what everyone expects.”

Whether the markets could pull a surprise “max pain” move to the upside, liquidating short bias, is a key alternative argument for Bitcoiners. For popular trader Omz, the weekly close price of $18,800 even represents a convincing local bottom.

The RSI divergence has not gone unnoticed elsewhere, with trader JACKIS flagging its arrival last week.

“We only got two touches of the oversold territory in the past & they have always marked the exact bottom as well,” he tweeted at the time.

Fellow trading account IncomeSharks also maintained that a reversal could accompany the U.S. midterm elections in early November, but stopped short of saying that the bottom was in.

“Elevator down, stairs up,” it commented on the 4-hour chart on the day:

“Keep on building double bottoms and new supports, Midterm Rally remains on the table. Break this structure, remove these targets, and find a new bottom.”

*BTC/USD 4-hour candle chart (Bitstamp). Source: TradingView*

Dollar wrecking ball costs stocks, fiat

Monday has barely started and the turmoil that accompanied last week is already back with a vengeance on macro markets.

An unstoppable U.S. dollar is laying waste to key trading partner currencies, with the Great British pound sterling making headlines on the day as it plunges 5% to come within a few percentage points of USD parity — its lowest levels against the greenback ever.

GBP/USD would follow the euro becoming worth less than $1.00, while the misery forced Japanese authorities to prop up the yen exchange rate artificially last week.

*GBP/USD 1-day candle chart. Source: TradingView*

EUR/USD briefly fell below $0.96 before a modest rebound, while USD/JPY remains near its highest since the 1990s despite Japan’s intervention.

At the same time, alarm bells are sounding for global bonds, which have fallen back to 2020 levels. Markets commentator Holger Zschaepitz warned alongside Bloomberg data:

“Looks like the bond market bubble has burst. The value of global bonds has plunged by another $1.2tn this week, bringing the total loss from ATH to $12.2tn.”

Stocks are set to fare no better, with futures down on the day prior to the Wall Street open. Brent crude oil fell below $85 per barrel for the first time since the start of 2022.

“Global bonds are collapsing in their fiat currencies, which are collapsing against the dollar, which is fast losing purchasing power,” Saifedean Ammous, author of the popular books, “The Bitcoin Standard” and “The Fiat Standard,” reacted:

“It will be months & years before the average fiat user realizes just how much they’re getting ruined financially. The ‘new normal’ is poverty.”

With crypto still highly correlated with stocks and inversely correlated against dollar strength, the outlook for Bitcoin is thus less than positive as the status quo looks set to remain.

Euro Area Consumer Price Index (CPI) is due this week, expected to show inflation still increasing, while the U.S. Personal Consumption Expenditures Price Index (PCE) print should conversely continue the U.S. downtrend which began in July.

The U.S. dollar index (DXY) meanwhile shows no sign of reversing, now at its highest since May 2002.

Hodlers in classic bear market mode

Amid such mayhem, it comes as no surprise that Bitcoin hodlers’ conviction is increasing and long-term investors refuse to sell.

Stubborn hodling is a hallmark of Bitcoin bear markets, and the latest data shows that that mindset is firmly back this year.

According to onchain analytics firm Glassnode, Bitcoin’s so-called Coin Days Destroyed (CDD) metric is setting new lows.

CDD refers to how many dormant days are erased when BTC leaves its host wallet after a given period. When CDD is high, it suggests that more long-term stored coins are now on the move.

“The total volume of Bitcoin coin-days destroyed in the last 90-days has, effectively, reached an all-time-low,” Glassnode commented:

“This indicates that coins which have been HODLed for several months to years are the most dormant they have ever been.”

*Bitcoin 90-day Coin Days Destroyed (CDD) annotated chart. Source: Glassnode/ Twitter*

The news follows weeks of various hodl-focused metrics showing a commitment to keep the BTC supply under lock and key for better days.

Glassnode, meanwhile, additionally noted the increasing prevalence of coins hodled for at least three months as a proportion of the USD value of the BTC supply.

“Bitcoin HODLers appear to be steadfast and unwavering in their conviction,” it agreed.

An accompanying chart showed Bitcoin’s HODL Waves metric — a depiction of the supply broken down by coin dormancy.

*Bitcoin HODL Waves annotated chart. Source: Glassnode/ Twitter*

Whales still dictate support and resistance

While old hands walk away from the “sell” button, Bitcoin’s largest-volume investors are on the radar of analysts when it comes to spotting price moves.

The current trading range represents a zone of interest due to the extent of trading activity involving whale money in the past.

Large buys lend additional weight to a specific support price while the same is true of resistance levels, and according to on-chain monitoring resource Whalemap, BTC/USD is currently stuck between the two.

“Holding 19k-18k is key for $BTC,” the Whalemap team summarized late last week.

An accompanying chart showed whale resistance levels capping relief for Bitcoin and limiting it to within the $20,000 zone.

*Bitcoin whale resistance annotated chart. Source: Whalemap/ Twitter*

Nonetheless, separate figures from research firm Santiment confirm that whales’ BTC exposure overall has fallen to two-year lows.

*Bitcoin whale ownership annotated chart. Source: Santiment/ Twitter*

“Extreme fear” enters second week

In a familiar return to 2022 norms, crypto market sentiment has now been in “extreme fear” mode for more than a week.

As per the Crypto Fear & Greed Index, which measures aggregate crypto market sentiment, the average investor could not feel much more uneasy about the outlook.

As of Sept. 26, Fear & Greed recorded a score of 21/100, with 25/100 the boundary for extreme fear.

Cold feet is nothing new to the market this year, which saw its longest-ever stint in “extreme fear” at over two months.

A potential silver lining could lie in social media interest, which saw a rebound over the weekend, Santiment noted.

“Among crypto’s top 100 assets, $BTC is the topic in 26%+ of discussions for the first time since mid-July,” it revealed in part of Twitter comments this week:

“Our backtesting shows 20%+ dedicated to Bitcoin is a positive for the sector.”

*Bitcoin social dominance annotated chart. Source: Santiment/ Twitter*

Data challenges the DXY correlation to Bitcoin rallies and corrections ‘thesis’

Analysts and traders strongly adhere to the “Bitcoin is inversely correlated to the strength of the U.S. dollar index” thesis, but a closer look at the data suggests otherwise.

Presently, there seems to be a general assumption that when the U.S. dollar value increases against other global major currencies, as measured by the DXY index, the impact on Bitcoin (BTC) is negative.

Traders and influencers have been issuing alerts about this inverse correlation, and how the eventual reversal of the movement would likely push Bitcoin price higher.

Analyst @CryptoBullGems recently reviewed how the DXY index looks overbought after its relative strength index (RSI) passed 78 and could be the start of a retrace for the dollar index.

This is literally the only thing you need to look at:

The $DXY is crazy overbought right now and due a correction. $BTC is the most oversold it ever has been on the monthly timeframe.

BITCOIN AND THE DOLLAR SHARE AN INVERSE CORRELATION. $BTC will rise and fiat will fall. pic.twitter.com/MpZniivpj0

— The London Crypto (@SerLondonCrypto) September 6, 2022

Moreover, technical analyst @1coin2sydes presents a bearish double top formation on the DXY chart, while simultaneously Bitcoin forms a double bottom, a bullish indicator.

Very beautiful Inverse Correlation between the Dollar Index DXY and Bitcoin BTC!

As #DXY forms a Double top (which maybe a reversal of its Trend) – Heading Down!#BTC forms a Double Bottom (which may serve also as a trend reversal) – Heading UP!#2sydes pic.twitter.com/A4eZSfJG82

— 2sydes.eth (,) (@1coin2sydes) September 12, 2022

Correlation changes over time, despite the general inverse trend

The periods of inverse movements between Bitcoin and the DXY index have never exceeded 36 days. The correlation metric ranges from a negative 1, meaning select markets move in opposite directions, to a positive 1, which reflects a perfect and symmetrical movement. A disparity or a lack of relationship between the two assets would be represented by 0.

*Dollar Index DXY 20-day correlation versus Bitcoin. Source: TradingView*

The metric has been below negative 0.6 since Aug. 19, indicating that both DXY and Bitcoin have generally followed an inverse trend. In fact, the longest-ever period of inverse correlation has been April 14 to May 20.

Saying that Bitcoin holds an inverse correlation to the DXY index would be statistically incoherent since it had a negative 0.6 or lower in less than 30% of the days since 2021.

The dollar strengthened after the FOMC minutes

On Aug. 17, officials at the United States Federal Reserve indicated that additional interest rate hikes would be needed until inflation eased substantially, according to the minutes from the July 27 meeting.

*Dollar Index DXY (orange, right) vs. Bitcoin (blue). Source: TradingView*

The report caused the U.S. dollar to appreciate versus major global currencies, as the market gave the Fed a vote of confidence. Meanwhile, Bitcoin dropped 11% in two days to $20,800, reinforcing the inverse correlation thesis.

Still, a correlation does not imply causation, meaning it is impossible to conclude that the DXY’s positive performance negatively impacted the Bitcoin price after the minutes from the Federal Reserve meeting were released.

Correlation should not be used to predict short-term moves

Even though pundits and influencers often use 20-day correlation data to explain daily price movements, one should analyze a more extended timeframe to understand the potential impacts of the DXY index on Bitcoin price.

*Dollar Index DXY (orange, right) vs. Bitcoin (blue), 2021. Source: TradingView*

For instance, 2021 presented some positive correlation between the DXY dollar index and Bitcoin. Maybe some of the movements were anticipated by either side, but no extended periods of inverse correlation were present.

More importantly, events solely relevant to the cryptocurrency might have distorted the metric, such as the first U.S. Bitcoin exchange-traded fund launch on Oct. 19, 2021. Other examples include Tesla announcing a $1.5 billion Bitcoin investment on Feb. 8, 2021.

Moreover, analysts point to the Chinese crackdown on mining in May 2021 as the culprit for the market downturn below $40,000. Those events could not have been anticipated by the DXY dollar index, so any ongoing correlation might have had little impact during those periods.

Consequently, those waiting for a turnaround on the DXY index before placing bets on a Bitcoin rally have no statistical backing. Whenever positive (or negative) developments specific to the cryptocurrency industry take place, the historical correlation loses relevance.

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