Bitcoin had a great week, closing at its highest point in months. Can the good times keep going?
After bitcoin’s value jumped last week, many are wondering if the positive trend will continue. BTC/USD managed to restrict losses into the later portion of this past weekend, resulting in a green candle on weekly timeframes.
In the absence of major macro market forces involving the United States Federal Reserve, bulls have free reign in this week’s “quiet” week. Bitcoin’s fundamentals remain strong, owing to a projected increase in mining difficulty for the second time in a row over the next days.
There are also some positive signs in the derivatives markets, with prices rising and sentiment data looking bullish.
The best weekly close in two months for BTC/USD occurred on August 14, at around $24,300. The weekly chart indicates a slow grind upward that has continued to develop since the June lows, and last week’s candle accumulated almost $1,100 or 4.8 percent. The gains sparked some volatility overnight into the first Wall Street trading day of the week, when BTC/USD rose to $25,200 on exchanges before significantly undershooting the weekly close level.
On recent days, there have been a variety of movements, which has come as no surprise to traders who are hesitant to trade on shorter timeframes. “A new week begins; the bears have taken control so far in order to test some critical levels,” noted popular trading account Crypto Tony in part of his latest Twitter commentary on the day.
According to on-chain monitoring resource Material Indicators, if unpredictability persists, the probability of a decline is high. Following the close, the weekly chart began signaling “downward momentum,” according to its proprietary trading tools, while daily timeframes were “flat.”
This week, the creator of Material Scientist described it as the “final week of the bear rally.” However, gold bug Peter Schiff still thinks that a much deeper correction is possible, and $10,000 could still be on the cards.
On a longer-term basis, however, BTC price action was not as confident. Until the next block subsidy halving event in 2024, he suggested dollar cost averaging (DCA) into Bitcoin by buying a fixed amount every set period — accumulating over time to average out the unitcost of your investment.
Although the next five trading days look calm from a macro perspective, following last week’s inflation report in the United States, there is always the potential for an unusual event in Europe or Asia to disrupt markets. Nevertheless, one well-known expert believes that crypto may have already moved past reacting erratically to every little trigger beyond inflation.
In a fresh market update for his trading suite, DecenTrader Filbfilb focused on decreasing correlation between BTC and “legacy markets.” The reason for this is the Terra and Celsius debacles, which form a perfect storm when taken together with worries over inflation and the Fed’s reaction to it.
Geopolitical concerns, such as the Russia-Ukraine conflict, tensions over Taiwan and Europe’s energy crisis, might exacerbate matters. As a result, Filbfilb felt that the macro market situation was on a “knife edge.” On the day, China’s news is worth noting; it implemented a snap rate decrease following disappointing economic data.
Spot price action is currently impactful on trading habits and conditions may still favor more upside. Derivatives markets were analyzed by Philip Swift, a builder at DecenTrader and founder of data resource Look Into Bitcoin, who highlighted negative funding rates.
Contrary to popular belief, moderate negative rates are often the driving force behind further gains. This is because experienced traders see a downturn coming and bet against it, rather than over betting on profits materializing. This allows for shorter positions to be “squeezed” by those with more knowledge.
Unlike what is anticipated by most people, Bitcoin and other cryptocurrency markets have a pattern of behaving opposite to expectations.
However, the Bitcoin network’s fundamentals are exhibiting a slower recovery rather than a race to the top. The most recent figures from BTC.com show that miners are gradually regaining their previous levels of activity. For the second consecutive time, difficulty will be boosted for this week’s automatic readjustment.
The 0.9 percent rise in Bitcoin mining is modest, but it demonstrates that competition between miners is increasing, and that higher prices are therapeutic to a part of the Bitcoin economy this year that has been highly pressured. At the same time, hash rate projections — an indication of the computing power dedicated to mining dedicated – remain flat at 200 exahashes per second (EH/s).
The Bitcoin spot price has reached a two-month high, but this is just one aspect of the market that is seeing some recovery this week.
Crypto Tax Calculator Australia is the perfect tool for Australian crypto traders. It takes the hassle and stress out of crypto calculations, making it easier for you to file your taxes this year! So if you’re looking for an easy way to calculate your cryptocurrency transactions, then look no further than our handy Crypto Tax Calculator.