BCGAME - Free 5BTC Daily Bonus!Bitcoin (BTC) is lower in a new trading week – Monday saw a test of sub-$33.000 levels, and the bulls are fighting.
What can be next? With short-term optimistic voices few and far between, it seems that cryptocurrency is simply not in the interests of investors at the moment.
In a scenario of macro market uncertainty, low volumes and bull market claims, Bitcoin has a lot to do to convince the market that good times are yet to come.
Highlight for the Fed … again
The main focus of investors across the economy this week is the US Federal Reserve.
Following President Jerome Powell's comments last week, the US dollar made strong gains as the stock then staged a selloff as market participants repositioned. The Dow Jones, for example, fell 3,5% in one day – the worst since last October.
The volatility came because Powell hinted that the Fed could soon begin to reduce the extent of its intervention in the market. This has become standard practice as part of their response to the coronavirus and the ensuing economic shutdowns.
A reduction in purchases, which CNBC noted currently amounts to about $120 billion per month, therefore presents a noticeable change.
Powell will speak again on Tuesday, this time before the Senate, and is expected to provide more information on the news he released widely last week.
“I'm very interested in what Powell has to say,” said Peter Boockvar, chief investment officer at Bleakley Global Advisors, on Friday.
"All of them will now give us the fine print of what's in the statement and what Powell said."
If surprises arise, the volatility that characterized the last few days could continue. Good news for the dollar tends to be bad for the Bitcoin price.
“I didn't get good vibes from the BTC chart when I woke up,” summarized popular trader Crypto Ed earlier in the week.
"One of the reasons IMO is the sudden strength in DXY since last week."
He added that the dollar may continue to “push” Bitcoin until the US Dollar Currency Index (DXY) hits around 94, from its current levels of 92,2.
Chinese bank deletes anti-crypto statement in minutes
It doesn't look good for Bitcoin spot price action as the week begins – but whose fault is it?
In addition to the Fed, another economy is exerting its influence on the crypto markets again, this time more directly: China.
In a statement, the Agricultural Bank of China, the country's third-largest lender, explicitly stated that its services should not be used for cryptocurrency-related transactions.
“The Agricultural Bank of China has issued a notice that it will not engage in virtual currency transactions and related activities,” reported China-oriented news source 8btc, translating the original document for social media users.
“The accounts of customers who participate in such activities will be closed and customer relationships will be terminated.
The result of its publication was immediately recognizable – Bitcoin plummeted over $1.000 in minutes before bouncing back to $33.000.
This behavior is far from surprising, but patience is now running out of automatic responses to China. The last episode proved to be a good example – the bank erased the statement shortly after publishing it, but the damage was done.
Quick explainer for those confused re AGbank
The Agricultural Bank of China released an announcement saying any customers dealing with crypto will have closed accounts
15 mins later it appears they deleted the notice
2021 getting rugged by the third largest bank in the world pic.twitter.com/qXax70lqgA
—db (@tier10k) June 21, 2021
Overall, nothing has fundamentally changed in the Chinese government's stance on Bitcoin since its controversial trade ban took effect in September 2017.
“Half of the Bitcoin network has already been closed by China. Bitcoin hash rate at mid-2020 levels,” noted Charles Edwards, CEO of asset manager Capriole, in a series of tweets about the mining crackdown that formed the previous source of Chinese price pressure.
Others argued that Bitcoin gained new opportunities thanks to punitive measures by the banks and the government – mining will move elsewhere and the network will flourish as a result of the use of friendlier and more trusted jurisdictions.
“The era of 'China-dominated' Bitcoin mining may be coming to an end.” Alex Gladstein, director of strategy for the Human Rights Foundation, commented on a farewell message from a miner in Sichuan Province.
"It will be a source of rich irony for historians of the future to teach that the world's free, open and decentralized monetary network was protected in its early years by individuals within a repressive dictatorship."
Bitcoin "Rick Astleys" are back
As the $30.000 support comes closer and closer, concern and confusion characterize reactions about the performance of the BTC/USD on Monday.
This is because the indicators of a bullish turn are there, but the price so far has done the opposite.
One is financing rates, which strongly favor bulls. At the time of this writing, rates were negative on stocks – a classic sign that a rally is on the way.
Moves among experienced hodlers confirm the trend, with currencies being unearthed even at levels prior to Monday's drop.
"Wow, Rick Astley is back," said statistician Willy Woo beside a graph showing Bitcoin's dwindling liquid supply. “Rick Astley” refers to a popular metaphor for strong hands.
"Currencies are going back to the HODLer that never leaves its BTC."
Analyst William Clemente III added that this “re-accumulation” echoed what happened in 2013, when Bitcoin had two bullish phases separated by a major pullback.
“HODLers stacking BTC heavily here,” he confirmed, noting net position change data.
Fundamentals echo uncertainty
China has had a significant impact on the fundamentals of the Bitcoin network.
As Edwards noted above, thanks to a broad miner outage, the hash rate has dropped significantly from its peak a few months ago.
This is worrisome in the short term, especially for those who adhere to the classic “price follows the hash rate” mantra, but it is necessarily short-lived.
Thanks to Bitcoin's inherent setup, there is always an attractive opportunity to mine somewhere under different circumstances. A mining route encourages participation in the network thanks to the hash rate and, consequently, the difficulty of falling.
The cost of participation therefore decreases, and mining becomes a viable proposition for more and more potential entities.
Meanwhile, Adam Back, CEO of Blockstream, strives to emphasize that China's impact on the hash rate was at most 39% of the top. The numbers vary greatly because the hash rate is an estimate and ultimately impossible to measure definitively.
PSA to front-run the next round of confused china hashrate FUD: hashrate has NOT halved, you are looking at VERY inaccurate data. 7-day peak 130 EH, current 98 EH maybe -25% down. and ATH peak 160 EH vs 98 = -39%. please. get. your. basic. facts. right. when reporting. thanks 🙏 pic.twitter.com/Add83UvIj3
- Adam Back (@adam3us) June 20, 2021
Is it that bad?
Not everyone thinks the prospects for Bitcoin are just bad news.
Some comparisons with previous bull market years place 2021 solidly within the framework of standard price performance.
As popular Twitter Root analyst pointed out over the weekend, the network's indicators are flashing as “oversold” rather than pessimistic, despite current external pressures.
So bearish today even though we are still hovering around the same range (~35k) totally in line with previous bull markets!
🇧🇷# Bitcoin pic.twitter.com/4Ivn3oVUhJ— Root (@theerationalroot) June 20, 2021
Others, like the creator of the stock-to-flow model, PlanB, are even bullish on virtually every timeframe beyond the daily chart.
As reported, their “worst case” is now $135.000 for BTC/USD later this year.
Flowing stock accommodated all the 2021 price surprises and remains valid.
