BCGAME - Free 5BTC Daily Bonus!Bitcoin (BTC) is back at $50.000 with a new week underway with a bang.
After a strong weekend, Bitcoin finally crossed the long-awaited $50.000 mark during Sunday night.
Along with a strong sense of déjà vu, traders are naturally curious as to what will happen next – and crucially whether Bitcoin has wrested more than it can chew from its latest price rally.
With the US Federal Reserve's annual Jackson Hole summit scheduled this week, macro triggers could combine with internal sources of contention to trigger a busy week for cryptocurrency markets.
In this article, we will discuss:
$50.000 Bitcoin: What Can Go Wrong?
There was no lack of concern that Bitcoin failed to raise $50.000 this weekend.
Everything from low volumes to a bearish Wyckoff distribution event was visible on social media for those unconvinced of the strength of the market.
In the event, however, Bitcoin cut and held the psychologically significant price level in classic fashion.
“If btc can get out of here. People who trade will lose their Btc and hodlers will gain,” summarized popular trader Pentoshi in one of his several tweets on Sunday.
I said that one other time before doing a relentless 6x. Know when to trade and when not to trade. All you have to do is do nothing. My strategy is to do nothing when this happens.
Pentoshi channeled several references to the fourth quarter of 2020, suggesting similarities between the composition of the market now and the start of the main phase of Bitcoin's latest bull run.
This “springboard” was also apparent when BTC/USD first hit $50.000 in February – but it took some time for the level to become firm support and provide the foundation for a trip to current highs of $64.500.
As such, if BTC/USD experiences a further pullback, it will likely be fleeting, Pentoshi argues.
"I probably won't look back too far, if any," he added.
Now it's all about accumulation. When tagging starts, there is only vertical accumulation.
Diminishing rumors fly as Fed virtual summit approaches
Macro suggestions will likely come from the Fed from the US this week.
The annual Jackson Hole meeting of leading financial figures – now set to be virtual – is rumored to be extensively focused on changes in economic policy arising from the coronavirus pandemic.
Specifically, markets will want to know if any tapering of asset purchases is anticipated and when it might happen.
With such a move priced in to some extent, only something unexpected could make the markets turn, analysts suggest.
“They are still very, very dovish. They are a little less peaceful,” Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, told Yahoo Finance last week.
But that's a bit of semantics at this point. Taper is very well documented and known. We know it's coming. It's just a matter of time and it really shouldn't surprise many investors out there.
Stocks were already weakening towards the end of last week thanks to bearish fears, with the start of US trading yet to come as of this writing.
Meanwhile, gold, which has suffered heavily this month as Bitcoin soared, has regained much of its recently lost ground.
Gold bugs remain convinced that the precious metal will continue to attract long-term investment, with safe-haven seekers turned away from Bitcoin due to volatility.
Has China Accelerated the Bitcoin Price Rise?
If Bitcoin's spot price action failed to impress you, there is little debate about the strength of its network fundamentals.
The hash rate and difficulty, months into a broad recovery, have surpassed each other over the past week.
Compared to last Monday, the hash rate added 8 exahashes per second (EH/s), estimates show, which equates to an overall increase of around 5% in computing power dedicated to mining.
At 121 EH/s, the hash rate is therefore just 47 EH/s away from the all-time highs seen before the mining lane in China settled in May.
“Bitcoin hash rate is continuing its recovery from one of the biggest infrastructure dislocations in modern history – with an estimated 45% of the Bitcoin mining industry, billions of dollars, relocating continents while the network continues as normal,” wrote the popular Twitter account Documenting Bitcoin Previous Week.
Bitcoin had zero downtime.
Not just zero downtime, but zero demand loss – with the return of hashing power came difficulty tweaks, which only served to strengthen network security and increase competition, all as planned.
With that, the difficulty is expected to increase for the third consecutive time in two days, this time around 9% – a post-China high.
That is firmly optimistic in the ears of those who are concerned about the long-term faith in mining profitability and the role China played in the Bitcoin operation.
However, comparing this year's post-halving bull run to previous ones, one commentator highlighted a potential point of concern.
“About 120k-138k blocks AFTER the bottom of miners’ capitulation in each bear market, bitcoin peaked,” noted Parabolic Trav on Sunday.
The 120k-138k blocks accumulate enough miner stock (after working for a while) to crush the market. This cycle of exodus from China forced inventories to market earlier. Implications?
If the China episode has accelerated the bull run this time, a potential second price spike could occur sooner than many anticipate. However, theories claim that 2021 will mimic 2013 in producing a type of “double bubble” BTC price top with two peaks, the second of which arriving later in the year or perhaps even later.
Exchange flows dominate again
On the topic of 2020 comparisons, however, there is another trend clearly repeating the “springboard” of last year's bull run.
Bitcoin forex reserves have fallen sharply in recent weeks after China temporarily reversed the general downtrend.
While exhibiting mixed behavior throughout 2021, investors are now withdrawing BTC in large enough amounts for those withdrawals to dominate the landscape, notes on-chain analyst Glassnode.
“Bitcoin exchange flows once again dominated outflows through August, with investors withdrawing BTC,” the document revealed late last week.
The market has gone through a series of phases of currency flow dominance over the past year, with outflow dominance last seen in late 2020.
This is in line with a popular narrative that focuses on accumulation at current price levels, suggesting overwhelming faith in higher prices yet to come.
“Extreme Greed” Increases Your Domain
“Extreme” emotions are back on the scene among crypto investors.
This is in line with the Crypto Fear & Greed Index, which this week is firmly within its “extreme greed” zone.
While not quite at the top of its 0-100 scale, the Index now measures 79/100, just 15 points away from the typically bullish peaks that prevent major price corrections.
The pace of change in Fear & Greed has been intense – just three weeks ago it averaged 42/100, denoting “fear” as the general emotion in the market.
Monday's reading is therefore the highest since mid-April, when Bitcoin was at an all-time high.
