Is Bitcoin slowly becoming less interesting for the average hodler? In 2022, Bitcoin price movements and network fundamentals will continue to go in opposite directions.
Bitcoin kicked off the first week of the new year in familiar territory below $ 50,000.
After December ended at $ 47,200 – well below most bullish predictions – there are many expectations for the leading cryptocurrency as there are still signs of the top halving.
BTC price 4-hour chart | Source: Tradingview
Many analysts say 2022 could soon become an exciting environment as Wall Street rebounds after its annual highs in stocks, rampant inflation and rising interest rates.
So far, however, everything has been calm and the Bitcoin course has not brought any major surprises for weeks in a row.
The article examines whether the situation will change or stay that way for the next few days?
Shares can “just go up” in the next 6 months
The S&P 500 is a classic developing country indicator when it comes to US stocks.
The index hit an all-time high of no less than 70 in 2021, ending a strong year, even if risky assets seem far less attractive.
Bitcoin was one of them when the price fell below the $ 50,000 mark, with notable events occurring during the holiday season at highs and lows around the thin liquidity.
With this in mind, central bank policy is expected to complicate things in the months ahead. The Federal Reserve (Fed) announced two rate hikes this year, and the market’s ability to absorb them is seen as an important test of asset performance.
In the first few days of the year, however, it is expected that things will continue “as usual”: stocks are rebounding to all-time highs. Charles Edwards, founder of the asset management company Capriole, poses in a number of tweets in the last week:
“History shows that introducing rate hike regimes will really give equity markets strength in six months. 10 of the 13 regimes (77%) since the 1950s: The stock market achieved positive returns in the first 6 months, an average of + 5.1%. Now we are approaching the beginning of a new regime. “
Edwards said that while such situations are generally “good” for Bitcoin, if future volatility continues, the stock will suffer heavy long-term losses due to rising interest rates.
“Without significantly higher economic growth (which is still to come), it is unlikely that a Fed rate hike will last.
Bitcoin will experience a lot of volatility during this period, not only because of the volatility in the stock market, but also because of the sharp correction by the Fed. “
Inflation is set to be a hot topic again next week as the latest December consumer price index (CPI) data comes out on January 12th.
US inflation chart | Source: Trade Economics
40,000 won the dollar is still the floor of support
Bitcoin’s recent spot price action is providing some extremely interesting indications that remain in a well-defined range.
In fact, the bull-bear scramble has been slightly more discouraging than the rhetoric on social media about low-volume trading, lethargic retailers, and non-traders.
I think two levels are important for #Bitcoin.
▫️ $ 48,000 that we are currently declining.
▫️ $ 49,400, the one that caused the last correction and should reverse for an up-test of possibly a mid-range $ 55,000. pic.twitter.com/zISQu2IcDV
– Michaël van de Poppe (@CryptoMichNL) January 2, 2022
“Two levels that I find important for Bitcoin:
▫️ $ 48,000 is the level at which the award is declined.
“$ 49,400 is the latest correction and is flipped to test a potential uptrend in the mid-range of $ 55,000.”
Answers to Levels to Watch by Michael van de Poppe, Renowned Analyst and Trader TechDev agree that $ 48,000 is “a small hurdle”.
Van de Poppe, on the other hand, said he was looking at the range between $ 40,000 and $ 42,000, with measures above this corresponding to an “accumulation phase”.
The source: Michael van de Poppe
However, Bitcoin has a habit of changing even the strongest trend at the least expected time.
For dealers Pentoshi, there’s little reason to celebrate the below $ 60,000 level that last surfaced more than a month ago.
“I would long for the logical areas in the downtrend. I’m going macro down until I get $ 58,000-60,000 back and I’m bullish on those areas. “
Pentoshi and others are calling for capital to be channeled into ETH based on altcoin strength, providing a convenient way to “reduce risk” when Bitcoin underperforms.
The source: Pentoshi
That strength is reflected in Bitcoin’s market cap, which has now fallen below 40% for the first time since May.
Candlestick chart ratio dominate belong Bitcoin 1 week | Source: TradingView
The only newspaper on the chain Prediction of “sustainable price trends”
For those looking for bullish signals of stagnant price action, on-chain indicators cannot be ignored.
The further the market moves away from last month’s rapid correction, the more attractive Bitcoin becomes as an investment bet based on historical trends.
In Messages The latest publication was released on December 31st. Capriole’s director Ryan McCoy highlighted the trend for investors to change their selling habits to accommodate the later period of earlier corrections.
In particular, on-chain analytics firm Glassnode’s Short-Term Holder Spended Output Profit Ratio (SOPR) shows the gain or loss of recently issued coins – those that have moved in the last 155 days.
Currently with an average score below 1, SOPR shows the number of coins losing money is decreasing, indicating sellers’ exhaustion. McCoy explains:
“Usually when this metric hits the bottom and then moves up, a more sustained price trend is triggered. The 30-day average is still below 1 (which means the average price of the coins moved is lower than the price they were bought at) but bullish signs like this after a sharp correction are showing that we are likely to be the current correction is in the later phase of the year. “
Short Term Bitcoin Holder SOPR Chart (30 Day Moving Average) | Source: Capriole
In contrast, long-term investors stayed true to their beliefs and did not sell.
McCoy sums up: “Despite the -38% decline since November, long-term owners are still sticking to Bitcoin. The last time Bitcoin was at $ 47,000, long-term stocks were 10% lower. So far there has been a negligible allocation despite the volatility. It’s an upward trend. “
the element basic almost never better
After the positive signals, the network fundamentals underscore the strong beliefs of another group of much-needed bitcoin market participants.
Despite the price hitting an all-time high of $ 69,000, miners are still accumulating instead of selling their coins.
At the same time, the network’s hashrate is also at an all-time high. This value was last reached in March and April, before price volatility caused by the Chinese ban forced the mass migration of miners.
If the saying “price after hashrate” is true, the miners’ belief in the long-term viability of Bitcoin will be another important indicator of the future position of the market. Capriole added:
“Indicators like this show that the underlying outlook is effectively justified and is largely ignored by newer, more compelling methods of explaining price dynamics, supply and demand. However, their ability cannot be overlooked to consider the institutional support and infrastructure to secure the protocol that is currently effectively laying the foundation for the entire cryptocurrency economy.
Bitcoin Hash Rate Chart | The source: MiningPoolStats
According to estimates by MiningPoolStats, the hashrate is currently over 190 exahashes per second (EH / s).
Meanwhile, the Bitcoin network difficulty will increase by around 2.4% by the end of this week.
Bitcoin Difficulty Chart | Source: Blockchain
This reflects the competitiveness of the current mining landscape, and the difficulty level will soon exceed 25 trillion for the first time since the pre-ban peak in China, according to China Data of blockchain.
With each increase, the difficulty increases the security of the network and creates an even stronger ecosystem.
“S.How sustainable is this “extreme phobia” this time?
The sentiment for Bitcoin will begin in 2022 as the crypto fear and greed index registers “extreme fear”.
Investors react very sensitively to even very small price movements in the current area.
The proof of this is that the fear and greed index has risen 8 points since the weekend, although the price movement has barely changed.
At the time of writing, the index measures 29/100 but is in the “fear” range.
Crypto Fear and Greed Index | Source: alternative.me
Meanwhile, as noted by the on-chain analytics resource EcoinometryAccording to the story, such a mentality does not last long.
“Bitcoin is returning to extreme fear. Historically, that means a 30-day drop limit. “
Fear & greed index and diagram price BTC/U.S. dollar | Source: Econometrics / Twitter
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