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Downward wave waiting for the market? 5 things to consider about Bitcoin this week

https://cointelegraph.com/news/wave-lower-for-all-markets-5-things-to-know-in-bitcoin-this-week?utm_source=Telegram&utm_medium=social

Since the beginning of 2022, there has been a lot of talk about the return and bullishness of the crypto market in 2023. Currently, the main question is that in the last weeks of 2022 and with the events that happened to FTX and Binance exchange, is the positive outlook of 2023 still valid?

According to Mihan Blockchain and quoted by Cointelegraph, the price of Bitcoin is currently affected by macroeconomic data, the fad surrounding the Binance exchange, the decrease in mining profitability, along with the increase in network difficulty and market sentiments, each of which can soon affect Bitcoin. which seems to be suffering these days. In the following, we will examine these factors.

1- Bitcoin price analysis

As we saw in the previous report of Blockchain Homeland, after the release of the November US Consumer Price Index (CPI), the cryptocurrency market experienced a significant rally and advanced to the $18,400 mark. But after the meeting of the Free Market Committee and the clarification of the Central Bank’s plan to increase the interest rate to reach 2% inflation, the price of digital currencies fell again. Currently, for the third day in a row, the price of BTC has failed to surpass $16,800 and is oscillating in a very limited area.

Bitcoin price chart
Bitcoin Price Chart Source: Homeland Blockchain

Since the beginning of November (mid-November) when the FTX exchange went into the abyss and caused the price of Bitcoin to fall by nearly 4 thousand dollars, the prices have not changed significantly. The question that many market participants are looking for an answer to is what factor can determine the task of the price trend and whether the fall is ahead or the rise.

Analytical website Stockmoney Lizards Checked Bitcoin chart on weekly time frame. According to this analysis, according to the retracement Fibonacci levels, BTC price is at the key support level (78% Fibo level). If the support level of $16,800 is lost, there is a possibility that the price will fall to 12,500.

Bitcoin price chart daily time frame Source: A: Twitter
Daily Time Frame Bitcoin Price Chart Source: twitter

This source, in a tweet Another published an image of Bitcoin price cycles and floors in 2011 (1390), 2014 (1393) and 2018 (2018) and while comparing them with the BTC price trend in 2022, he considered history to be likely to repeat itself for Bitcoin. According to this analysis, if history repeats itself, Bitcoin is probably leaving the bottom of the trend.

Comparison of Bitcoin price trend structure in different years
Comparison of Bitcoin price trend structure in different years Source: Twitter

On that side of the coin, many experts believe that the disaster is yet to come. Including Crypto Tony, who talks about the price of Bitcoin reaching $10,000 on his Twitter. He in one of tweetHe wrote of his Bitcoin price prediction for 2023 (1402) and said he expects the price to drop down to the $11,000 or $9,000 range and start to bottom out there. According to him, in 2023 we can see the accumulation stage of Bitcoin after the market capitulation as Bitcoin prepares for its next halving event.

2- The state of macro indicators in the United States

US gross domestic product (GDP) growth in the third quarter of 2022 was in line with expectations and was positive. This is while it decreased by 0.9% in the second 3 months. This issue can be important and effective for cryptocurrencies, because after the reduction of GDP in the second quarter, we saw an increase in interest rates. Rising interest rates are generally not good news for high-risk assets like Bitcoin. Therefore, GDP growth can reduce the pressure of the Federal Reserve to raise interest rates and take the pressure off the crypto market.

According to investor and market analyst Ajay Bagga, the Fed’s GDPNow model estimate for real US GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 (Fall 1401) was 3.2% on Dec. 9. (Azar 18), compared to its estimate on December 6 (Azar 15), which was 3.4%; Dropped.

In addition to GDP, the price index of personal consumption expenditures (PCE) is also interesting. A measure that the Federal Reserve pays close attention to when considering policy changes.

Trading firm QCP Capital, citing the impact of PCE, wrote that the Fed’s policies will only increase inflation (and wages). However, QCP warned the risk asset markets, including the crypto market, about a further decline in prices.

This company shared a graph of the daily time frame of the Nasdaq index and analyzed using the Elliott wave theory that in the fourth quarter of 2022, this index will pass its 4th corrective (upward) wave in the overall downward trend, but in the end, the wave The fall of 5 Elliott will come and affect all high-risk financial markets.

Nasdaq-100 futures chart
Nasdaq-100 futures daily chart Source: TradingView

In analyzing the performance of the S&P500 index, the company said:

We were looking for a high buying pressure to create a twin ceiling pattern around 4,320, but we couldn’t get there and the index fell before that. As you can see in the image below, I expect another decline and the formation of a WXY pattern (Triple Corrective Elliott Waves).

S&P 500 index
S&P500 index chart Source: TradingView

3- Rumors about Binance and creating fear in the market

Dear readers of Blockchain Homeland, please note that in the coming days, we will examine the status of the Binance exchange and the rumors surrounding it in a detailed and in-depth article.

The bankruptcy of FTX seems to have caused pressure on the Binance exchange as well. At present, Binance exchange is involved in the fringes and events that, according to CZ, the CEO of Binance exchange, have been set up with the intention of creating FUD in the market. These events in recent days have also affected the Grayscale fund and its parent company, DCG. In the coming days, we will publish a separate article on this matter, which will examine the possibility of bankruptcy of this fund and its impact on the market.

The world’s largest digital currency exchange in terms of market volume has faced a strong reaction from the media and users in recent weeks; Because the efforts of this exchange to prove its reserves have not been able to convince users.

As we saw in the previous report of Blockchain Homeland; Mazars, which was responsible for the audit of Binance’s assets, announced that it will suspend the audit of Binance and all crypto companies.

Prior to that, a report from Reuters was published which claimed that the US Department of Justice is looking to prosecute Binance for money laundering. Although Binance publicly denied it, a lot of skepticism against Binance was formed in the crypto market, including a blog post which claims there is suspicious activity between Binance and its American branch (Binance.US).

These findings dovetail well with earlier reports from Forbes and Reuters that suggested Binance.US had a clever trick designed to fool regulators and customers.

However, with the collapse of FTX, everyone is taking a closer look at the crypto industry. We doubt Binance’s regulatory tai chi will allow them to escape the law for long.

On the other hand, the CEO of Binance denied all the accusations and considers them to be an attempt to create a fad in the market. Referring to the words of Ryan Selkis, the founder of the Mesari analytical platform, he stated that there is an element of xenophobia in criticizing Binance.

Selkis in tweet He himself wrote:

Much of the Binance fad just stems from xenophobia (Binance is a non-US exchange). I am totally in favor of testing them under difficult conditions and I think it is bad that such a high percentage of volume is held by an exchange. But I don’t like the tone of some of the reviews. I’m sorry!

4- The competition of miners increases

After the largest decrease in Bitcoin network difficulty in 18 months, this parameter is set to start increasing again this week. According to estimates from BTC.com, the network difficulty adjustment of this period will be accompanied by an increase of about 3.8%.

The difficulty of the Bitcoin network
Bitcoin Network Difficulty Source: btc.com

Increasing network difficulty has implications for miners. Because the collapse of the ftx exchange Bitcoin price has reduced by 25% and as a result the profits of miners have been reduced. The decrease in miner profit raises the concern about the miner surrender event.

It is interesting to know that despite the decrease in the price of Bitcoin in recent months, the increase in the difficulty of the network, instead of the withdrawal of miners, has resulted in their intense competition.

Data from the chain analysis company Glassnod also shows a 30-day decrease in the bitcoin reserves of miners’ wallets, which are usually used to cover current mining costs.

30-day net position change chart of Bitcoin miners.
30-day net position change chart of Bitcoin miners. Source: Glassnode

It is estimated that bitcoin miners currently hold between 120,000 and 820,000 bitcoins, equivalent to 1% to 4% of all bitcoins in circulation.

5- The state of market sentiments

In the last 2 months, thanks to the events that happened to ftx exchange and Binance exchange; It is natural that the dominant feeling in the market is fear and uncertainty. However, the Crypto Fear and Greed Index is performing significantly better than expected and remains above its “Extreme Fear” level. This index is currently 29 out of 100, which is not so low compared to current news and events.

But Crepito Tony thinks it won’t be long before the fear-greed index falls to its true position in current conditions. He expects the index to decrease to 6 in 2023.

Fear and greed index
Fear and Greed Index Chart Source: Alternative.me

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