Bitcoin (BTC) starts another week in a precarious position near $20,000 before renewed macro upheaval.
After admittedly sealing its best weekly gains since March, the largest cryptocurrency is struggling to hold its recently reclaimed levels.
Major resistance zones remain overhead and with inflation data set to be released later in the week, the coming days could prove worrying for risk assets everywhere.
At the same time, crypto market sentiment is showing signs of recovery and on-chain metrics continue to underscore what should be Bitcoin’s recent macro price bottom.
Amid conflicting data, Cointelegraph takes a deeper look at potential market-moving factors for the week ahead.
The 200-week moving average is a headache
At around $20,850, the weekly close of June 10th was hardly anything special for BTC/USD, but the pair still posted its best seven-day growth in several months.
Bitcoin ended Sunday a whopping $1,600 higher than where it started the week, sealing an advance not seen since March.
The success didn’t last, however, as the hours turned negative after the week’s close. At the time of writing, BTC/USD is targeting $20,400, data from Cointelegraph Markets Pro and TradingView showed.
Bitcoin’s ability to hold current levels could be crucial to sentiment this summer, as relief in global stocks would provide an opportunity for crypto to erase some of its losses over the past few months.
Commentators, including trading suite Decentrader, eyed the weekly chart with interest.
watch weekly $BTC futures. The current candle will close on a bullish engulfing bar above the Moonraker and the weekly Vwap. The momentum is also increasing. If stocks keep going up and have a summer rally $BTC and crypto should probably follow. https://t.co/tlkrnTsG33
— Dezentrader (@dezentrader) July 10, 2022
Others were less enthusiastic, noting that BTC/USD still had another close below the key 200-week moving average (WMA) at around $22,500.
In previous bear markets, the 200 WMA acted as the overall support level, with bitcoin dipping briefly below to hit macro bottoms. However, this time seems different as $22,500 has been off the chart for a month.
#BTC the weekly candle has rallied +15% but still holds resistance below the 200MA for 3 weeks.
Lower timeframes are a little more bullish, indicators are cooling but markets remain fearful.
Will #Bitcoin break above the weekly 200 MA again before the weekly close? pic.twitter.com/NZXbxK8Oi2
— Steve Courtney ~ Crypto Crew University (@CryptoCrewU) July 8, 2022
Meanwhile, popular trader TechDev advocated a more optimistic outlook for the remainder of 2022.
By the end of the year, he argued over the weekend, a reclamation of more major WMAs should result in Bitcoin ending its “reaccumulation phase” altogether.
“32-35k BTC flip likely confirms end of reaccumulation and correction this year+,” TechDev said Twitter followers
“Imo most likely once both 100W and 50W EMAs are in this range. 100W currently at 34.8K and 50W at 37.2K.”
Elsewhere, the ongoing liquidation of assets at embattled crypto lending platform Celsius added to selling pressure.
Celsius continues to send its remaining cryptoassets to exchanges. A few hours ago, 2,000 wBTC were transferred from the main wallet and after a series of hops, they finally reached Coinbase and Binance.
Remaining Key Values:
410,000 STETH ($479mm)
16,000 wBTC ($342 million) pic.twitter.com/ae6viYL1Jk
— Light (@lightcrypto) July 10, 2022
The relentless dollar is back as Asian markets plummet
Asian equities trended lower on July 11 as news of social unrest in China marred the start of the macro week.
Markets felt the strain as protesters demanded the release of frozen funds amid a scandal involving both bank officials and local authorities accused of abusing COVID-19 tracking apps.
At the time of writing, the Shanghai Composite Index was trading 1.5% lower, while Hong Kong’s Hang Seng was down 3.1%.
Europe fared slightly better, with modest growth for the FTSE 100 and Germany’s DAX, with the US still open.
However, before Wall Street returned, the US Dollar Index (DXY) was already making fresh moves higher, erasing a retracement that made for a cooler end to last week.
DXY was at 107.4 on July 11, just 0.4 points below the 20-year highs of the days before.
Analyzing the situation, an analyst at trading firm The Rock described DXY as “about as extreme as it gets” in terms of year-to-date growth.
“Based on the extreme rally this year, the DXY is now up 16% year-on-year,” he said wrote:
“This is as extreme as has been historically seen and, unfortunately, it typically coincides with major financial stresses in the markets, a recession, or both.”
Bitcoin managed to defy its traditional inverse correlation to DXY last week, rising in tandem with the index.
Inflation is said to make for a ‘messy week’
As if that weren’t enough, the age-old theme of inflation could provide another test of markets’ resilience this week.
The June US Consumer Price Index (CPI) release is due on July 13 and the monthly numbers are expected to be even higher year-on-year.
The higher inflation is and the further it deviates from these already high expectations, the more likely risk assets are to react in anticipation of a response from policymakers.
For macro analyst Alex Krueger, the expected course for this week is clear.
“Getting messy,” he summarized on Twitter.
topics this week
#1 CPI inflation. Consensus is higher: 8.8% yoy, 1.1% mom. My view: come in even higher, big dip is bought.
#2 result. Mainly finances this week. Should be okay.
#3 European Gas Crisis. Puts downside pressure on risk and the euro.
Gets messy. https://t.co/LCmt2GRcHl
— Alex Kruger (@krugermacro) July 10, 2022
While the CPI shrugged off many of the leading inflation indicators, it even caught the attention of mainstream commentators over the weekend with a murky suggestion that this week’s numbers could put the cat among the doves.
“As US CPI inflation could get very close to 9% next week, some will be quick to point out that this measure is backward-looking,” said economist Mohamed El-Erian reacted:
“Yes… but it captures the pain felt by many, especially the less fortunate sections of society; and Affects inflation expectations.”
Any knee-jerk reaction, meanwhile, could definitely scare bitcoin markets in line with other risk assets, or at least trigger a lot of volatility, as seen in previous CPI events.
MACD hints at bottom
With several bitcoin price metrics either blinking at the “bottom” or even hitting all-time lows, the space is not lacking in signals suggesting that a BTC investment has a historically unrivaled risk-to-reward ratio at current prices.
This week the latest metric to join the herd is the weekly chart’s Moving Average Convergence/Divergence (MACD).
The MACD is effectively tracking a chart trend that is already playing out. It does this by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.
If the resulting reading is below zero, Bitcoin tends to be in a bottoming scenario, meaning that the recent trip to $17,600 could be as well should historical norms repeat itself.
A #Bitcoin Price capitulation when the weekly MACD is below the zero line has always marked the bottom. pic.twitter.com/5U1Q13Ybju
— Dave the Wave (@davthewave) July 10, 2022
Commentator Matthew Hyland, meanwhile, written down a similar MACD structure is still playing out on the 3-day chart.
“The 3-day MACD is still on a bullish cross,” said market analyst Kevin Svenson added:
“Despite the withdrawal, I remain optimistic in the medium term.”
As Cointelegraph recently reported, Bitcoin’s Relative Strength Index (RSI) is already at its most “oversold” level on record.
Last week, meanwhile, a dealer July 15 has been identified as the key date by which another chart feature will bottom call, this one consisting of two separate MAs.
2-month highs for the Crypto Fear & Greed Index
As a modest silver lining, the average crypto investor is slowly regaining their confidence, the latest data shows.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC, UNI, ICP, AAVE, QNT
Building on previous strength, crypto market sentiment reached its highest level since early May over the weekend and now stands at 22/100.
The renaissance of the Crypto Fear & Greed Index, while still in the “extreme fear” territory, represents a clear contrast to what has happened over the past two months, which has seen it fall as low as 8/100 – even below some earlier ones bear market lows.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.