BTC Price Still Not At ‘Max Pain’ – 5 Things To Know In Bitcoin This Week
Bitcoin (BTC) starts another week in a precarious spot as global macro instability dictates sentiment.
After sealing a weekly close just inches above $19,000, the biggest cryptocurrency still lacks direction as nerves mount over the resilience of the global financial system.
Last week was a testing time for investors in risk assets, with gloomy economic data from the US and also Europe.
The eurozone thus provides the backdrop for the latest concerns of market participants, who watch as the financial buoyancy of major banks is called into question.
With the war in Ukraine only escalating and winter approaching, it is perhaps understandable that hardly anyone is optimistic – what could be the impact on Bitcoin and crypto?
BTC/USD remains below the previous halving cycle’s all-time high, and compared to the bear market of 2018 it is flowing in, it is also talking about a new multi-year low.
Cointelegaph takes a look at five BTC price factors to watch in the coming days with Bitcoin still below $20,000.
Spot price avoids multi-year low weekly close
Despite the bearish sentiment, Bitcoin’s weekly close could have been worse — at just above $19,000, the largest cryptocurrency managed to add a modest $250 to last week’s close, data from Cointelegraph Markets Pro and TradingView show.
However, the previous close had been the lowest since November 2020 on weekly time frames, and as such, traders continue to fear that the worst is yet to come.
“The bears remained in full swing last night during Asia, while the bulls failed to give us any good rallies to work on,” popular trader Crypto Tony wrote in part of a Twitter update on the day.
Second agreed with a summary concluding that BTC/USD was in a low volatility zone that would necessitate a breakout sooner or later. All that remained was to decide the direction.
“The Next Big Move Is Up,” Credible Crypto black.
“Usually before these big moves and after capitulation we see a period of low volatility before the next big move begins.”
As Cointelegraph reported, the weekend was already tipped to bring a boost of volatility as suggested by Bollinger Bands data. This came hand in hand with increasing volume, a key ingredient in sustaining a potential move.
“Weekly chart BTC shows a massive increase in volume since the beginning of the third quarter + weekly bullish divergence on one of the most reliable time frames,” other trading account Doctor Profit concluded.
“Bitcoin price increase is only a matter of time.”
Not everyone saw an imminent comeback. IN predictions Over the weekend, Crypto trader Il Capo gave the range between $14,000 and $16,000 as a longer-term target.
“If this was the real bottom… bitcoin should be trading near 25k-26k now,” trading account Profit Blue arguedshows a chart with a double bottom structure potentially developing on the 2-day chart.
Credit Suisse gets nervous when dollar strength goes nowhere
Beyond crypto, attention is gathering around the fate of major global banks, particularly Credit Suisse and Deutsche Bank.
Concerns about liquidity resulted in emergency public assurances from the chief executive of the former, with executives reportedly spending the weekend reassuring major investors.
Bank failures are a sore spot for underwater growers – it was government bailouts for lenders in 2008 that originally led to Bitcoin’s creation.
As history increasingly wants to rhyme nearly fifteen years later, the Credit Suisse saga is not going unnoticed.
“We can’t see inside CeFi firm Credit Suisse – JUST LIKE we couldn’t see inside CeFi firms Celsius, 3AC, etc.,” founder Mark Jeffery tweeted on the day, compared the situation to the meltdown of the crypto fund earlier this year.
For Samson Mow, CEO of Bitcoin startup JAN3, the current environment may still give Bitcoin its time to shine in a crisis rather than remaining correlated with other risk assets.
“Bitcoin price is already pushed down to the limit, well below the 200 WMA,” he arguedciting the long-lost 200-week moving average as support for the bear market.
“We have already had contagion from UST/3AC and influence. BTC is massively shorted as a hedge. Even if Credit Suisse/Deutsche Bank collapses and triggers a financial crisis, we can’t see us going much lower.”
Nonetheless, with instability already prevalent in the global economy and geopolitical tensions only rising, Bitcoin markets are voting with their feet.
The US dollar index (DXY), still just 3 points off its recent twenty-year highs, continues to circle for a potential rematch after limited corrective moves in recent days.
Looking further out, macroeconomist Henrik Zeberg reiterated a theory that sees the DXY temporarily losing ground in a big boost for stocks. However, this would not last.
“Early 2023, DXY will once again rally with the target of ~120. This will be deflationary bust – and stocks will crash in a bigger bust than during 2007-09,” he wrote in part of a tweet.
“Biggest Deflationary Bust Since 1929.”
Miner earnings target nears all-time low
With the Bitcoin price suppression underway, it is less than surprising to see miners struggling to maintain profitability.
At one point in September, monthly sales from miners were in excess of 8,500 BTC, and while that number subsequently cooled, data shows that for many the situation is precarious.
“Bitcoin miner revenue per TeraHash on the brink of all-time lows,” Dylan LeClair, senior analyst at digital asset fund UTXO Management, revealed in the weekend.
“Margin squeeze.”
The scenario is interesting for the mining ecosystem, which is currently deploying more hashrate than at almost any point in history.
Estimates from monitoring resource MiningPoolStats put the current Bitcoin network hash rate at 261 exahashes per second (EH/s), only marginally below the all-time high of 298 EH/s set in September.
Competition among miners remains healthy, as evidenced by difficulty adjustments. While seeing the first decline since July last week, the difficulty is set to add an estimated 3.7% in seven days, taking it to new all-time highs.
Nevertheless, for economist, trader and entrepreneur, Alex Krueger, it may yet be too early to breathe a sigh of relief.
“Bitcoin hash rate hitting all-time highs while the price is falling is a recipe for disaster rather than a cause for celebration,” he wrote in a thread about the miner data last month.
“When miner profitability is squeezed, the odds of another round of miner capitulation increase in the event of a downturn. But hopium never dies.”
GBTC “discount” hits new all-time low
Echoing the institutional exodus from BTC exposure this year, the world’s largest institutional investment vehicle has never been such a bargain.
Grayscale Bitcoin Trust (GBTC), which traded well above the Bitcoin spot price in good times, is now being offered at its biggest ever discount to BTC/USD.
According to data from Coinglass, on September 30, GBTC “Premium” – now actually a discount – reached -36.38%, suggesting a BTC price of only $11,330.
The premium has now been negative since February 2021.
Analyzing the data, Venturefounder, a contributor to the chain analysis platform CryptoQuant, described The GBTC fall as “absolutely wild”.
“No sign yet that the GBTC discount has bottomed out or reversed,” he commented.
“Institutions not even biting for $12K BTC (locked for 6 months).”
Cointelegraph has long tracked GBTC, with owner Grayscale trying to get legal permission to convert and launch it as a spot exchange-traded fund (ETF) – something that remains prohibited by US regulators.
In the meantime, however, the lack of institutional appetite for BTC exposure is something of an elephant in the room.
“Objectively, I’d say there isn’t much interest in $BTC from US-based institutional investors until $GBTC starts getting bids closer to net asset value,” LeClair wrote last week.
Map Bitcoin’s “Max Pain” Scenario
While it’s safe to say that another Bitcoin price drop would make many hodols question their investment strategy, it remains to be seen whether this bear market will replicate those that have gone before.
Related: Analyst on $17.6K BTC Price Bottoms: Bitcoin ‘Not There Yet’
For analyst and statistician Willy Woo, creator of the data resource Woobull, the next bottom may have a close relationship with hodler capitulation.
Earlier in Bitcoin’s history, the bottom of the bear market was accompanied by at least 60% of the BTC supply being traded at a loss.
So far, the market has almost, but not quite, copied that trend, leading Woo to conclude that “peak pain” may still be around the corner.
“This is a way to visualize maximum pain,” he wrote next to one of his maps showing underwater supply.
“Previous cycles bottomed out when about 60% of coins were trading below their purchase price. Will we meet this again? I do not know. The structure of this current market this time is very different.”
According to research firm Glassnode in the chain, 9.52 million BTC were held at a loss as of October 2. Last month, the calculation in BTC terms reached the highest since March 2020.
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 trade involves risk, you should do your own research when making a decision.
