‘Wild ride’ lower for BTC? 5 things to know in Bitcoin this week

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Bitcoin (BTC) has started a new week still in holiday mode and the United States financial markets are closed for Independence Day.

The largest cryptocurrency, trapped below the increasingly challenging $20,000 mark, continues to feel pressure from the macro environment as talk of lower levels is ubiquitous.

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After a quiet weekend, holders find themselves trapped in a narrow range, while the prospect of an upward breakout is becoming harder to believe.

As one trader and analyst singles out July 4th as a “wild run to downside” site for crypto markets, the countdown to the season continues after the latest Federal Reserve rate hike for bitcoin.

What else could happen in the coming week? Cointelegraph takes a look at potential market-moving factors for the days ahead.

BTC price spends its time over the long weekend

Bitcoin fully recovered from the weekend, but the classic pitfalls of off-peak trading remain.

The United States won’t be back on the trading desk until July 5th, in the meantime providing ample opportunity for some classic weekend price action.

So far, when it comes to volatility, the market has been closed – with the exception of a brief spike at $18,800, BTC/USD has circled the area between $19,000 and $19,500 for several days.

Even as the weekly close provided no real trend change, data from Cointelegraph Markets Pro and TradingView showed, the psychologically important $20,000 was not challenged.

BTC/USD 1-Week Candle Chart (Bitstamp). Source: TradingView

Popular trading account crypto tony. “While below the lower range we can expect a drop to $18,000” repeated To Twitter followers as part of a fresh update on July 4.

“It’s been a very boring few days at the markets, and this is a classic for the mid-range.”

In terms of downside targets, others are keeping an eye on this area around $16,000.

Meanwhile, there was little in terms of short-term price targets for short-term traders, with no meaningful bitcoin futures gap and a flat performance on Asian markets.

Meanwhile, the US Dollar remained at a twenty-year high after returning from its latest retracement defence.

The US Dollar Index (DXY) was above 105 at the time of writing.

US Dollar Index (DXY) 1-hour candle chart. Source: TradingView

Gold nears “explosion” against US stocks

With Wall Street closing for Independence Day, US stocks may take respite on Monday.

For a popular chartist, however, the focus is on the strength of the stock versus gold in the current environment.

In a Twitter thread that day, gold monitor Patrick Karim specifically marked the precious metal hitting a historic “blast off” zone against the S&P 500.

After exiting the bottom in late 2021, the gold to S&P ratio has recovered throughout this year, and is now about to cross a range that has historically posted significant growth since.

“Gold closed on ‘blast off zone’ versus US equities. Previous take-offs have yielded significant gains for silver and miners,” commented Karim.

The situation cannot be said to be the same in terms of the US Dollar, the strength of USD since March has kept XAU/USD firmly in its position below $2,000.

Still, for silver fans, the implication is that even a modest push-through to the XAU/SPX ratio will bring in significant returns.

The forecast again raises the question of how likely is bitcoin to break with the macro trend. If Karim’s scenario plays out due to its ongoing correlation with equities, a breakout against BTC for gold would be the natural knock effect.

Popular trader and analyst CRYPTOBIRB, “The correlation coefficient rose sharply to 86% versus the S&P 500, after escaping the sideways pattern for the 1.5-year period.” Abbreviation at the end of the week.

“Now, at 0.78 ratio it remains strongly positive.”

Fellow analyst VentureFounder noted that bitcoin is also linked to Nasdaq’s move.

Meanwhile, against the dollar, Cointelegraph reported, bitcoin’s inverse correlation is now at a 17-month high.

Crunch Time for Hayes’ “The Downside From the Wild Ride”

July 4th, in addition to being Independence Day, is being viewed by one market player as an exclusively public holiday like no other – at least for bitcoin.

With markets closed and BTC price action already on the edge of support, Arthur Hayes, the former CEO of derivatives platform BitMEX, has chosen this long weekend as a long day of reckoning for the crypto markets.

The logic seems logical. The Federal Reserve raised key rates by 75 basis points in late June, providing fertile ground for an adverse reaction from riskier assets. Low-liquidity “out-of-hours” holiday trading increases the likelihood of a volatile price move up or down. Combined, the cocktail, Hayes warned last month, can be potent.

“As of June 30 (the end of the second quarter), the Fed has hiked the rate by 75 bps and began shrinking its balance sheet. July 4 falls on a Monday, and is a federal and banking holiday,” He wrote in a blog post.

“It’s the perfect setup for another mega crypto dump.”

So far, though, signs of what Hayes says are “the wild ride of the downside” haven’t materialized. BTC/USD has been practically stable since the end of last week.

The deadline should be Tuesday, July 5th, as the withdrawal of traders and their capital would provide the liquidity needed to stabilize the markets as well as buy any coins that are cheap in the event of a last minute bearish run. .

Hayes added that his earlier forecasts of lows of $27,000 for BTC/USD and $1,800 for ETH/USD had already “shattered” in June.

Mining difficulty still rising

Despite considerable concern over the ability of miners to withstand the current BTC price drop, the fundamentals of Bitcoin’s network remain calm.

An impressive testament to the miners’ resolve to remain on the network, the upcoming readjustment this week does not plan to ease the difficulty.

After a modest 2.35% decrease two weeks ago, the difficulty, which increases automatically and takes into account fluctuations in miner participation, will hardly change at this time.

Difficulty will increase further if current prices remain the same, according to estimates from on-chain monitoring resource BTC.com, a metric near the all-time high of 0.5%.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

When it comes to miners, opinion tends to be that it is the less skilled players – possibly the new ones with higher costs – who have been forced to exit.

information uploaded Production costs for miners were put at around $26,000 on social media by asset manager Capriole’s CEO Charles Edwards last week. Of that, $16,000 is electricity, meaning that miners’ overheads directly affect their ability to limit losses in the current environment.

“We traded below electricity costs in June, although the floor has fallen since unskilled miners surrendered,” Edwards said.

Bitcoin miner production cost chart. Source: Charles Edwards / Twitter

a sea of ​​ups and downs

Bitcoin on-chain metrics pointing to record overselling are nothing new this year, and especially in recent weeks.

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The trend continued in July, as the network returned to scenarios not seen since the cross-market crash of March 2020.

According to on-chain analytics firm Glassnode, the number of loss-making coins is now the highest since July 2020. Glassnode analyzed the weekly moving average of loss-making unspent transaction output (UTXO).

Bitcoin UTXO (7-day moving average) in loss chart. Source: Glassnode

Similarly, UTXO’s percentage in gains was slightly higher than the two-year low of 72% on July 3.

Bitcoin% UTXOs (7-day moving average) in profit chart. Source: Glassnode

Bear markets may produce some welcome, if rare, silver linings. Bitcoin transaction fees, which were once very high during periods of intense network activity, are now at their lowest level since July 2020. As Glassnode revealed, the average fee is $1.15.

Bitcoin mean transaction fee chart. Source: Glassnode

As Cointelegraph reported, the same is true for the Ethereum network gas fee.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.