After days of losses following the latest US inflation data, BTC / USD, like altcoin and risk assets more generally, has failed to recover.
The larger cryptocurrency has yet to bring $ 20,000 to compelling support, and at the start of the third full week of September, the danger is once again that that level could act as a resistance.
The bulls have a lot to worry about: in the coming days the Federal Reserve will decide on the next key rate hike, something that will affect the market far beyond just sentiment.
Additionally, the aftermath of the Ethereum (ETH) merger continues to occur, as at the defunct Mt. Gox exchange, repayments to creditors add another potential cloud to Bitcoin’s pricing landscape.
Cointelegraph examines five potential market moving factors to watch in Bitcoin over the coming week.
The “hammer” of the Fed rate hike in the center
The main event of the week comes in the form of the Federal Reserve’s decision on key interest rates.
After the August consumer price index (CPI) print became “hotter” than expected, the Fed will be under pressure to respond.
Therefore, the market has now fully priced a minimum 75 basis point hike for the Fed funds rate and is not discounting the 100 basis point possibilities, according to the CME FedWatch Tool as of Sept. 19.
A 100-point hike would be the Fed’s first such action since the early 1980s.
The Federal Open Market Committee (FOMC) will meet September 20-21 and will issue a statement confirming the Fed’s hike and support for the figure involved.
“The Fed isn’t going to loosen anytime soon, and that’s classic human nature because we now have the advantage of knowing how far the mistakes they made by loosening too much have been,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. in an interview with Kitco over the weekend.
Growth in risk assets since the March 2020 slump has “swung too far to one side,” he said, and it is now “very clear” that a reversal will take hold.
Cryptocurrencies will figure in the overall market recovery and eventually Bitcoin will come out ahead, McGlone continued, reiterating a long-standing theory about the future of cryptocurrency. Gold will also outperform, but for both of them the pain comes first.
“Unfortunately, for the Fed to stop this club, the risk assets have to make them stop by squeezing for them,” he summed up.
A 100 basis point move this week would accelerate that process, which is now seeing catalysts from central banks outside the US after they were initially slow to start raising rates to fight inflation.
The popular Twitter Games of Trades analytics account meanwhile said it was the pivotal time for the S&P 500 before Wall Street trading began.
# SP500 has reached its “line in the sand” level.
This is the point of sinking or swimming. Fly or fall. Fish or cut bait. pic.twitter.com/ZaCfAfcHcE
– Game of Trades (@GameofTrades_) September 18, 2022
“In times like this, with great uncertainty across the board, the cryptocurrency market won’t do much without the permission of the shares,” analyst and commentator Kevin Svenson added.
The spot price falls after the poor weekly close
The last week has seen an increase in favorable wind for Bitcoin, causing BTC price action to fall in kind.
BTC / USD lost over $ 2,000 in a single weekly candle, closing below $ 20,000 in what is the lowest close since July, according to data from Cointelegraph Markets Pro and TradingView.
The close was followed by a sharp dip where the pair dipped below $ 19,000.
The bearish mood is perhaps understandable: the Ethereum merger has become a “news selling” event and, coupled with macro triggers, has contributed to a new flight of risky assets.
Now, analysts are evaluating the chances that the bearish trend will remain in place at least until the Fed rate announcement is broken.
“BTC went through the weekend, but there is always the potential for some volatility before closing,” analysis resource on the Material Indicators chain said Twitter followers in part of a September 18 post.
“Huge classifieds and Fed announcements next week will spice things up again.”
An accompanying chart showed the progress of Binance’s order book, with support at around $ 19,800 as it failed to sustain the price action.
The day before, Material Indicators had argued that likewise it made no sense to imagine that a deeper dip would be avoided. Judging by the order book, the offer action has not yet been strong enough to support current levels.
Self #Bitcoin it was really close to the BOTTOM, do you think there would be a liquidity gap between $ 18k and $ 18.5k, and wouldn’t you also expect there to be solid offers at least until the June low at $ 17.5k? #FireCharts
I have no more questions. pic.twitter.com/Xstusqg2T8
– Material indicators (@MI_Algos) September 16, 2022
Considering when a macro bottom might occur, in the meantime, popular trader Cheds has bet on the fourth quarter of this year, describing Bitcoin as “right on track” to do so.
“Weekly $ BTC starts hitting range lows,” he said added in a further tweet at the closing of the week.
The shorts were piling up at the time of writing on both Binance and FTX, suggesting a concerted effort to push the market down by derivatives traders. This one, connects popular Ninja accounts discussedit would ultimately fail beyond the opening of Wall Street.
The US dollar is below its multi-decade high
Watch out for a potential macro high, meanwhile, is the US dollar, which has rebounded from the losses seen after the CPI was printed.
A classic headwind for cryptocurrencies, the US Dollar Index (DXY) currently stands at just under 110, after consolidating for several days.
The index reached 110.78, its highest since 2002, earlier this month, while avoiding significant retracements.
Looking into the immediate future last week, Hyland warned that a “new love at first sight” for DXY will accompany a “capitulation event” in risk assets.
We are heading for a capitulation event
We are also heading towards a maximum hit of the US dollar
When? No clues but there is nothing to say that DXY has passed
It is currently in position for the highest weekly close of the year: pic.twitter.com/UHrJfYsSQP
– Matthew Hyland (@MatthewHyland_) September 15, 2022
A look at the inverse correlation between DXY and BTC / USD meanwhile confirms the impact of the former’s sharp upward moves on the latter.
Ethereum gets post-merge blues
In the week following the much-vaunted Merge, Ethereum is experiencing a major decline from the hype.
In a move that could skew the market cap share in Bitcoin’s favor, ETH / USD fell 25% last week.
Currently trading below $ 1,300, the low since July 16, the pair is seeing bearish prognoses from analysts and traders across the board.
“Ethereum fails to maintain critical support,” Svenson put on guard as the weekly close failed to draw a line below the losses.
Analyst Matthew Hyland meanwhile gave a objective $ 1,000 per ETH / USD, adding that $ 1,250 “should be worth as support”.
$ ETH There is also the taking of the low of $ 1355, as I said, it would be a good level to eliminate.
Will the bulls be able to get her back?
A 4-hour close above $ 1355 would be acceptable to the bulls. If not, I would aim for $ 1285 later. https://t.co/LZACSzzJok pic.twitter.com/Za2Ln5ydgj
– Daan Crypto Trades (@DaanCrypto) September 18, 2022
Against BTC, Ethereum fell as much as 19% during the week, with Bitcoin’s share of the overall market cap of cryptocurrencies up 1.2% since September 14.
For the well-known trader CryptoGodJohn, everything was anyway Playing outside for an opportunity for “generational entry” on the couple.
Less enthusiastic was Samson Mow, CEO of Bitcoin adoption startup JAN3, who noted that while ETH / USD was still above its 200-week moving average (WMA) at current levels, Bitcoin was below. its equivalent.
ETH is down 6% for the day, while BTC is only down 2%. ETH is still trading at a premium based on Merge’s expectations and can go much, much lower. ETH 16% below 200 WMA would be ~ $ 1k. pic.twitter.com/jh7j13ivMd
– Samson Mow (@Excellion) September 18, 2022
The 200 WMA functions as an important trend line during bear markets in cryptocurrencies and claiming it after its loss as support has historically meant a return to strength.
The dormant supply of Bitcoin continues to age
Even as recent price volatility sees an increase in on-chain activity, hodlers remain steadfast, on-chain data confirms.
Related: Here’s why a 0.75% Fed rate hike could be bullish for Bitcoin and altcoin
According to analyst firm Glassnode, coins held for a period of at least five years show only one trend: upward.
In new data on the day, Glassnode confirmed that the percentage of BTC’s last active offering in September 2017 or earlier reached a new all-time high of 24.8%.
The quantity of the supply active for the last time between five and seven years ago, meanwhile, has touched its own higher in almost two years – 1.01 million BTC.
At the same time, the “younger” coins are also on the move, with the 6-12 month range seeing highs of the last five months.
However, the long-term trend among savvy investors is clear when it comes to Bitcoin, as evidenced by the supply share held by long-term (LTH) holders.
“LTH Supply is the volume of Bitcoin that has been dormant for 155 days and is statistically the least likely to be spent during market volatility”, Glassnode explained last week, when the metric hit an all-time high of 13.62 million BTC.
After the CPI event, as Cointelegraph reported, Bitcoin flows to exchanges recorded the largest single day tally in several months.
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