Bearish pennant breakdown confirmed? 5 things to watch in Bitcoin this week

Bitcoin (BTC), begins a new week in a precarious spot — below $45,000, and below key moving averages. Whats next?

Bitcoin erased the majority of its recovery almost a week after a series of unwinding leveraged positions brought the market down to $42,800.

There was little to no paradigm shift over the weekend, but now there is downside volatility. Cointelegraph looks at five factors that could help traders predict the next move, as BTC/USD fell 13% in one week.

Stocks due for rebound

After the selling pressure that was added to Bitcoins problems in the first half September, stocks are expected to perform better.

Expectations are that equity markets will rally now that they have had a bad week. This is continuing the trend which has characterized markets since March 2020s Coronavirus crash.

Charles Edwards, CEO and investment manager Capriole forecasted, “Equities will bounce this week” and provide some relief to Bitcoin.

Over the past year, Bitcoins relationship to macro trends has been more and more in doubt. However, BTC price action is still affected by shocks to the system, as demonstrated by the Federal Reserve Jackson Hole virtual Summit earlier in September.

Edwards commented alongside a chart that said, “The world still views Bitcoin as a threat on asset,” Edwards stated.

“A lot of Bitcoin corrections in 2021 have been correlated with a S&P500 error of -2% or greater.”

BTC/USD vs. S&P500 annotated chart. Source: Charles Edwards/Twitter

Contrarily, strong stocks could help to maintain the strength of U.S. dollars, which may also give Bitcoin more breathing room.

The U.S. currency index (DXY), saw a rapid move towards 93 last Wednesday before it stopped to consolidate its gains. This process continues.

Spot price falls further below bullish metrics

Forecasts suggest that macro moves could prove decisive in determining the trajectory of Bitcoins price this week.

After the weekends volatility, BTC/USD fell below $45,000 on Sunday.

Spot traders are hedging their bets for more downside. There has never been a greater gap between on-chain metrics and adoption phenomena.

Moskovski Capital CEO Lex Moskovski stated that stablecoin liquidity is increasing and bitcoin on exchanges has hit a 3-year low.

“If macro doesn’t sh*t on the bed, the next leg is programmed.”

Moskovski added later that macro markets had indeed started the week in green and that stablecoins were not used as shorting collateral made a clear bullish argument.

Stablecoins can be used to secure shorts, but they are not high-quality collateral.

Legacy finance was opened green.

What is your thesis to sell, soldier?– Lex Moskovski (@mskvsk) September 13, 2021

Cointelegraph reported that current price floor estimates are $43,000 to $38,000, with a rebound possible from such levels despite being far below important moving averages.

Since September was a historically low-performing month for Bitcoin prices are expected to rebound from October.

Popular Twitter account Lark Davis said Monday that bitcoin is experiencing a red month in September, and a large price movement in Q4″.

“BTC could still reach 100k by the end of the year.”

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

Peter Brandt, a veteran trader, is however sounding the alarm — at the least for the moment.

“Theres a name for that chart pattern. He tweeted along with the daily chart that showed what appeared to be a breakdown in a bearish pennant.

“Dancing with 2017”

Theres good news! Bitcoin is still “dancing with 2017” in terms of price gains, even though its in the midst of a halving cycle.

This is according to Decentrader data, which indicates that BTC/USD in 2021 after a block subsidy reduction of half has been achieved.

Filbfilb, Decentrader analyst, said that he is “dancing with 2017 at this moment” in comments made over the weekend.

Bitcoin bull run comparison chart. Source: Decentrader

This chart shows how Mays miner rout halted progress. Bitcoin gained previously between 2013 and 2017, but then fell to create a lower paradigm in May. This trend is continuing.

Cointelegraph reported that a “double top” phenomenon is still a possibility for Bitcoins 2021 completion. This phenomenon was seen in 2013, 2017 and 2018, with a price drop in between. This could be related to Mays $29,000 rise.

All-time record for monthly illiquid supplies

Investor behavior has been a key feature that set last week’s price dip environment apart. Everyone kept buying.

Last week, unlike the panic that erupted during episodes like March 2020, there was no shortage of supply. Speculators were eager to buy up strong people and dump excess stock onto the market.

Willy Woo, a statistician, says that every category of Bitcoin investors either increased their positions or remained neutral in the current turbulence.

“Whales added in recent weeks. Minnows stack. 10000 BTC holders mostly flat,” he said Sunday, alongside data from Glassnode, an on-chain analytics company.

“Reserves held public reducing (mainly exchanges or ETFs reducing while corporations adding).

Chart showing the distribution of Bitcoin. Source: Willy Woo. Twitter

Similar data supports the fact that Bitcoins supply has increased in demand. Analyst William Clemente pointed out that last week had no effect on hodler patterns.

“93% of Bitcoins supply havent moved for at least one month. This is an all time high. He added, citing Glassnode data as another indicator of how bullish the supply dynamics are.

Annotated chart of Bitcoin HODL waves Source: William Clemente/Twitter

Fear has replaced greed.

This is all for the Crypto Fear & Greed Index which tracks investor sentiment. It has some interesting data this week about market emotions.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC (ALGO), ATOM, XTZ and EGLD

The drop to $42,800 reduced its readings from “extreme glutt” to “fear,” which was a sentiment zone that remained until Sunday.

The Index did add some “greed” as the weekend came to an end, despite the fact that prices fell further.

Fear & Greed was at 44/100 Monday morning — still in “fear” territory — while Bitcoin/USD traded below $45,000 as of Mondays writing.

Crypto Fear & Geed Index.

Although the exchange funding rates are slightly positive, they do not rule out the possibility of a “short squeeze”, which could boost price performance.