Bitcoin (BTC) starts a new week above $20,000 but heading for a new bearish record as a key support level remains out of reach.
After a calm weekend punctuated by a brief spike to near $22,000, BTC/USD is back near the Friday closing price of CME futures markets.
A “round trip” thus allows traders to pick up where they left off at the end of last week’s final Wall Street trading session, but what could lie in store in the coming days?
A familiar cocktail of macro threats and ongoing bearish tendencies make the current climate far from ideal for the average hodler. Despite seeing some relief last week, crypto markets continue to bear the brunt of cold feet, which have defined macro sentiment increasingly throughout 2022.
With the June monthly close fast approaching, meanwhile, Bitcoin faces a few days of reckoning amid what could be its worst monthly performance since 2018.
Cointelegraph takes a look at five potential market triggers for the week ahead as inflation rages and crypto struggles to regain its footing.
Traders expect July to provide BTC price “catalysts”
“Apathetic” is a good word to describe the general sense of resignation among Bitcoin traders this week.
While the weekend spared the average hodler more unwelcome surprises, data from Cointelegraph Markets Pro and TradingView shows, the fact remains that BTC/USD is far from where anyone wants it to be — even in a bear market.
With the key 200-week moving average (WMA) out of reach, there is precious little bullish sentiment out there, as evidenced by the “extreme fear” of the Crypto Fear & Greed Index still firmly in control.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
“BTC will capitulate in the next 6 months & hit cycle bottom (anywhere between $14-21k), then chop around in $28-40k in most of 2023 and be at ~$40k again by next halving,” Venturefounder, contributing analyst at on-chain analytics platform CryptoQuant, summarized in part of a Twitter update on June 27.
Venturefounder’s thesis is indicative of a broader belief that the bottom is not yet in for Bitcoin, and that any relief moves are exactly that — distractions on the way to lower levels which suck capital out of market newbies and weak hands.
Expectations are that the first week of July could provide the next major bout of volatility across crypto and risk assets.
“Not much happening overnight on Bitcoin but am expecting quite a slow week due to the lack of catalysts currently,” popular trader Crypto Tony confirmed.
“July will be more of an action packed month for volatility due to the catalysts upcoming.”
For Arthur Hayes, former CEO of derivatives giant BitMEX, the first week of next month is a period where macro stars will align to punish hodlers once again.
In a blog post earlier in June, he flagged the United States Federal Reserve’s outsized rate hike and balance sheet reduction as providing the key backdrop to a risk asset nightmare.
“By June 30 (second quarter end), the Fed will have enacted a 75bps rate hike and begun shrinking its balance sheet. July 4 falls on a Monday, and is a federal and banking holiday. This is the perfect setup for yet another mega crypto dump,” Hayes warned.
A “wild ride to the downside” thus could be just days away.
As Cointelegraph reported, popular consensus for a genuine price bottom focuses on the area between $14,000 and $16,000, but $11,000 has also made an appearance, this corresponding to an 84.5% drawdown versus Bitcoin’s most recent all-time high.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
How normal is this bear?
While some panic sell their BTC, analysts are striving to show that so far, there is nothing unusual about the scope of the Bitcoin bear market.
Among them is on-chain analytics firm Glassnode, which in its recent research piece, “A Bear of Historic Proportions,” called for calm on sub-$20,000 BTC.
“Bear market lows have historically been established with BTC drawdowns of -75% to -84% from the ATH, and taking a duration of 260-days in 2019-20, to 410-days in 2015,” it wrote.
“With the current drawdown reaching -73.3% below the Nov-2021 ATH, and taking a duration between 227-days and 435-days, this bear market is now firmly within historical norms and magnitude.”
What singles out the current climate is not Bitcoin itself, but investors’ reactions to price changes.
Despite losses remaining within historical norms, sales of BTC at a loss have eclipsed previous records.
“The recent price collapse through to the $20k region was punctuated with the largest daily USD denominated realized loss in history,” Glassnode noted.
“Investors collectively locked in a loss of -$4.234B in a single day, which is a 22.5% increase from the previous record of $3.457B set in mid-2021.”
In BTC terms, the losses amount to the third-largest in Bitcoin’s history.
Bitcoin net realized profit/loss annotated chart (screenshot). Source: Glassnode
BTC risks first monthly close below 200WMA
With three days left before the June monthly close, things are either looking worrying or “interesting” for Bitcoin depending on one’s perspective.
With the bear market in full swing, BTC/USD remains below a key trendline that has supported it during previous macro lows. The 200-week moving average (WMA), which has never decreased in value, currently sits at $22,430.
In previous bear markets, as Cointelegraph reported, Bitcoin has retained the 200WMA as support while wicking below it to put in floor prices.
This time, however, the level is flipping to resistance as bulls’ attempts to follow historical norms repeatedly fail. As such, the end of the month could be “interesting,” says Stock-to-Flow price model creator PlanB, as it would mark the first monthly close under the 200WMA ever.
An accompanying chart uploaded on June 26 shows Bitcoin’s relationship to the 200WMA versus the distance from its block halving events, these delineating the four-year cycles, which contain the bear market paradigms previously referred to.
This is getting interesting! If BTC does not close June above 200WMA ($22K) that would be the first monthly close below 200WMA ever. 4 days to go .. pic.twitter.com/YtshVcIpks
— PlanB (@100trillionUSD) June 26, 2022
Meanwhile, Checkmate, lead on-chain analyst at Glassnode, noted further unusual bearish traits currently characterizing the BTC price.
In addition to being under the 200WMA, he notes, BTC/USD Is also below its realized price and deep in the “buy” zone of the Mayer Multiple metric.
As Cointelegraph recently reported, the Mayer Multiple shows how far the price below its 200-day moving average and thus how likely a buy at a specific level would be to generate asymmetrical returns.
“Such events in the past have only occurred for 13 out of 4,360, representing 0.2% of all trading days,” Checkmate wrote in part of a tweet.
#Bitcoin is trading below the following models which have coalesced around bear market floors in the past:
200W moving average
0.6 x Mayer Multiple
Such events in the past have only occurred for 13 out of 4,360, representing 0.2% of all trading days. pic.twitter.com/DtWGMrL2U2
— _Checkɱate ⚡ (@_Checkmatey_) June 26, 2022
Bitcoin dominance dives from multi-month high
It was only recently that altcoins were suffering even more than Bitcoin due to upheaval from multiple major projects including Terra and Celsius.
Now, however, the tables are turning — Bitcoin dominance has reversed after spiking this year, leading to suggestions that altcoins could be the place to be in the short term.
“Bitcoin dominance is moving down strongly. The advantage lies with altcoins right now,” popular Twitter account BTCfuel summarized.
After reaching an 11-month high of 48.36% on June 11, Bitcoin’s share of the overall crypto market cap has declined to 43.46% at the time of writing — a noticeable shift in under three weeks.
For veteran trader Peter Brandt, Bitcoin’s relative strength versus alts could have more significance than meets the eye for bulls.
“This chart could be the big ‘tell,’” he argued about the market cap dominance data.
“A decisive close back above 50% would be huge positive.”
Others are meanwhile confident that despite the latest reversal, it is not altcoins’ time to shine in any meaningful way going forward.
According to Venturefounder, holding BTC is still an investor’s best bet.
#Bitcoin dominance peaked at 48% and started going down again: but imo it’s definitely NOT the beginning of #ALTSEASON.
Rest assured in a cycle-end bearmarket #BTC shall remain the best bet over #altcoins
Such event has happened multiple times during the 2018 cycle as well. pic.twitter.com/SJQolLNvy6
— venturef◎undΞr (@venturefounder) June 27, 2022
“Normal bear market narrative altcoins bleed more heavily Bitcoin,” trading suite Decentrader added in separate comments on the latest dominance action.
“However, for the last 2 weeks altcoins (generally) have out performed. So either: ‘This time is different’ or ‘This won’t last.’ Dominance remains in 40-48% range.”
Bitcoin dominance 1-day candle chart. Source: TradingView
Bitcoin goes mainstream again — for the wrong reasons
Bitcoin is more popular among mainstream internet users than at any time in over a year — but is it something worth celebrating?
Related: Top 5 cryptocurrencies to watch this week: BTC, UNI, XLM, THETA, HNT
Data from Google Trends confirms that more people have been googling “Bitcoin” this month than at any point since May 2021.
Worldwide Google search data for “Bitcoin.” Source: Google Trends
Then, as now, however, BTC price action was targeting long-term lows, rather than highs, indicating that it is bearish events that trigger mainstream interest.
Last November’s all-time high, by comparison, looks like a blip on the radar when it comes to search interest.
Not a capitulation pic.twitter.com/rmp7ukK1HU
— JACKIS (@i_am_jackis) June 26, 2022
As such, activity for phrases such as “Bitcoin is dead” has spiked, this noted by social media users as a possible sign that the market is in a “capitulation” phase.
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