Bitcoin (BTC) continues to test support for $ 10,000 after a weekend in which it consolidated after a major drop – what next?
Bintec monitors key factors determined to affect the price action in the coming week.
Keizer: US currency index needs to drop below 80
The end of last week saw major changes for BTC / USD, with the pair gaining over 15% to $ 9,900 from $ 12,050.
Bitcoin bounced back to five figures before seeing several more tests with $ 9,900 failing to trigger a significant boom over the weekend.
What changed on Friday was a macro factor – the US Dollar Currency Index (DXY), which started rising after hitting two-year lows.
The DXY US Trading Partner measures the USD against a basket of currencies. A week earlier, the Federal Reserve’s announcement of an inflation had the effect of a recession on the index, but last week saw a reversal in its fortunes – at the expense of safe bases.
At the time of publication on 7 September, DXY was at 92.95, rising to 93.25 over the weekend. For RT host Max Keyser, Fresh losses are needed to acquire bitcoin – the inverse relationship between cryptocurrency and DXY must continue.
“We need DXY to drop through 80 to get the real fireworks going on in #Bitcoin and Gold,” he tweeted.
Keizer said the developments in the ongoing Brexit saga could also prove a positive impact for BTC next month. Should the European Union adopt a strict stance with the United Kingdom, the euro could benefit and DXY may be pressurized.
“The European Union cuts (UK) in October are expected to free the euro to trade more. This will help bitcoin greatly, ”he wrote.
US Dollar Currency Index 5-Day Chart. Source: TradingView
Time constraints for policy in Europe
On the subject of Jio Politics, a number of events could hit the Stair market this week, with Bitcoin reacting to the move.
In addition to preparing for Brexit negotiations to fail, the European Union will monitor economic policy as the European Central Bank (ECB) meets to discuss its options.
As noted by Cointegraf, for the first time since 2016, the ECB’s deflation in the sphere of influence has returned. Now, the focus will be on whether mimicking the US approach is appropriate for the Eurozone.
As Bloomberg reported on Monday, the overall global recovery from the March coronavirus virus, which was once strong, is now fading.
The publication’s chief economist, Tom Orlick, commented, “High-frequency data picture a rapid rebound in the second quarter and a stall in the third – pre-virus levels are very low.”
To return to “pre-virus normality”, he said that would work is a coronavirus vaccine.
CME Difference opens at $ 10,600
A classic bitcoin price was delivered on the trigger this weekend, which could see the picture short-lived upside down.
Bitcoin futures of CME Group closed at $ 10,615 on Friday but closed at $ 10,430 again.
The resulting “gap” in the market is likely to rise above current levels of $ 10,100 – if bitcoin follows historical behavior patterns, then zero should not remain for long.
The original plunge below $ 10,000 raised expectations that the only difference that would have violated the rule – at $ 9,700 – would be filled. For Michaël van de Poppe, analyst at Cointelegraph Markets, $ 10,000 must be decomposed to make this possible.
“The $ 10,800-10,900 area should warrant a short-term relief surge if caught $ 10,000,” he said told Twitter followers on Sunday.
“Breaking $ 10,000 and the market goes to the CME Gap all at once and we’ll see a mid $ 9K.”
CME bitcoin futures chart showing the latest difference. Source: TradingView
Fundamentals see only a slight decline
Bitcoin’s network fundamentals are set to take a break this week as miners take stock of price declines.
According to data from on-chain monitoring resources BTC.com and Blockchain, the difficulty and hash rate is set to come near all-time highs.
The next automatic difficulty adjustment will be on Monday and will see an estimated 1.7% negative move. The difficulty is currently at its highest level, underlining the overall competition of the bitcoin network.
Meanwhile, the hash rate peaked at its full peak in mid-August, but has since dropped only negligently – currently around 122 exhages per second (EH / s).
The hash rate gives a rough estimate of the computing power dedicated to validating the bitcoin blockchain, with downward pressure to interrupt some less profitable miners.
On Thursday, a day before the $ 9,900 plunge, Cointegraf reported exiting some of the major mining pools – heading towards the BTC exchanges, while spot prices hovered around $ 11,500 following a rejection of $ 12,000 support.
Bitcoin 7-Day Average Hash Rate 1-Month Chart. Source: Blockchain
Fear changes greed
In a consequent result of the price action, the cryptocurrency market sentiment has hit its most “frightening” in nearly two months.
According to the latest data from the Crypto Fear and Greed Index, investors have completely changed their outlook from a week ago.
The index takes several factors into consideration to compile a generalized reading of how much fear or greed is spreading to market participants at a given time. The higher the reading, the greater is the potential for market improvement.
As Contechlegraph reported, most of August saw ling near a high index of 85/100, known as “excessive greed”. Before running to $ 12,000, the number was close to 40, or “scared”.
Friday saw another shake-up, in which “greed” suddenly disappeared, once again replaced by “fear”, with the index 41/100, the lowest level since July.
Crypto Fear and Greed Index 3-Month Chart. Source: optional