Bitcoin Miners 'Finally Surrendered' - 5 Things You Need to Know About Bitcoin This Week
As the shock of the latest U.S. inflation data passes, Bitcoin starts the new week nearing key resistance levels – can this strength last?
The weekly close on July 17 may have been nearly the same as last time, but BTC/USD is showing some much-needed strength ahead of the Wall Street open on July 18.
Last week was a testing moment for holders of cryptocurrencies around the world, with inflation driving sentiment in risky assets and a pessimistic mood hanging over the U.S. dollar. With these pressures now somewhat relieved - at least temporarily - there is emotional room to relax.
Meanwhile, on-chain data suggests that now is a make-or-break moment for Bitcoin miners, and the capitulation of the entire market seems imminent.
As the debate continues on where Bitcoin’s macro bottom is, Cointelegraph took a look at several factors that will influence BTC’s price performance in the coming days.
All eyes on weekly moving averages
Those watching the BTC weekly chart will experience a sense of déjà vu this time around – BTC/USD’s close on July 17 was within $100 of its close on July 10.
The latest week's close was a bit of a disappointment in itself, with Bitcoin erasing gains at the last minute and ending the past seven days in the red.
What happened next, on the other hand, had the opposite tone - Bitcoin rallied rapidly overnight, up $1,400 in 12 hours.
This all leads to a familiar challenge in intraday trading - BTC/USD is approaching the key trendline at $22,000 and the 200-week moving average (WMA) at $22,600.
Previously, the 200 WMA acted as support in a bear market, but this time it has actually turned into resistance, which was lost in mid-June and never regained.
As such, this level will be a key area of focus for analysts if the bulls can sustain the upward pressure.
According to PlanB, the creator of the S2F series of Bitcoin price models, a factor other than spot price is also strengthening its importance. As with previous bear markets, the 200 WMA was briefly above Bitcoin's realized price this year, providing a classic market reversal signal.
The realized price is the average price of the last move of all bitcoins in existence.
“During the bear market (blue) in 2014/15 and 2018/19, the realized price was above the 200 WMA, and the bull market did not start until the realized price touched the 200 WMA,” PlanB told Twitter followers on July 17, And a diagram is attached.
“The realized price and 200 WMA have now touched $22K. For the next bull run, we need BTC above the realized price and 200 WMA.”
Cointelegraph reported that the bulls also seem to need to play the moving average game over the longer-term horizon. In addition to the 200 WMA, the 50-week and 100-week exponential moving averages (EMA) are also subject to forecasting.
Data from Cointelegraph Markets Pro and TradingView shows that the 50-week EMA is currently sitting at $36,000 and the 100-week EMA is just above $34,300.
BTC/USD 1-week candle chart (Bitstamp), 50-week EMA, 100-week EMA; 200 WMA Source: TradingView
Ethereum nears $1,500, could lead upside move
One catalyst for Bitcoin to break above the key $22,600 resistance level could come from an unlikely source — altcoins.
While it is typical for other cryptocurrencies to mimic Bitcoin's moves, this week, some are waiting to see if BTC/USD will follow the lead of the largest altcoin, Ethereum.
Amid news that its transition to proof-of-stake (PoS) mining may be complete soon, ethereum has performed well in terms of price gains in recent days, gaining 25% in the past week alone.
As of writing, ETH/USD is on the verge of challenging $1,500 for the first time since June 12.
The popular Twitter account Bluntz summed it up today: “This week, ETH reclaimed the 200-week moving average, BTC may reclaim next week, I think the bearish time is over.”
Another commentator, Light, also believes that Ethereum’s strength should keep upward pressure on Bitcoin, noting that traders who ignored Ethereum’s movements and continued to short BTC have been liquidated.
Data from on-chain monitoring resource Coinglass confirmed that short liquidations in cryptocurrencies totaled roughly $132 million in the 24 hours to July 18.
Cryptocurrency liquidation chart Source: Coinglass
Looking ahead, however, not everyone is convinced that Ethereum will be able to break out of its overall downtrend with a noticeable impact on other tokens.
Cointelegraph contributor Michaël van de Poppe believes that a gap in Chicago Mercantile Exchange (CME) bitcoin futures over the weekend could provide a downside force that shatters optimism.
CME futures closed around $21,200 in the last session (July 15).
On July 17, he updated in a tweet: "Given the possibility of a potential CME gap (and Bitcoin hovering around the previous CME gap), I will not be impressed by ETH's false move and retesting lower prices surprise."
"Hopefully enter the bull market in the $1250-1280 area."
ETH/USD 1-hour candlestick chart (Binance) Source: TradingView
Dollar Strength Finally Turns in Bitcoin's Favor
On the topic of macro moves, things generally look less of the frenzy that greeted cryptocurrency investors last week.
Inflation data has come and gone, cooling the debate over whether U.S. inflation has peaked, guiding the release of the next consumer price index (CPI) data in August.
The Fed will decide how to tackle inflation later this month, with the Federal Open Market Committee (FOMC) meeting on July 26.
As such, any macro cues involving bitcoin price action will come from elsewhere, with geopolitical factors the more important underlying factors.
Asian shares opened the week stronger, helped by a modest rebound in Chinese technology stocks, which had been battered by the coronavirus.
Meanwhile, the U.S. dollar, which has been under the spotlight in recent weeks amid pressure on global stock markets, is starting to consolidate gains.
The U.S. dollar index (DXY), which has long been inversely correlated with the performance of crypto assets, fell below 108 today after reaching a fresh 20-year high the week before.
Twitter analyst IncomeSharks commented: "Finally saw the decline on the daily line." He emphasized that the US dollar index may test the trend line in May.
“Even down to that trendline, it would have huge implications for stocks and cryptocurrencies. It would fit perfectly with a bullish week ahead of the Fed meeting.”
Another analyst, Rickus, also believes that while a pullback is still possible, Bitcoin won’t “crash again” — thanks to DXY’s decline and a stronger S&P 500 close.
0xWyckoff, founder of crypto trading resource Rekt Academy, added in a post about DXY: "This week should give stocks and cryptocurrencies room to rally until they find nearby support."
Meanwhile, Dan Tapiero, managing partner and CEO of 10T Holdings, noted in another observation that a macro high in USD/CNY should mark a turning point for Bitcoin.
“The 3 major Bitcoin highs in 2014, 2018, and 2021 roughly coincide with CNY highs or USD lows,” he noted in a July 18 tweet.
“This suggests that USD peaks will soon support BTC lows.”
US Dollar Index (DXY) 1-day candlestick source: TradingView
Miners sell 14,000 BTC in a few days
With so much hope for a trend reversal, on-chain data shows that the prospect of Bitcoin miners selling their inventory looks even bleaker.
According to data from on-chain analytics platform CryptoQuant, starting on July 14, miners removed a significant portion of Bitcoin from their reserves.
As a result, miners' reserves fell to their lowest level since July 2021, which also marks a low for Bitcoin prices.
The reserve on July 18 was 1.84 million BTC, which was 14,000 less than on July 14.
CryptoQuant contributor Edris believes that these numbers are an encouraging sign that miners are now contributing to establishing a macro price bottom for Bitcoin.
“Bitcoin miners have finally capitulated,” he concluded over the weekend.
“Bitcoin price has been consolidating around the $20,000 level for the past few weeks, making investors wonder if this is an accumulation phase or a sell-off phase. Looking at the miner reserve chart, it appears to be the latter.”
Bitcoin Miner Reserve Chart Source: CryptoQuant
Meanwhile, macro analyst Alex Krueger called June’s miner sell-off a “clear signal of capitulation,” adding that miners “tend to accumulate on the way up and then sell off when things get worse.”
RSI Triggers 'Very Rare' BTC Price Turning Point
Finally, a "rare" event on Bitcoin's chart may have fueled a historic turn, analysis shows.
Looking at the BTC/USD chart from Bitcoin’s early days, Stockmoney Lizards noted that Bitcoin’s Relative Strength Index (RSI) is now at a suitably low level and is aligned with the logarithmic trendline that sparked the biggest rally in BTC’s price combined.
"The current situation is exciting and very rare," it announced over the weekend.
The attached chart shows the power of the event, after the RSI hit an all-time low.
BTC/USD Annotated Chart Source: Stockmoney Lizards/Twitter
Meanwhile, CoinPicks analyst Johnny Szerdi believes that Bitcoin's relative strength index needs to break above the 50 mark (a key resistance zone in recent months) to avoid the risk of a fresh sell-off.