After the Jackson Hole market sell-off in the US, Bitcoin (BTC) is going down as we start the first week of September.
As a result of the U.S. Federal Reserve’s reaffirmation of its aggressive inflation outlook, risk assets retreated across the board, and crypto is still hurting from the fallout.
Related: The Chinese Yuan leads Asia’s currency decline as the US dollar reaches a 20-year high.
Even though there wasn’t much volatility over the weekend, it didn’t do much to calm people down, and BTC price activity has returned to focusing on prices below $20,000.
Multiple weeks of gains have been largely wiped out, and traders and experts now anticipate a retest of the macro lows reached in June of this year.
While the Fed is currently in a period of relative calm until the decision to raise interest rates in September, there is still an opportunity for unpredictability as geopolitical instability and inflation remain, with the latter continuing to rise in Europe.
Still, as of the last week, Bitcoin seems to be a network that is fundamentally stable, as on-chain evidence contradicts price charts.
Asian Trade Tv examines five things to consider when predicting the future direction of BTC/USD.
The spot price triggers the $18,000 target.
Markets Pro and TradingView data reveal that there were no surprises in predicting the BTC/USD price at the most recent weekly closure.
After a fairly quiet weekend of trading, the pair went down a lot on August 28. It ended the week at its lowest level since early July.
Related: US Dollar Price in Pakistan, 22 Aug 2022
A red weekly candle of $2,000 capped the bears’ terrible month of August, which began with a loss of $3,000 the previous week.
A chart of BTC/USD weekly candles (Bitstamp). TradingView is the source.
People were naturally pessimistic about the near future in the days before the end of the monthly candle.
As part of a weekend update on Twitter, trader Josh Rager told his followers, “I’m hoping for a rebound this week, but the way markets finished on Friday doesn’t seem so good.”
well-known trading accountsNonetheless, Il Capo of Crypto anticipated the potential of a temporary squeeze to the upside prior to the continuation of the downturn.
Noting that negative financing rates indicate a future market bias for direct losses, he anticipated that $23,000 may return first.
“Much more people anticipate 19K than anticipate 23K.” Funding tells it all. Additionally, there is abundant liquidity above 21k.” “Stretch those briefs,” he tweeted.
Mark Cullen, a trader, replied that traders were “adding additional BTC shorts in the region between 20.1 and 20.3k.”
“There is a good inefficiency there and another between 20.9 and 21.1 k.” “If it could break apart, there would likely be a swift rise,” he noted.
Gert van Lagen, a technical expert, set the daily chart’s floor at $17,500, despite several demands for $17,000 or below.
Related: US Dollar Price in Pakistan, 15 Aug 2022
In a less cautious analysis, TMV Crypto saw $18,400 as a high-interest area for the long term.
Traders anticipate greater falls in U.S. equities.
Fed Chair Jerome Powell’s bombshell of a speech last week sent shockwaves across global risk assets.
According to one estimate, Powell’s eight-minute speech erased more than $2 trillion from global stock markets, including $1.25 trillion in the United States alone.
“At some time, as the stance of monetary policy continues to tighten, it will likely become appropriate to limit the rate of increases,” said Powell.
“Restoring price stability will likely require an extended period of tight monetary policy. “The historical experience clearly advises against prematurely easing policy.”
As Bitcoin and other cryptocurrencies also felt the pressure, August 29 was a key trading day on Wall Street.
On television, Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, cautioned that U.S. equities will continue to decline, with the S&P 500 expected to drop below 4,000 in the near future.
On the other hand, crypto-focused Game of Trades stated that July’s high inflation already indicated a macro bottom in stocks.
Using S&P cumulative data, Game of Trades continued to argue that things were not as bad as they appeared.
According to weekend commentary, the SP500 is exhibiting a LOT of underlying strength.
“The cumulative advance/decline line indicates the market’s underlying strength, which many investors fail to see. The indicator has reached fresh highs despite the SP500 being double digits away from its ATH.
Another observation said that even a decline to 3,900 would maintain a “bullish configuration.”
Related: US Dollar Price in Pakistan, 14 Aug 2022
The U.S. dollar targets September 2002 levels.
This week, the strength of the U.S. dollar continued to be a crucial factor in market volatility.
This week, the U.S. dollar index (DXY) reached fresh twenty-year highs, drawing attention to the classic negatively linked relationship between dollar performance and risk assets.
At the time of writing on August 29, these highs are still in effect, with the DXY reaching 109.47, its highest level since September 2002.
Dollar index (DXY) hourly candlestick chart TradingView is the source
: “If the dollar continues to rise, it will severely damage the economy. Raoul Pal, the creator of Global Macro Investor, said that there was “absolutely nothing till 120” on the DXY chart as resistance.
Michal van de Poppe, a writer for Asian Trade Tv, was also anxious, citing DXY as a factor producing a “moment of truth for the whole crypto market.”
Because the dollar went up, major fiat currencies, especially the euro, went back below parity with the greenback on August 29.
Since the European Central Bank and the Bank of Japan didn’t want to raise rates as much as the Federal Reserve, inflation kept going up over the summer.
Hourly candlestick chart of EUR/USDTradingView is the source.
The MVRV-Z score enters the green.
Returning to its “buy” zone is a traditional Bitcoin strength indicator that has identified macro bottoms throughout the cryptocurrency’s existence.
The MVRV-Z score indicator, which began preparing analysts for a price bottom in July, has now reached its lowest level in one month.
A graph depicting Bitcoin MVRV-Z scoresThe LookIntoBitcoin MVRV-Z indicator utilises market capitalization and realised price to assess how close BTC/USD is to its “fair value.”
In July, it printed a likely BTC price floor of $15,600 before leaving its buy zone for a short time and coming back in the second half of August.
As reported by Asian Trade Tv, the realised price — the average price at which the BTC supply last moved — is currently at $21,600, according to data from on-chain analytics firm Glassnode.
A chart of Bitcoin’s real price. .
The Return of “extreme terror”
Bitcoin’s reversal below $20,000 has likely not come as a surprise, but its major market mood indicator has returned to its most pessimistic category.
Related: Bitcoin mining difficulty to reach an 8-month high despite BTC price decline
At 24/100 as of August 29, the Crypto Dread & Greed Index has returned to a “severe fear” level.
During the relief rally, the Index reached a high of 47/100. It is now in the range that has been the norm for most of the months of 2022.
This year even saw the longest period of “severe dread” ever, combined with market sentiment scores as low as 6/100.
Related: Pakistan’s US Dollar exchange rate on July 2, 2022
The Fear & Greed Index for Cryptocurrency (screenshot). Alternative.me is the cited source.
But when the on-chain research firm Santiment looked at how investors felt, it found that large investors were adding to their holdings instead of selling them.
A graphic for August stated: “As Bitcoin fluctuated around $20,000 this weekend, the increase in the number of critical whale addresses is a favourable indicator.”
There is a link between the price of $BTC and the number of addresses holding 100 to 10,000 $BTC, which has increased by 103 during the previous 30 days.
Others, on the other hand, thought that it would take a while for crypto demand to reach a macroeconomic tipping point.
On-chain analytics company Material Indicators said, “The real generational change happens when people can’t afford to buy, not when they don’t want to.”