The first 6-week losing streak since 2014 has left the bitcoin price at it’s lowest level in almost a year. The fall was triggered by an uncertain regulatory environment, a factor that could make or break cryptocurrencies and leave investors questioning what to do about their portfolios.
The 5 things you should know this week: 1) First 6-week long losing streak since 2014; 2) Bitcoin falls below $8000 for first time since December 2017; 3) US Securities and Exchange Commission freezes Crypto Custodial Asset Management AG’s plans to offer digital assets as investment options; 4) Ethereum co-founder Vitalik Buterin comments on scaling solutions like Plasma Cash, Casper FFG — both of which have been met with skepticism among community members; 5) Coinbase is considering adding additional trading pairs including BTC/USDT
Bitcoin has been on a losing streak since the beginning of the year, but it’s not time to panic. Here are 5 things you need to know in Bitcoin this week. Read more in detail here: bitcoin price history by year.
How much worse may things become for hodlers if Bitcoin (BTC) opens the second week of May 2022 by calling up bearish ghosts from the past?
The biggest cryptocurrency is giving new and old market players a run for their money after plummeting to over $33,000, and the panic is apparent.
The background for these historical chart retests that no one wanted to see again is a terrible mix of macro clues that is expected to persist this week and beyond.
As cries for surrender grow louder, there is still no consensus on how far BTC/USD should or should fall to establish a solid long-term bottom.
As Bitcoin approaches its 2022 lows, Cointelegraph examines the elements that may influence market moves in the following days.
Six weeks have ended with a loss.
Whatever way you slice it, there’s little reason to be optimistic about Bitcoin price charts this week.
The weekly closing of $34,000 on May 8 was the sixth consecutive weekly red candle for BTC/USD.
According to statistics from Cointelegraph Markets Pro and TradingView, the chart feature hasn’t been seen in over eight years, with the most recent occurrence being in August 2014.
Bitcoin was in the second year of its four-year halving cycle at the time, having experienced its initial blow-off high in November 2013 at little over $1,000. This cycle, however, has been distinct in that the blow-off top has either not arrived or has been much more subdued than past cycles.
1 week candle chart of BTC/USD (Bitstamp). TradingView (source)
Meanwhile, macroeconomic factors have dashed any hopes of a late boom among the bulk of experts, who now anticipate global financial tightening to hold risk assets like crypto in check.
Returning to the chart, BTC/USD has already lost nearly $4,000, or 11.1 percent, in May.
According to statistics from on-chain monitoring site Coinglass, the worst month of May on record was last year, when the pair dropped 35.3 percent.
However, after April’s performance, the chances of a return are minimal. Prior to 2022, Bitcoin had had increases of at least 32 percent in April for four years in a straight, but this year it posted its worst-ever loss of 17.3 percent.
Monthly BTC/USD returns graph (screenshot). Credit: Coinglass
The BTC 100-week moving average has dropped.
As a result, as the week starts, the advise from experts on short-term Bitcoin price movement is almost unanimous: remain cautious.
Following the weekly close, BTC/USD continued to fall towards $30,000, with the pair now aiming for $33,000 and January’s lows of $31,800.
Material Indicators, an on-chain analytics site, urged Twitter followers, “Don’t attempt to catch this knife,” accompanying a graphic showing bid support evaporating from the Binance order book.
According to Monday’s order book data, a huge bid wall has formed at $33,000. It was placed there as the market dealt quickly with another wall of purchase interest at roughly $33,800, demonstrating the reality of sell-side pressure in the present situation.
Data from the BTC/USD order book (Binance). Material Indicators (source)
“Historically, $69.5 million in BTC bid liquidity served as support, but there was also substantial liquidity below it.” That does not seem to be the case in this circumstance,” Material Indicators said of the initial line of defense.
Bitcoin also fell below its 100-week moving average (WMA) for the first time since March 2020 on last week’s weekly candle.
BTC/USD then moved on to test the 200 WMA as support, as it has done in prior piercings of the 100 WMA. The ramifications for popular Twitter account Bitcoin Back this time are therefore evident.
In 2014 and 2018, both prior instances resulted in surrender to the 200-week moving average, he stated in part of his newest analysis.
“Today’s chart has many differences from those two times, and those two times were very similar to each other.”BTC/USD 1-week candle chart (Bitstamp) with 100, 200 WMA. Source: TradingView
Despite this, Blockchain Supporter predicted a “massive plunge in” on Monday after the current show of weakness.
Meanwhile, as Cointelegraph observed, Bitcoin was expected to plummet to or below $30,000 in the next weeks even before the weekly closure.
The US CPI is set to continue the inflation story.
The larger macro downturn now firmly in place across global markets was largely to blame for Bitcoin’s decline in the first week of May.
In this regard, stocks are especially troublesome, since crypto’s continued association with those indexes makes for a bleak ride for investors.
Things came to a head last week after tightening confirmations from the United States Federal Reserve — the S&P 500 capped its first five straight weekly drop since 2011.
Another army is set to return despite the continuing Russia-Ukraine war and accompanying financial concerns.
Because of the effect from trade disruption and sanctions on Russia, inflation in the United States is already at its highest level since the early 1980s.
The consumer price index (CPI) statistics for April will be revealed this week, and the probabilities are that the figures will reflect the scope of the global crisis like no other.
Prior to the CPI print on May 11, US President Joe Biden will talk on the topic of inflation.
The March CPI was 8.5 percent, and there are already whispers in analytics circles that inflation may be peaking now or soon.
“Without a recession, we estimate inflation to peak this summer between 6% and 7% and then decline to 3% to 4% next year.” We may have already seen the first indicators of peaking inflation in lower three-month than y/y pricing and wage increases.” pic.twitter.com/4mXXxFvmIN – @yardeni
May 8, 2022 — Carl Quintanilla (@carlquintanilla)
“For me, the best scenario for a bottom is capitulation in the next few days, followed by a lower-than-expected CPI reading on Wednesday,” prominent trading account Daan Crypto Trades said.
“That’s my signal to go big.”
In recent months, CPI events, big or minor, have tended to drive short-term BTC price volatility.
Data suggests that the desire to launch a “capitulation” — a major sell-off in which investors panic sell their bitcoins — is great.
Over 40% of the Bitcoin supply is now held at a loss, which is the biggest percentage since April 2020, just after the COVID-19 meltdown.
Currently, 7.7 million #Bitcoins are in the red. Since April 15th, 2020, this is the biggest sum.
That’s about 41% of the overall quantity in circulation. pic.twitter.com/uXPR9PiJHT
May 7, 2022 — On-Chain College (@OnChainCollege)
A true surrender event had occurred at the moment, as demonstrated first and primarily by price.
On-chain analytics startup Glassnode verified capitulation on March 16, 2020, by analyzing unrealized earnings and losses among hodlers at the moment.
Nine days later, the firm’s net unrealized profit/loss score had moved from “capitulation” to “hope – fear,” indicating a little improvement.
The metric is now measuring “optimism – anxiety” and is heading into “hope – dread” area.
Bitcoin profit/loss chart, net unrealized. Glassnode is the source of this information.
Sentiment plummets to the macro bottom.
It’s no surprise that the events of May have had little impact on general crypto market sentiment.
BTC, ALGO, XMR, XTZ, THETA are the top 5 cryptocurrencies to monitor this week.
According to the Crypto Fear & Greed Index, however, it is only this week that the reality of the situation has hit home for the majority.
The traditional sentiment indicator is at 11/100 as of May 9, solidly in the “severe dread” category and also at levels that have historically created bottoms.
Crypto Fear & Greed has halved in value in just two days.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
The traditional financial market equivalent, the Fear & Greed Index, has meanwhile begun to diverge from crypto, steady at 30/100 or “fear” on May 9 even after last week’s mayhem.
“With Bitcoin now retracing all the way down to $33.9k, trading mood has plunged to six-week lows,” according to research company Santiment.
“We typically prefer to see capitulation signs like this, as weak hands leaving the space is generally what is needed for a truly notable bounce.”Fear & Greed Index (screenshot). Source: CNN
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
The “bitcoin buy the dip” is a term that is used to describe when the price of bitcoin drops and then rises again. The term has been used since 2014 and it has been used in 5 different articles this week.
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