Bitcoin (BTC) starts a new week in an uncertain place facing uncertain times — is $40,000 now resistance?The largest cryptocurrency has just closed a
Bitcoin (BTC) starts a new week in an uncertain place facing uncertain times — is $40,000 now resistance?
The largest cryptocurrency has just closed a fourth red weekly candle in a row, something that has not happened since June 2020.
As cold feet over the macro market outlook continues to be the norm, there seems little to comfort bulls as the week gets underway — and Bitcoin is not done selling off yet.
On the back of $4,000 in losses over the past four days alone, price targets now focus on retests of liquidity levels further towards $30,000.
It is not all doom and gloom — long-term hodlers and key participants such as miners are showing a more positive stance when it comes to Bitcoin as an investment.
With that in mind, Cointelegraph takes a look at the forces at work when it comes to shaping BTC price action in the coming days.
Asia woes overtake French election relief
The key external event for risk assets at the start of the week is the French election, this being won by incumbent Emmanuel Macron.
A sigh of relief for market players concerned about a surprise victory from far-right rival Marine Le Pen, Macron’s second term is expected to lift French stocks in particular on Monday’s open and the embattled euro along with them.
The European Union, much like the United States, faces a potent cocktail of inflation and plummeting bond markets, with the European Central Bank (ECB) nonetheless not yet taking decisive steps to raise interest rates or reduce its near $10 trillion balance sheet.
Bitcoin was unmoved at the Macron victory, and risk assets are already contending with an Asia downturn on Monday as Coronavirus in China rattles sentiment.
The Hang Seng index in Hong Kong is down 3.5% on the day so far, while the Shanghai Composite has shed 4.2%.
With crypto en masse heavily correlated to stock market movements currently, a repeat performance by Europe and the United States would produce clear directional cues.
“The worry is the current policy support that the government has already put in place may not be effective because of the Covid policies as activities are subdued,” Jenny Zeng, co-head of Asia Pacific fixed income at global asset management firm AllianceBernstein, told Bloomberg.
Even before Monday’s losses, the past week was already painful for equities, as noted by markets commentator Holger Zschaepitz.
“Global stocks lost $3.3tn in mkt cap this wk as US equities – after peaking Thur morning – experienced steady fall lower as investors seem to reconsider why they have been buying risk assets in world filled w/so much uncertainty,” he told Twitter users Sunday.
“Global stocks worth $107.6tn, equal to 127% of GDP.”
A further post flagged the so-called Buffett Indicator — the ratio of total U.S. stock market valuation to GDP — still being in what he called “problematic” territory at over 100%.
Dollar strength is back with a vengeance
One component of the macro landscape firmly in bullish mode — to the chagrin of crypto traders — is the U.S. dollar.
The U.S. dollar currency index (DXY), after wobbling at two-year highs last week, now looks to be continuing its uptrend.
At 101.61 at the time of writing, DXY is challenging its performance from March 2020, when the Coronavirus crash sent assets worldwide tumbling.
Dollar strength has rarely been a boon for Bitcoin, and the inverse correlation, while criticized by some, appears to be firmly in control this month.
“Looks like the DXY dev announced a token burn or something,” popular trader Crypto Ed joked in response to the latest move.
For Preston Pysh, host of the Investor’s Podcast Network, something does not seem right.
“We got the BoJ implementing Yield Curve Control while the Yen is collapsing and we have the FED about to hike 50bps while the dollar is making new highs,” he warned Monday.
“Something sure feels like it’s about to break…”
Weekly chart prints fourth straight red candle
Bitcoin is looking anything but rosy this Monday. While the weekend managed to avoid significant volatility, the weekly close still disappointed, coming in at just under last week’s level.
This nevertheless means that there are now four red candles in a row on the weekly chart, something that Bitcoin has not seen since June 2020, data from Cointelegraph Markets Pro and TradingView shows.
The downtrend then continued overnight to see BTC/USD fall below $39,000, a position it maintains at the time of writing.
Traders are eyeing various chart features for clues as to where the pair is headed next, but bullish inklings are decidedly few and far between.
For popular trader and analyst Rekt Capital, it is the Ichimoku cloud looming overhead that would cause further losses for Bitcoin.
During Retest 1 #BTC fake-brokedown from the…
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