Bitcoin (BTC) starts a new week still in holiday mode with United States financial markets off for Independence Day.The largest cryptocurrency, stuck
Bitcoin (BTC) starts a new week still in holiday mode with United States financial markets off for Independence Day.
The largest cryptocurrency, stuck below the increasingly daunting $20,000 mark, continues to feel the pressure from the macro environment as talk of lower levels remains omnipresent.
After a quiet weekend, hodlers find themselves stuck in a narrow range while the prospect of a breakout to the upside appears increasingly hard to believe.
As one trader and analyst singles out July 4 as the site of a “wild run to the downside” for crypto markets, the countdown is on for Bitcoin to weather the aftermath of the latest Federal Reserve rate hike.
What else could the coming week have in store? Cointelegraph takes a look at the potential market-moving factors for the days ahead.
BTC price bides its time over long weekend
Bitcoin emerged from the weekend unscathed, but the classic pitfalls of off-peak trading remain.
The United States will not return to trading desks until July 5, providing ample opportunity for some classic weekend price action in the meantime.
So far, the market has held off when it comes to volatility — with the exception of a brief spike to $18,800, BTC/USD has circled the area between $19,000 and $19,500 for several days.
Even the weekly close provided no real trend change, data from Cointelegraph Markets Pro and TradingView showed, with the psychologically significant $20,000 unchallenged.
“While below the range low we can expect a drop down to $18,000,” popular trading account Crypto Tony reiterated to Twitter followers as part of a fresh update on July 4.
“Been a very boring few days in the markets, and this is classic for a mid range.”
In terms of targets to the downside, others continued to eye the area around $16,000.
In 2018, The Orange MA was the Bottom. In 2020, The Green MA was Bottom. Currently holding the Green MA (16-17K). If it breaks then there is a Possibility of Next Bottom Blue MA (12-13K) $BTC pic.twitter.com/rZILTAOlXf
— Trader_J (@Trader_Jibon) July 3, 2022
With no meaningful Bitcoin futures gap and flat performance on Asian markets, meanwhile, there was little to be had in terms of short-term price goals for short-timeframe traders.
The U.S. dollar, meanwhile, continued to hold near twenty-year highs after returning from its latest retracement defiant.
The U.S. dollar index (DXY) stood above 105 at the time of writing.
Gold nears “blast off” against U.S. equities
With Wall Street closed for Independence Day, U.S. equities can take a breather on Monday.
For one popular chartist, however, attention is focusing on the strength of stocks versus gold in the current environment.
In a Twitter thread on the day, gold monitor Patrick Karim specifically flagged the precious metal as being about to hit a historical “blast off” zone against the S&P 500.
After bottoming out at the end of 2021, the ratio of gold to the S&P has recovered throughout this year, and is now about to cross a boundary, which has historically led to significant upside afterward.
“Gold closing in on ‘blast off zone’ versus US equities. Previous take-offs have unleashed important gains for Silver & Miners,” Karim commented.
The situation cannot be said to be the same in U.S. dollar terms, with USD strength keeping XAU/USD firmly in its place below $2,000 since March.
Nonetheless, for silver fans, the implications are that even a modest push-through for the XAU/SPX ratio will bring significant returns.
Note you won’t need to get back to previous 2011 highs for the #gold versus #spx ratio to have MUCH higher nominal prices for silver & miners.
Think about that for a moment.
— Patrick Karim (@badcharts1) July 3, 2022
The forecast again calls into question the extent of Bitcoin’s ability to break with macro trends. A breakout against BTC for gold would be the natural knock-on effect should Karim’s scenario play out thanks to ongoing correlation with equities.
“After escaping the sideways pattern that had formed for a 1.5 year period, the correlation coefficient increased sharply to 86% vs S&P 500,” popular trader and analyst CRYPTOBIRB summarized at the weekend.
“Now, at 0.78 ratio it remains strongly positive.”
Fellow analyst Venturefounder noted that Bitcoin also remains tied to moves in the Nasdaq.
Meanwhile #Bitcoin and #NASDAQ are still trending together.
Note previous bottoms (Dec 2018 & Mar 2020) happened as #BTC and $QQQ correlation at peak, suggesting macro has always influenced BTC bottoms. We can predict more likely that macro calls bottom for BTC again this time. pic.twitter.com/szmS4c6WV8
— venturef◎undΞr (@venturefounder) June 26, 2022
Against the dollar, Cointelegraph meanwhile reported, Bitcoin’s inverse correlation is now at 17-month highs.
Crunch time for Hayes’ “wild ride to the downside”
July 4, apart from being Independence Day, is being watched…
cointelegraph.com