Bitcoin (BTC) entered the final week of July with uncertain foundations, with $30,000 acting as resistance.
It’s going to be an exciting but potentially nerve-wracking week for traders, with bitcoin price action facing a slew of volatility triggers.
Chief among them is the Federal Reserve’s interest rate decision, which is headlined by a series of important macro data releases.
Some are hoping that these alone will be enough to lift bitcoin out of a month-long trading range that is barely clear of the $30,000 mark. So far, the market hasn’t offered any clues as to where it’s headed next.
Nonetheless, traders have become impatient and increasingly convinced that BTC/USD will eventually fall below $25,000 from current levels and even lower.
Cointelegaph explores the main factors in the Bitcoin price performance debate as July draws to a close.
Bearish start to the week as BTC hits $29,000
Bitcoin saw a typical burst of volatility at the weekly close on July 23, allowing bulls to see a possible return to the $30,000 support level.
However, this was short-lived as BTC/USD gave back last-minute gains to close the week almost exactly at $30,000 with a few hours left until the weekly candle closed.
Overnight price action remains weak, according to Cointelegraph Markets Pro and transaction view.
Overall, however, the series as we know it persists.
As the weekend drew to a close, Michaël van de Poppe, founder and CEO of Trading Eight, highlight He called it a “key zone” for bulls to break out.
“Bitcoin’s key levels haven’t been breached yet, so we’re going to continue sideways,” he said. continue that day.
“Conditions remain the same; – Long above $30,200-30,400 – Long when price hits $29,000.”
Popular trader Daan Crypto Trades pointed out that the price surge to $30,300 has actually opened and closed the CME futures gap.
“Don’t be fooled by weekend deviations,” he said Tell Twitter followers.
Peer trader Credible Crypto is cautiously optimistic about the range it has seen over the past month, saying bitcoin can avoid more serious losses.
“Prices have been trading in a tight range for the past 30 days, with overall open interest fluctuating between two key levels,” he said. Summarize.
“Price range, OI builds, then we see up/down, OI reset before the cycle repeats. If this persists, the downside should be capped at the lows.”
Fed rate hike decision leads ‘action-packed week’
This week, one event dominated the macro landscape, and not just in the cryptocurrency space.
The Federal Reserve’s Federal Open Market Committee (FOMC) will meet on July 26 to decide how much, if any, the benchmark interest rate will be raised.
There is little doubt in the market that a rate hike is coming – unlike last month, comments from Fed officials had them almost unanimously predicting a 0.25% hike.
According to the latest data from CME Fed Watch Toolthere is currently a 99.8% chance of this happening.
This week’s macro data will only be released after the Federal Open Market Committee (FOMC) meeting, so there is no room for time to influence the decision. However, equally important are the releases, which include second quarter GDP and the personal consumption expenditures (PCE) index.
“There’s nothing like a vibrant week in the markets. 20% of S&P 500 companies report earnings with Fed meeting and inflation data,” financial review resource Kobeissi Letter wrote Part of the Twitter feed.
“After a few weeks of low volatility, things should get interesting this week. It’s a great week for traders.”
Main events this week:
1. Consumer Confidence Data – Tuesday
2. New Home Sales Data – Wednesday
3. Fed Rate Decision – Wednesday
4. Q2 2023 GDP data – Thursday
5. PCE Inflation Data – Friday
6. Roughly 20% of S&P 500 companies report earnings
Action-packed week ahead.
— KobeissiLetter (@KobeissiLetter) July 23, 2023
Financial commentator Tedtalksmacro noted that overall central bank liquidity conditions around the world appear to be at macro lows despite the possibility of a rate hike.
“Global central bank liquidity may have bottomed out after freefall since March,” he said. commented and a comparison chart.
“Historically, this has been good for BTC + risk.”
Hash Ribbon “Capitulation” Leads to Falling Fundamentals
Bitcoin’s stubborn trading range is once again weighing on network fundamentals as intense competition among miners cools down.
according to the latest estimates bitcoin networkBitcoin mining difficulty will be reduced by about 4% when the next automatic adjustment is made on July 26.
Difficulty is currently at an all-time high, with only a few dips this year, and this week could be the hardest week of 2023 so far.
Hash rate tells a similar story of consolidation after hitting an all-time high this month. Charles Edwards, founder of crypto asset management firm Capriole Investments, flagged a new “surrender” phase when analyzing the Hash Ribbons indicator.
Edwards believes that although Bitcoin has been absent from the market since the end of 2022, when Bitcoin is still suffering from the consequences of the FTX crash, traders need not worry about capitulation.
Still, he called the explosive increase in hash rate over the past seven months “unsustainable.”
“We have hash ribbon capitulation. Bitcoin hash rate growth slowing down after incredible (unsustainable) 50% growth in 2023,” he said. commented last week.
“HR capitulation is not a sell signal, but it’s not a bullish one either. Risk management is necessary until growth resumes.”
Cointelegraph continues to report extensively on the state of miners, proposing various theories regarding the recent BTC sale.
NVT hits new high since 2019
As Bitcoin mines its 800,000th block, a classic on-chain indicator is sending a similar signal — at least for now — that Bitcoin’s price conditions may be overheating.
The Network Transaction Value (NVT) ratio (which divides Bitcoin market capitalization by the dollar value of daily on-chain transactions) has hit a four-year high.
NVT attempts to indicate when on-chain transaction volume is out of sync with overall network value, but the impact can vary.
As its creator, analyst Willy Woo, explains, NVT peaks can occur during bull markets and periods of “unsustainable” price growth.
“When Bitcoin’s NVT is high, it indicates that its network valuation exceeds the value transmitted on its payment network, which can happen when the network is growing at a high rate and investors view it as a high-return investment, or when the price is in an unsustainable bubble,” he wrote in an article. with introduction According to metrics on his analytics site Woobull.
Meanwhile, Capriole’s Edwards said in a recent interview with Cointelegraph that NVT is still under control and unable to reach extreme highs such as those seen in 2021.
“NVT is trading at normal levels right now,” he added, “given today’s normal readings, it doesn’t tell us much; it’s just that based on this metric alone, Bitcoin’s valuation is quite reasonable.”
Long-term holders control 75% of BTC supply
A glimmer of hope brewing? The available supply of Bitcoin continues to shrink behind the scenes.
Related: Bitcoin Could Still Reach $19K, Trader Warns Ahead of ‘Big Move’
As noted by several market participants, the amount of BTC available for purchase indicates the enduring conviction of the most ardent holders.
55% of the supply is currently dormant at least two years29% are five years or moredata representation from on-chain analytics company Glassnode.
“Bitcoin long-term holder supply has hit a new ATH of 14.52 million BTC, equivalent to 75% of circulating supply,” additional analysis highlight this week.
“This suggests that long-term holding is the preferred market dynamic for sophisticated investors.”
The accompanying chart shows the amount of BTC in the hands of so-called long-term holders (LTH), defined as entities that hold coins for 155 days or more.
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This article does not contain investment advice or recommendations. Every investment and transaction involves risk, and readers should do their own research when making a decision.
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