December 22, 2024
Exchange flow gap hits 10K BTC — 5 things to know in Bitcoin this week

Bitcoin (BTC) is still holding near its 18-month high from the second week of November – where might BTC price go next?

The largest cryptocurrency defied selling pressure to post another impressive weekly close.

Increasingly, analysts are describing it as a change in sentiment, with both Bitcoin and altcoins refusing to give back gains that first emerged more than a month ago.

Cryptocurrencies are striking out on their own in a hot macroeconomic environment, with assets like stocks feeling the pressure and bulls hoping the uptrend isn’t over yet.

There are plenty of potential volatility triggers in the week ahead. With inflation still on everyone’s mind, the Federal Reserve will deliver a round of speeches as part of its planned event, with Chairman Jerome Powell delivering a speech.

A short trading week on Wall Street will mean extended “off-hours” trading next week, making it possible for cryptocurrencies to see more volatility at the end of next week.

Behind the scenes, Bitcoin is technically as resilient as Bitcoin’s price action indicates – hash rate and difficulty have reached all-time highs and are expected to reach new all-time highs in the coming days.

Cointelegraph delves deeper into these questions and details what to expect for Bitcoin market activity in the short term and beyond in a weekly overview.

Bitcoin bulls refuse to budge

Like last week, Bitcoin’s weekly candle at the close on November 6 did not disappoint.

Data from Cointelegraph Markets Pro and Cointelegraph Markets Pro showed that the closing price was just above $35,000, effectively setting an 18-month high, before a wave of volatility briefly fell below the $36,000 mark. trading view show.

BTC/USD 1 week chart. Source: TradingView

The intense tug-of-war between buyers and sellers means current resistance levels are difficult to overcome, while liquidations are increasing at the close.

as famous The hourly chart, drawn by prominent trader Skew, shows “both sides of the exchange being swept.”

On November 5, Skew also showed a growing open interest (OI) on Binance, the world’s largest exchange, which was an important prelude to the volatility in recent weeks.

Next, trader Daan Crypto Trades cited funding rate data showing longs paying shorts.

“There were still quite a few positions open over the weekend, so I would expect further volatility once futures open and exit those positions (on both sides) on Monday,” part of X’s comments read then.

According to Cointelegraph, bets from market participants include $40,000 as a popular BTC price target. The timing is up for debate, but forecasts for late 2023 revolve around higher levels.

At the same time, however, a more conservative approach persists. Among them is popular trader Crypto Tony, who told X subscribers over the weekend not to bet on bulls breaking through resistance levels.

“I will go short only if we lose the $34,100 support area and close my current long position if we lose $33,000,” he said wroteupdating his current trading strategy.

“I wouldn’t suggest turning desire into resistance here at all.”

Fed spokesperson leads Macro Week

With the release of U.S. macroeconomic data this week, attention is once again focused on the Federal Reserve as the source of market volatility.

Officials, including Chairman Powell, will take the stage at various speaking engagements in the week leading up to the Nov. 10 Veterans Day holiday.

The timing may be more noteworthy than the speech itself – the Fed continued to pause on raising interest rates last week despite data showing inflation exceeded expectations.

Previous comments have led markets to no longer expect a shift in interest rate policy until next year.According to data from CME Group Fed Watch Toolbets on the outcome of the next interest rate decision, coming a month from now, are repeating the pause.

Probability chart of the Fed’s target interest rate.Source: CME Group

“All attention is on the Federal Reserve,” financial commentary resource The Kobesi Letters wrote in an X commentary on the upcoming Macro Diary.

Kobesi added that volatility is likely to continue in the coming days amid turmoil in bond markets. There were also notable changes in the stock market last week, with the S&P 500 suddenly reversing course after falling in the second half of October.

Investment research platform Game of Trades went on to say that “significant economic fluctuations” are coming due to a rare contraction in U.S. consumer credit.

“This has happened only three times in the past 75 years,” the report noted, referring to savings as a percentage of U.S. national income.

The other two were the 2008 global financial crisis and the March 2020 COVID-19 crash.

Computing power and difficulty hit record highs

It feels like after this year’s rally, the rise in Bitcoin network fundamentals is truly relentless.

Hashrate and mining difficulty have offset every decline on the road to current all-time highs, and the coming correction will solidify these levels.

According to data from monitoring resource BTC.com, the difficulty is expected to increase by another 2.4% on November 12, reaching nearly 64 trillion for the first time in Bitcoin history.

Overview of Bitcoin network basics (screenshot). Source: BTC.com

While hash rate is more liquid and difficult to measure accurately, trends have been evident in recent months.

As James van Straten, a research and data analyst at cryptocurrency insights firm CryptoSlate, pointed out, last week was particularly important for hash rate (the estimated combined processing power of a network dedicated to miners).

As Cointelegraph reported, one theory calling for this trend to continue until next year’s block subsidy halving revolves around miners’ own goals.

In an interview in September, Filbfilb, co-founder of trading suite DecenTrader, said miners wanted to increase their BTC retention rate ahead of the halving, which would slash BTC rewards per block by 50%.

However, he stated that BTC/USD could be trading at $46,000 by the time of the halving.

Foreign exchange flow gap reaches second highest level

As the cryptocurrency market recovers, the profitability picture for Bitcoin holders is changing.

As Cointelegraph reported, initial returns exceeded $30,000 and BTC spot prices were above acquisition costs for various recent investor groups.

Now, the exchange is showing clear signs of change, with inflows taking a back seat and withdrawals approaching year-to-date highs.

For Van Straten, this phenomenon marks “a major shift in the Bitcoin transaction process.”

“The new momentum in Bitcoin withdrawals is evident, with more than 61,000 BTC recently withdrawn, a significant increase from the year-to-date low of nearly 43,000 BTC,” he wrote in CryptoSlate. analyze November 3.

“This rise suggests investors are increasingly inclined to hold Bitcoin assets on the sidelines, which may indicate a stronger long-term belief in Bitcoin’s value.”

He added that the gap between exchange deposits and withdrawals in BTC has reached its second-largest ever – a “staggering” 10,000 BTC, according to data from on-chain analytics firm Glassnode.

The analysis concluded: “This difference was only overshadowed by the impact following the FTX crash, which saw an overwhelming peak of over 80,000 BTC withdrawn.”

“These trends may indicate a shift in investor sentiment, with more investors appearing to be choosing to hold assets for the long term rather than seeking immediate liquidity on exchanges.”

Bitcoin transaction flow data chart. Source: James van Straten/X

Glassnode also showed total capital inflows hit a new high this year – an event popular social media trader and analyst Ali described as representing “strong investor confidence”.

Cryptocurrency ‘fear’ hits post-$69,000 highs

In the cryptocurrency space, improving sentiment is often a double-edged sword, as the mindset of the average holder becomes increasingly profit-focused.

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This can be proven by the following facts Cryptocurrency Fear and Greed Index – A classic market sentiment indicator that warns when the market enters a stage of irrational exuberance.

During Bitcoin’s all-time high in November 2021, the Fear and Greed Index reached 84/100, and as of November 6, the index was only 10 points away from that peak.

At a ratio of 74/100, the market has become “greedier” than at any time in the past two years. However, for CryptoTony, there is still room for further gains before the emotional imbalance becomes impossible to ignore.

“Before I would consider closing some positions, I would like to see extreme greed,” he said Tell X subscribers are watching the index’s readings for November 5, believing that Ethereum (ETH) should be the first to move higher.

The historical extremes for fear and greed are around 95/100, the last time in February 2021.

Cryptocurrency Fear and Greed Index (screenshot). Source: Alternative.me

This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should do their own research when making decisions.