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After the lowest weekly closing since July, Bitcoin (BTC) faces another week of "big" macro developments. BTC/USD, along with cryptocurrencies and risk assets in general, has failed to rebound from several days of losses triggered by the most recent U.S. inflation statistics.
The largest cryptocurrency has yet to convert $20,000 into compelling support, and as the third full week of September starts, the risk that this level will serve as resistance resurfaces. In the coming days, the Federal Reserve will decide on the next significant rate rise, which will have a considerably greater impact on the market than emotion.
In addition, the fallout of the Ethereum (ETH) Merge continues to play out, while payouts to creditors at the failed exchange Mt. Gox add another possible cloud to the Bitcoin pricing environment. Cointelegraph examines five possible Bitcoin market-moving issues to watch during the next week.
The most significant event of the week is the Federal Reserve’s decision about key interest rates.
As a result of the Consumer Price Index (CPI) for August coming in “hotter” than anticipated, the Federal Reserve will be under pressure to act.
According to the CME FedWatch Tool, as of September 19, the market has completely priced in a minimum 75-basis-point increase in the Fed funds rate and does not discount the possibility of a 100-basis-point growth.
A 100-point hike would be the first such step taken by the Fed since the early 1980s.
On September 20-21, the Federal Open Market Committee (FOMC) will convene and issue a statement confirming the increase and Fed support for the number involved.
In an interview with Kitco over the weekend, Mike McGlone, senior commodity analyst at Bloomberg Intelligence, stated, “The Fed will not be relaxing any time soon, and it’s basic human nature because we now have the luxury of knowing how deep in their blunders they went by easing too much.”
The expansion of risk assets since the fall in March 2020 has “swung much too far to one side,” he added, and it is now “quite evident” that a reversal will take place.
Crypto will play a role in the global market reset, and Bitcoin will emerge victorious, McGlone concluded, confirming a long-held opinion regarding the future of cryptocurrencies. Gold will also outperform, although both will first suffer.
“Unfortunately, for the Fed to quit swinging this sledgehammer, risk assets must tighten for them,” he summed up.
A 100-basis-point hike this week would accelerate this trend, which central banks are currently accelerating outside the U.S., which were first sluggish to begin hiking interest rates to battle inflation.
Prior to the opening of Wall Street trading, the popular Twitter analytics account Games of Trades stated that the S&P 500 was at a crucial period.
Kevin Svenson, an analyst and pundit add, “In times like these, with enormous uncertainty across the board, the Crypto market is not going to achieve much without clearance from equities.”
Bitcoin has accumulated tailwinds during the previous week, resulting in a decline in BTC price movement.
BTC/USD dropped by more than $2,000 in a single weekly candle, closing below $20,000 for the first time since July, according to data from Cointelegraph Markets Pro and TradingView.
The closing was followed by a steep decline in which the pair dropped below $19,000.
The gloomy sentiment is arguably reasonable since the Ethereum Merge became a “sell the news” event, which contributed to a fresh flight from risk assets in conjunction with macro triggers.
Now, economists are assessing the likelihood of the decline continuing until the Fed’s rate announcement has passed.
Material Indicators, an on-chain analytics site, told Twitter followers in a part of a September 18 article, “BTC has dipped over the weekend, but there is always the possibility of volatility before the closing.”
Massive economic and FED statements will heat things up again next week.
A supplementary chart depicted the current situation of the Binance order book, with support near $19,800, having failed to maintain price movement.
The day before, Material Indicators concluded that it was similarly unlikely that a further decline could be prevented. According to the order book, bidding activity was still insufficient to sustain present levels.
Chess, a well-known trader, predicted that a macro bottom will occur in the fourth quarter of this year, characterizing Bitcoin as “on pace” to do so.
“$BTC weekly is beginning to press range lows,” he tweeted as the week came to a conclusion.
Short positions were increasing at the time of writing on both Binance and FTX, indicating a coordinated attempt by derivatives traders to drive the market lower. This, asserted fellow popular account Ninja, would not be effective beyond the opening of Wall Street.
In the meantime, the U.S. dollar has returned from post-CPI print losses and eagerly anticipates a potential macro high.
A typical headwind for crypto, the U.S. dollar index (DXY) has been consolidating for many days around slightly under 110.
Earlier this month, the Index reached 110.78, its highest level since 2002, while avoiding large retracements.
Last week, when analyzing the near future, Hyland cautioned that a “fresh blow off-peak” for DXY would coincide with a “capitulation event” in risk assets.
Meanwhile, an examination of the inverse connection between DXY and BTC/USD indicates the effect of significant upward movements of the former on the latter.
In the week following the much-hyped Merge, Ethereum is witnessing a significant comedown.
Last week, ETH/USD dropped 25%, which may tilt market capitalization back in Bitcoin’s favor.
The pair is trading below $1,300, its lowest level since July 16. Analysts and traders alike are negative about the team.
“Ethereum is struggling to maintain vital support,” Svenson said as the weekly close failed to halt the declines.
Meanwhile, analyst Matthew Hyland set a $1,000 price objective for ETH/USD, noting that $1,250 “could provide some support.”
Ethereum fell down up to 19% against BTC during the past week, with Bitcoin’s share of the total crypto market capitalization climbing 1.2% since September 14.
According to renowned trader CryptoGodJohn, the conditions were still favorable for a “generational entry” chance on the pair.
Samson Mow, CEO of Bitcoin adoption firm JAN3, was less optimistic, noting that while ETH/USD was still above its 200-week moving average (WMA), Bitcoin was below its equivalent.
During crypto downturn markets, the 200 WMA serves as an essential trendline, and historically, regaining it after its loss as support has signaled a return to strength.
Even if recent price volatility has led to an increase in on-chain activity, hodlers remain steadfast, according to on-chain statistics.
According to Glassnode, coins stored for at least five years exhibit one trend: an upward movement.
Glassnode confirmed in daily statistics that the proportion of the BTC supply active in September 2017 or earlier set a new all-time high of 24.8%.
Meanwhile, the volume of the supply active between five and seven years ago reached its greatest level in nearly two years: 1.01 million BTC.
Similarly, “younger” coins are also rising, with the 6-to-12-month bracket experiencing its five-month highs.
However, the long-term trend among seasoned Bitcoin investors is evident, as indicated by the proportion of Bitcoin supply owned by long-term holders (LTHs).
“LTH Supply is the volume of Bitcoin that has been inactive for 155 days and is statistically the least likely to be spent amid market instability,” Glassnode stated last week as the measure reached record highs of 13,62 million BTC.
After the CPI event, Bitcoin flows to exchanges reached their highest daily total in many months, as reported by Cointelegraph.