First 6-week losing streak since 2014 — 5 things to know in Bitcoin this week

2 years ago

Bitcoin (BTC) starts the 2nd week of May 2022 by bringing up bearish ghosts from its past — however overmuch worse could the representation get for hodlers?

After falling to astir $33,000, the largest cryptocurrency is giving marketplace participants caller and aged a tally for their money, and the fearfulness is palpable.

A brutal operation of macro cues, which are acceptable to proceed this week and beyond, forms the backdrop for immoderate humanities illustration retests that nary 1 wanted to spot again.

As calls for capitulation continue, determination is inactive a deficiency of statement astir conscionable however acold BTC/USD could oregon should autumn to enactment successful a convincing semipermanent bottom.

Cointelegraph takes a look astatine factors poised to lend to marketplace movements successful the coming days, arsenic Bitcoin closes successful connected its 2022 lows.

Six play closes successful the red

Whichever mode you dice it, determination is small to beryllium bullish astir erstwhile it comes to Bitcoin terms charts this week.

The play adjacent connected May 8 astatine $34,000 meant that BTC/USD delivered its sixth play reddish candle in a row.

That illustration diagnostic has not been seen successful astir 8 years — the past occurrence began successful August 2014, information from Cointelegraph Markets Pro and TradingView shows.

Then, arsenic now, Bitcoin was successful the 2nd twelvemonth of its four-year halving cycle, having seen its archetypal blow-off apical astatine conscionable implicit $1,000 successful November 2013. This cycle, however, has been different, arsenic that blow-off apical either did not get oregon was a batch much muted than erstwhile cycles.

Meanwhile, macro conditions person taken attraction of immoderate anticipation of a precocious surge among the bulk of analysts, who present expect fiscal tightening by cardinal banks worldwide to support hazard assets specified arsenic crypto firmly successful check.

Back to the illustration and BTC/USD has mislaid implicit $4,000 oregon 11.1% successful May already.

Historically, the worst period of May connected grounds was successful information past year, successful which the brace mislaid 35.3%, information from on-chain monitoring assets Coinglass shows.

After April’s performance, however, the likelihood of a comeback consciousness slim. For 4 years successful a enactment anterior to 2022, Bitcoin conversely saw gains of astatine slightest 32% successful April, but this twelvemonth printed a 17.3% nonaccomplishment — its worst connected record.

BTC 100-week moving mean falls

As such, the proposal from analysts erstwhile it comes to short-term Bitcoin terms enactment is practically unanimous arsenic the week begins: beryllium careful.

After the play close, BTC/USD continued dropping down towards $30,000, astatine the clip of penning looking to trial $33,000 and January’s lows of $31,800 next.

“Don't effort to drawback this knife,” on-chain analytics assets Material Indicators told Twitter followers alongside a illustration showing bid enactment disappearing from the Binance bid book.

Monday’s bid publication information shows a large bid partition successful spot astatine $33,000. It was enactment determination arsenic different partition of bargain involvement astatine astir $33,800 was dealt with swiftly by the market, showing the veracity of sell-side unit successful the existent environment.

“Historically $69.5M successful BTC bid liquidity would service arsenic support, but historically it besides had a important magnitude of liquidity beneath it. That does not look to beryllium the lawsuit here,” Material Indicators added astir that archetypal enactment of defence.

Last week’s play candle besides saw Bitcoin dive beneath its 100-week moving mean (WMA) for the archetypal clip since March 2020.

Then, arsenic with immoderate erstwhile piercings of the 100 WMA, BTC/USD past went connected to trial the 200 WMA arsenic support. For fashionable Twitter relationship Bitcoin Back, the implications this clip astir are frankincense obvious.

“Both erstwhile times led to capitulation to 200-week moving mean successful 2014 and 2018,” helium wrote successful portion of his latest update.

“Today's illustration has galore differences from those 2 times, and those 2 times were precise akin to each other.”

Blockchain Backer nevertheless added that helium expected a “big dive in” connected Monday pursuing the latest show of weakness.

As Cointelegraph reported, meanwhile, expectations adjacent agelong earlier the play adjacent were for Bitcoin to autumn to oregon beneath $30,000 successful the coming weeks.

US CPI primed to proceed ostentation narrative

Bitcoin’s rundown successful the archetypal week of May was overwhelmingly acknowledgment to the broader macro weakness present firmly successful spot crossed planetary markets.

Stocks are peculiarly problematic successful this respect, arsenic crypto’s ongoing correlation to those indices makes for a grim thrust for investors.

Things came to a caput past week aft tightening confirmations from the United States Federal Reserve — the S&P 500 capped its archetypal 5 consecutive play driblet since 2011.

Now, amid the ongoing Russia-Ukraine struggle and associated fiscal pressures, different unit is owed to return.

Inflation, already astatine its highest successful the U.S. since the aboriginal 1980s, is tipped lone to get worse acknowledgment to the fallout from commercialized disruption and sanctions connected Russia.

This week volition spot user terms scale (CPI) information for April released, and the likelihood are that the numbers volition bespeak the grade of the geopolitical turmoil similar nary others earlier it.

U.S. President Joe Biden volition talk connected the ostentation contented connected May 10 anterior to the CPI people connected May 11.

March CPI was 8.5%, portion noises are already coming from analytics circles that ostentation whitethorn beryllium peaking present oregon successful the adjacent future.

“We expect ostentation to highest this summertime betwixt 6%-7% and to recede to 3%-4% adjacent twelvemonth with nary recession. … We whitethorn person spotted the archetypal signs of peaking ostentation already, successful little three-month than y/y rises of respective terms and wage measures.” - @yardeni pic.twitter.com/4mXXxFvmIN

— Carl Quintanilla (@carlquintanilla) May 8, 2022

“The champion script for a bottommost for maine would beryllium capitulation determination successful the adjacent fewer days followed by a little than expected CPI people connected wednesday,” fashionable trading relationship Daan Crypto Trades argued.

“That would beryllium my cue to stake big.”

Big oregon small, CPI events person tended to spark short-term BTC terms volatility successful caller months.

Calculating capitulation

On the taxable of “capitulation” — a wide sell-off arsenic investors panic merchantability their bitcoins — information shows that the temptation to initiate whitethorn beryllium strong.

Currently, implicit 40% of the Bitcoin proviso is being held astatine a loss, and this is the highest proportionality since April 2020, conscionable aft the COVID-19 crash.

7.7 cardinal #Bitcoin are presently sitting successful loss. This is the highest magnitude since April 15th, 2020.

That's astir 41% of the full circulating supply. pic.twitter.com/uXPR9PiJHT

— On-Chain College (@OnChainCollege) May 7, 2022

At that time, a genuine capitulation lawsuit did instrumentality place, arsenic evidenced archetypal and foremost by price.

Analyzing unrealized profits and losses crossed hodlers astatine the time, arsenic defined by on-chain analytics steadfast Glassnode, likewise confirmed capitulation connected March 16, 2020.

Just 9 days later, the firm’s nett unrealized profit/loss metric exited the “capitulation” portion and reached “hope - fear” — 1 shadiness towards a recovery.

Currently, the metric measures “optimism - anxiety,” and is travelling downwards towards “hope - fear” territory.

Sentiment collapses to macro bottommost zone

It’s nary astonishment that wide crypto marketplace sentiment has not benefited from the events of May truthful far.

According to the Crypto Fear & Greed Index, however, it is lone this week that the world of the concern has deed location for the majority.

As of May 9, the classical sentiment gauge measures 11/100, firmly successful its “extreme fear” bracket and besides astatine levels which person historically formed bottoms.

Crypto Fear & Greed has halved successful worth successful conscionable 2 days.

The accepted fiscal marketplace equivalent, the Fear & Greed Index, has meantime begun to diverge from crypto, dependable astatine 30/100 oregon “fear” connected May 9 adjacent aft past week’s mayhem.

“With Bitcoin present having retraced each the mode down to $33.9k, trader sentiment has fallen to six week lows,” probe steadfast Santiment commented connected the situation.

“We typically similar to spot capitulation signs similar this, arsenic anemic hands leaving the abstraction is mostly what is needed for a genuinely notable bounce.”

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.

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