Bitcoin (BTC) is at the start of another week with China’s latest “ban” behind it — but its next “FUD” story is already brewing.
Bitcoin (BTC) is at the start of another week with China’s latest “ban” behind it — but its next “FUD” story is already brewing. The United States’ infrastructure bill is back on the table, with this week likely to see a definitive vote on what could shake up cryptocurrency businesses. At the same time, fundamentals and on-chain metrics alike continue to be more bullish than ever, and traders are betting on — at worst — a moderate price dip to a floor no lower than $36,000. What are the odds? takes a look at five things that could move the markets in the coming week.
D-Day for infrastructure bills
Macro history moves from China to the United States this week as lawmakers decide the fate of the so-called "infrastructure law". H.R.3684, fresh from Senate approval, will see the final vote on Monday - although those rumours may be delayed. The bill contains controversial descriptions of “brokers” that could have far-reaching consequences for US crypto businesses. Efforts to change the language are still ongoing, with figures such as Wyoming Senator Cynthia Loomis and Attorney Caitlin Long in the top positions. This text describes a broker as "any person who is responsible (for a fee) for the regular provision of services that transfer digital assets on behalf of another person". While H.R.3684 may be a thorn in the side of the local crypto industry, it may mean nothing to the experienced Bitcoin dog. However, with China's recent failure to ban the ban, market sentiment is sensitive to the quarterly FUD story. “Bitcoin is bipartisan. An apolitical digital asset,” Senator Loomis said on Twitter ahead of election day. The bill has received 539 amendments.
Green week expected in crypto market
This is a well-known story about BTC's spot price action this Monday as BTC/USD returned to $44,400. That ushered in the start of the resistance level that eventually led to last week's rejection after the pair briefly crossed $45,000. So far, this explosive effort isn't much different, with $44,000 not holding out at the time of publication. However, when compared to the projected return to the $30,000 midpoint that won't come until Sunday, recent progress is refreshing. "I'm looking forward to a green week for Bitcoin" said Michaël van de Poppe. The weekly close, which has been a source of disagreement over the past few days, did not disappoint, hitting $43,144, above the minimum threshold stressed by some traders. Rekt Capital traders and analysts called for a closing price of $43,600 which didn't happen on time but came hours later. “BTC continues to be pressured by the Pi Cycle 111-day MA support and this immediate red resistance zone,” he added in additional comments. “This price compression is really forming a clear market structure here, probably an upward triangle from the start.”
Lightning Network is at the forefront of fundamental growth
It's a smile for the basics of the Bitcoin network for another week as forecasts call for a sixth consecutive difficulty increase. After a fifth straight spike last week - a rare feat - data shows that eight days from now, Bitcoin will close any additional difficulties in an uptrend. This will be his first six consecutive gains from seven to mid-2019. That's not the only problem - the hashing rate is now around 145 echash per second (EH/s) and only 23 EH/s from its all-time peak. Statistics prove the confidence of the miners and the rate of their return after the mass exodus to China four months ago. From a consumer point of view, the story is nothing short of impressive. The Lightning Network, which has just emerged from the El Salvador reception success story, is approaching a capacity of 3,000 BTC. From early 2021, this capacity has almost tripled. “The capacity of the Public Lightning Network just surpassed 2900 BTC. In the last 10 days, over 400 BTC has been added,” commented investor Kevin Ruuk along with the accompanying chart. "Find me a better card, I'll be waiting..." Lightning is what it is called. A Layer 2 protocol that handles BTC off-chain transactions instantly and for free. Last week, Twitter became the first major partner of Strike's payment gateway to implement Lightning Network Tipping.
Do you feel scared?
Investors in the crypto market have a lot of downsides - and the sentiment indicator, the Crypto Fear & Greed Index, shows how nervous they are. Late last week, the index, which uses a basket of factors to determine sentiment, fell to its lowest level since mid-July - before BTC/USD started surging to $53,000. This time it's $40,000, not $30,000, which is the focus of the game's pricing. On Monday, the index was slightly higher at 27/100 – still firmly in the “fear” area. However, in an institutional context, negative funding levels evoke cautious optimism about the potential for sustainable growth. As analysts often point out, when everyone is vulnerable to a downside, this provides an ideal time for long BTC and a stumbling block for most speculators.
"I will never betray you..."
These words and another quote from the song of the same name by British singer Rick Astley from 1987 became a meme for bitcoiners. They describe the thinking - and investing habits of - pedestrians who never sell their BTC, no matter the circumstances. Tackling any storm is a stimulating force for long-term market participants, but for now, investor Rick Astley may even be pointing the way to a new all-time high. As analyst Willie Woo notes, this Rick Asstilles worked long and hard, and historically, the good times are just around the corner. "Bitcoin has entered the 'I will never give up on you' phase of the Astley cycle," he argued, along with a humorous chart comparing Rick Astley's buying habits to BTC price movements. The effect can happen faster than many people imagine. With a sudden spike to $2,000 on Sunday, van de Pope called for a "party" over bitcoin and altcoins. In general, a strong hand has controlled a growing segment of what BTC has to offer.
China has tried several times over the past 12 years to contain the growth of the cryptocurrency sector, but apart from one minor omission, the general ban on cryptocurrency trading has not changed the long-term growth of cryptocurrencies. This shows that no country, not even the second largest economy in the world, can stop the emergence and growth of cryptocurrencies. Deutsche Bank analyst Marion Labor said in an update on the bank's website that Bitcoin (BTC) is likely to "remain highly volatile for the foreseeable future" as most people buy it for investment or speculation rather than to use the medium of exchange. Labor believes, however, that Bitcoin will become “the digital gold of the 21st century”.
At Morningstar's annual investment conference, Dennis Lynch, director of asset management at Counterpoint, compared Bitcoin to cartoon characters from South Kenny Park. Lynch said, "I like to say Bitcoin is something like Kenny from South Park - he dies every episode and comes back." As the impact of the Chinese FUD fades, let's examine a chart of the top 5 cryptocurrencies that could remain strong in the short term.
BTC / USDT
Bitcoin has recovered from its 100-day simple moving average ($41,002), indicating that the bulls are trying to aggressively defend this level. Bulls will now try to push the price above the 20-day exponential moving average ($45,178). A decline in the 20-day EMA and the relative strength index (RSI) in negative territory suggest that the bears are on the back foot. If the price drops below the 20-day EMA, the chances of a break below the 100-day SMA increase. Such a move would complete the bear's head and shoulders pattern, targeting $32,423.05. The bulls need to push and hold the price above the $48,843 resistance to open the door for a possible rally to $52,920. A break and close above this level can signal the resumption of the uptrend. The BTC/USDT pair sees a tough battle between bulls and bears near the split. The bulls have pushed the price above the 20 EMA and will then try to clear the hurdle above $45,200. If they succeed, the pair could rise to $49,000. Conversely, if the price drops from the current level, the bears will try to pull the price below the $41,000 critical support zone to $39,600 - the start of a downtrend.
AVAX / USDT
Avalanche (AVAX) is trading in an ascending channel. The long tail of today's candlestick indicates that the bulls are aggressively buying on the decline to the 20-day EMA ($61). Rising moving averages and RSI in positive territory indicate buyers' gains. The AVAX/USDT pair may now try to revive the all-time high at $79.80. This is an important level to watch out for as a break above it could signal the resumption of the uptrend. The pair may then approach the channel's resistance line and the bullish momentum may increase if this hurdle is overcome. Conversely, if the price drops from the current level or resistance and breaks below USD 60.04, this indicates the start of the adjustment lower in the 50-day SMA (USD 45). The pair rallied from the 100 SMA and the bulls are trying to keep the price above the 20 EMA. If they do, the pair may start their journey north to $79.80, where the bears may decline again. On the other hand, a critical level of supervision is the channel support channel. Breaking and closing below this support would be the first indicator that the bulls may be losing their footing. If the rate drops below $60.04, the decline could extend to $55.
ALGO / USDT
Algorand (ALGO) is trading below the 20-day EMA ($1.77) but the long tail of today's candlestick is showing gains trying to protect the $1.51 support. If the bulls move and hold the price above the descending trend line, this indicates that the short-term correction may be over. The ALGO/USDT pair could rise to $2.15 and then to $2.55. Alternatively, if the price drops from $1.84, the pair may fall back to $1.51. If the bulls maintain this support, the pair can hold in the $1.84-1.51 range for several days. A break and close below USD 1.51 signal a possible trend reversal. The pair may then slide to the immediate $1.15 support.
The pair tried to rebound from the strong support at USD 1.51, but the rebound could hit the barrier at the moving averages and then hit the downtrend line again. If the price drops due to resistance to overhead, that would indicate sentiment remains negative and traders are selling relief on the rally. This increases the chances of a break below $1.51. This negative opinion will be rejected if the price rises and stays above the downtrend line. The bulls will then make one more attempt to continue the upward movement.