Decentral Block Post

Bitcoin (BTC) is on track for its biggest weekly gains since March, but not everyone is convinced the good times will last.

Crypto sentiment highest since early May

Data from Cointelegraph Markets Pro and TradingView shows that at the time of writing, BTC/USD is up over $2,000 this week — nearly 12%.

After spending several days trapped in a narrow range, the pair managed to exit to the upside, the gains accelerating overnight into July 8 to see highs of $22,401 on Bitstamp.

Those highs alone are noteworthy, coinciding with Bitcoin’s 200-week moving average (MA), an essential level in bear markets which has acted as resistance since last month.

While consolidating around $1,000 lower, Bitcoin nonetheless is showing the potential for a trend turnaround. Beating out the 200-week MA, however, will be no easy task.

Crypto and equities markets are down, and aside from the positive news of Celsius repaying all of their debt and avoiding a massive liquidation, there are few on-the-spot reasons that are prompting investors to buy Bitcoin (BTC) and altcoins.

The collapse of numerous decentralized finance (DeFi) protocols, crypto investment funds and BTC trading 60% below its all-time high continue to weigh on sentiment, but a few positive tidbits of data could be a sign that the market is ready to enter a consolidation phase.

Crypto investors HODL

According to a recent survey conducted by Appinio and despite the collapse in crypto prices and the start of the bear market, “more than half (55%) of crypto investors held their investments in response to the recent crypto-asset market sell-off with just 8% selling their investments.”

This suggests that the investment conviction of a majority of crypto investors remains strong. The study also found that “33% of American investors are invested in crypto-assets,” and “40% of investors believe Bitcoin presents the best investment opportunity over the next three months.” 

American investors show resiliency

When it comes to how American investors responded to the broad pullback across financial markets, Appinio found that 65% of respondents held their investments and remained confident in their choices.

Hope springs eternal for many crypto investors after the market saw positive price movement on July 7, alongside gains in the traditional market. 

The green day in the markets comes amid a backdrop of increasing jobless claims in the U.S., which is a possible signal that “the pressure on wages may have now peaked” according to Harris Financial Group Managing Partner Jamie Cox. According to Cox, a continuation of this trend could result in financial conditions that are “tight enough to allow the Fed to throttle back on the scale of rate increases."

Data from Cointelegraph Markets Pro and TradingView shows that after trading near $20,400 for a majority of the day on July 7, the price of Bitcoin (BTC) spiked nearly 7% in the afternoon hours to hit a daily high of $21,860.

As the crypto faithful attempt to navigate the choppy waters of the crypto winter in search of a market bottom, here’s what several analysts are predicting could be next for Bitcoin.

The trend remains negative

Twitter user "Roman" posted the following chart noting that “Many are becoming euphoric and bullish as we have repeated similar candle patterns for the last 8 months.”

Crypto companies are going belly up left and right, and Bitcoin mining companies also appear to be taking on water faster than they can bail. In mid-June, Compass Mining CEO Whit Gibbs and chief financial officer Jodie Fisher abruptly resigned after allegations that the Bitcoin mining hardware and hosting company had failed to pay hundreds of thousands of dollars in overdue electricity bills to Dynamics Mining, a facility provider for Compass.

Bloomberg recently reported that many industrial-size Bitcoin miners took on a significant amount of debt by leveraging their equipment and BTC as collateral for loans to either acquire additional gear or expand their operations. According to the report, and data from Arcane Research, miners owe some $4 billion in loans and now that Bitcoin price trades near its 2017 all-time high, the trend of miners liquidating their BTC holdings at swing lows to cover capital costs and operational costs is expected to pick up speed.

In the last month Marathon Digital, Riot Blockchain, Core Scientific, Bitfarms and Argo Blockchain PLC have each sold between 1,000 to 3,000 BTC to cover debts, operational (OPEX) and capital expenses (CAPEX).

The troubles faced by miners are also having a knock-on-effect on ASICs and their pricing at major mining hardware merchants like Big Sky ASICs, ASIC Marketplace, Bitmain and Kaboomracks shows popular top and mid-tier ASIC miners selling up to 70% down from their all-time highs in the $10,000 to $18,000 range.

With data from Arcane Research showing publicly traded industrial miners now selling more Bitcoin than they mined in May, it’s possible that some will either reduce their footprint and scale back, or go out of business if they are unable to cover OPEX and CAPEX debt.

Bitcoin (BTC) faces a new selling threat in the near future as users of defunct exchange Mt. Gox prepare to get their BTC back.

In fresh correspondence dated July 6, attorney Nobuaki Kobayashi, appointed trustee in Mt. Gox rehabilitation process, confirmed that he was "preparing to make repayments" to account holders.

Cash, Bitcoin or Bitcoin Cash?

Over eight years after Mt. Gox imploded, it appears that those who lost money are about to receive BTC.

The event has been long coming, as have concerns over its impact on the market. The price of Bitcoin at the time was a fraction of the current $20,900, commentators have noted, leading to suspicions that recipients could instantly sell large amounts of BTC on the market, pressuring prices.

In the official correspondence, Kobayashi did not give an exact date for the repayments to begin.

Ethereum investors who staked millions of dollars worth of Ether (ETH) tokens to become validators on its soon-to-launch proof-of-stake (PoS) network are now facing heavy paper losses.

Ether spot traders outperform stakers by 36.5%

In detail, investors have locked a little over 13 million ETH into the so-called Ethereum 2.0 smart contract since it went live in December 2020. However, there is no date when these investors can redeem their tokens alongside the 10% yield.

Interestingly, around 62% of Ether tokens were deposited before the price peaked at around $4,930 in November 2021. Meanwhile, the other 38% were deposited after the record high, according to Glassnode's latest report.

As a result, the total value locked inside the Ethereum 2.0 smart contract peaked at $39.7 billion in November 2021, led by 263,918 network validators. But now, the value has dropped to $14.85 billion as of July 7, despite an additional inflow of 5 million ETH in the last eight months.

Ethereum 2.0 stakers deposited ETH to the network's PoS contract at an average price of $2,390. So, ETH stakers are now holding an average loss of 55% as a result of ETH's 75% crash since November 2021, Glassnode noted.

Bitcoin (BTC) is due to give a definitive signal that a macro bottom is in this month, one analyst has concluded.

In a Twitter thread on July 6, popular commentator Wolf eyed key moving average data as proof that BTC price action will not be going lower.

Key chart crossover eyed as end to bear market losses

Amid repeated calls for BTC/USD to revisit levels not seen since Q4 2020, one simple historical trend is now saying that the pair has already seen its latest macro lows.

Analyzing the 3-day chart, Wolf argued that the 100-day moving average (MA) crossing the 200MA will act as a price floor signal — just like in previous bear markets.

“Negative 3d MA100 will cross positive 3d MA200 by half July, that would confirm that bottom is in,” he wrote.

Trading across the cryptocurrency market was relatively subdued on July 5 as the ecosystem continues to digest the fallout from the Three Arrows Capital scandal and Voyager Digital announcing that it has filed for Chapter 11 bankruptcy protection. 

Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin (BTC) has spent the day oscillating around the $20,000 support level, ranging from a low of $19,775 to an intraday high of $20,480 on $25.48 billion in trading volume.

Here’s a look at what several analysts are saying about what could come next for Bitcoin and what support and resistance levels to keep an eye on in the event of a sharp move in price.

Watch the repeating pennant pattern

A noticeable pattern on the Bitcoin chart prior to the pullbacks that have occurred since November 2021 was pointed out by crypto analyst and pseudonymous Twitter user Moustache, who posted the following chart displaying the similarities between each drawdown.

Moustache said,

Bitcoin (BTC) mining companies have suffered in 2022 due to the crypto bear market. Nonetheless, their stocks collectively saw a sharp rebound on July 6, raising hopes that investors have started to buy the dips.

One of the intraday winners was Bitfarms (TSE: BITF), which surged by over 24% to close at $1.29.

Similarly, Marathon Digital Asset Holdings (NASDAQ: MARA), Core Scientific (NASDAQ: CORZ), and Cathedra Bitcoin (CVE: CBIT) rose by over/around 12.5%, 16.22%, and 15%, respectively.

Bitcoin miners' revenue down 70% from peak

The rallies come as a breather in what has been a bad year for mining stocks. A nearly 60% year-to-date plunge in the BTC price and a rise in "mining difficulty" have pushed the miners' daily revenues lower by over 70% from their November 2021 peak of $62 million.

The outcome is bad for all the mining stocks, including the ones mentioned above. For instance, BITF is still down 86% from its peak in pre-market trading on July 6 despite a 24% rebound in the previous session.

Bitcoin (BTC) approached the July 6 Wall Street open near $20,000 as a fresh battle between support and resistance loomed.

Whale levels close by

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD wedged in a tight trading range with liquidity creeping closer to spot on the day.

After recovering 6% losses from the day before, order book data confirmed that support and resistance was now almost shoulder-to-shoulder.

According to on-chain monitoring resource Whalemap, a cluster of whale positions between $20,546 and $21,327 meant that this large area was now the zone to beat.

Buyer interest, meanwhile, stayed at around $19,200, this also formed of whale bids which formed after BTC/USD dipped to multi-year lows of $17,600 in Q2.

The cryptocurrency market along with the tech-heavy Nasdaq saw a bit of positive price action on July 5 amid a backdrop of rising recession concerns in the United States. 

Data from Cointelegraph Markets Pro and TradingView shows that an early morning onslaught by bears managed to drop Bitcoin (BTC) to a daily low of $19,309 before reinforcements arrived to bid the price back above support at $20,400 during the afternoon.

Here’s what several analysts are saying comes next for the top cryptocurrency and what support and resistance levels to keep an eye on moving forward.

Looking for a continuation to $23K

A bullish take on the recent Bitcoin price action was offered by independent analyst Michael van de Poppe, who posted the following chart as a follow-up to a previous Tweet that suggested Bitcoin needed to crack the resistance zone at $19,700 to continue higher:

The analyst said:

Bear markets in cryptocurrency are known to be painful, but the month of June was especially trying for the crypto faithful as a confluence of factors resulted in the price of Bitcoin (BTC) falling 37.9%, its worst monthly performance since 2011.

As a result of the continued widespread weakness, a majority of the so-called Bitcoin “tourists” have now exited the space, leaving only the most dedicated holders remaining, according to blockchain analytics firm Glassnode.

Despite Bitcoin's ongoing struggles and the fact that crypto traders are currently experiencing the worst bear market in the sector's history, several metrics suggest that the outlook isn’t as dire as some are predicting and that the hodler base of the crypto market remains strong.

Dedicated hodlers increase in number

A significant purge of active Bitcoin wallets is a common occurrence during major sell-off events as well as in early bear markets, according to Glassnode. However, the severity of the exodus has been diminishing since the bear market of 2018, indicating that “there is an increasing level of resolve amongst the average Bitcoin participant,” Glassnode said.

During the most recent reduction in the number of addresses with a non-zero balance, only 1% of the Bitcoin addresses purged their holdings entirely as compared to 2.8% between April and May 2021, and the whopping 24% that did the same between January to March of 2018.

The growth of Circle's native stablecoin USD Coin (USDC) in the last two months compared to its $66-billion rival giant Tether (USDT) is nothing short of spectacular.

USDT, USDC market cap ratio hits the lowest on record

Notably, USDC's market capitalization has grown by 8.27% since May, reaching its highest level of $55.9 billion on July 2. In contrast, USDT has suffered an over 19% drop in its market valuation, currently treading around $66.14 billion.

This is the closest USDC has come to challenging USDT's supremacy in the stablecoin sector based on the diminishing gap between their market caps.

In detail, the USDT to USDC market cap ratio was above "9" in August 2020. However, in July, it dropped to 1.20, the lowest on record, as shown in the chart below.

At the current rate — and with less than $10 billion now separating the two stablecoins — USDC can surpass USDT by market capitalization in a few months, if not weeks. 

Bitcoin (BTC) hit daily lows on the July 5 Wall Street open as the U.S. dollar saw a violent surge higher. 

USD sets yet another 20-year record

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD retreating to $19,281 on Bitstamp as the Independence Day long weekend concluded with a bump.

The pair had seen last-minute gains the day prior, these fizzling as the return of Wall Street trading was accompanied by USD strength laying waste to gains across risk assets and safe havens.

Bitcoin traded down $1,000 on the day, while spot gold shed over 2% and U.S. equities markets also fell. The S&P 500 was down 2.2% at the time of writing, while the Nasdaq Composite Index lost 1.7%.

The U.S. dollar index (DXY), on the contrary, hit 106.59, a level not seen since December 2002 and above previous breakouts from Q2 this year.

Bitcoin (BTC) has a “neutral to positive” outlook despite staying below $20,000, according to ARK Investment Management.

In its latest "Bitcoin Monthly" report, the American asset management giant flagged signs that BTC price action is close to bottoming.

Wood: "We're waiting for more capitulation signals"

One of Bitcoin’s most vocal supporters, ARK and CEO, Cathie Wood, have stuck with BTC exposure as the market continues to fall from all-time highs.

The latest Bitcoin Monthly release confirms that conviction, with Wood, analysts and research associate David Puell suggesting that little ground remains to be covered before BTC/USD reverses.

“Down 70% from its all-time high, bitcoin is trading at or below some of its most important levels: its 200-week moving average, the general cost basis of the market (realized price), the cost bases of long-term (LTH) and short-term holders (STH), and its 2017 peak,” the report reads.