New Year, the same “extreme fear”-5 things worth paying attention to in Bitcoin this week

Bitcoin (Bitcoin) Start its first full week of 2022 in a familiar area under $50,000.

At $47,200 at the end of December-well below most bullish expectations-the largest cryptocurrency has a lot to do, as signs of the peak of the halving cycle are still nowhere to be found.

Analysts said that as the stock market is at a high at the end of the year, inflation is rampant and interest rate hikes are imminent, Wall Street will return, and 2022 may soon become an interesting market environment.

However, so far, everything has been calm-Bitcoin/USD has not had major surprises for several weeks.

Cointelegraph studies factors that may change or continue the status quo in the coming days.

The stock market may see a 6-month “only rise”

Look at the Standard & Poor’s 500 Index to understand the development of the U.S. stock market.

The index reaches no less than 70 all-time highs By 2021, even though risky assets look far less attractive, the year has ended in a booming way.

Bitcoin is one of them, falling below the $50,000 mark. The only notable event is the peaks and troughs surrounding holiday liquidity.

Having said that, it is widely believed that the central bank’s policy will provide a potential pigeon in the coming months. The Fed has issued two interest rate hike signals this year, and market digestibility is seen as a key test of asset performance.

However, for the first block of this year, it is likely to be a continuation of the latest style of “business as usual”-the stock has risen to a record high.

Charles Edwards, the founder of the asset management company Capriole, pointed out in a report: “History shows that the beginning of the interest rate hike system will actually lead to six months of stock market strength.” Series of tweets this week.

“Ten of the 13 systems (77%) since the 1950s have had positive stock market returns in the first six months, with an average of +5.1%. We are now approaching the beginning of a new regime.”

Edwards said that while this situation is usually “favorable” for Bitcoin, further declines may mean that stocks will be hit in the long-term due to interest rate hikes.

“Without significantly higher economic growth (to be seen), it is unlikely that any interest rate hike plan by the Fed will go a long way,” he continued.

“During this period, Bitcoin will experience volatility, which will be affected by both the stock market volatility and the sharp adjustments of the Federal Reserve.”

Inflation will receive attention again next week, and the latest US Consumer Price Index (CPI) data for December will be released on January 12.

American inflation chart. Source: Tradingeconomics.com

40,000 USD accommodation supports the bottom line

Recently, Bitcoin spot price movements have hardly provided valuable information through interesting clues, keeping them within a clear range.

The battle between bulls and bears is actually somewhat flat in nature and goes beyond the rhetoric on social media-trading volume is scarce, retail interest is low, and large players continue to maintain nearby selling levels.

Responding to the level of attention of Cointelegraph writer Micha¹el van de Poppe Sunday, popular trader and analyst TechDev agree US$48,000 represents “a small brick wall”.

On the downside, Van de Poppe stated that he is focusing on the area between US$40,000 and US$42,000 and is taking action on top of it. corresponding To “accumulate”.

However, Bitcoin is accustomed to disrupting the strongest trends at the least possible moments.

For trader Pentoshi, there is nothing to celebrate at levels well below $60,000, which appeared more than a month ago.

“I will be long in the logical area in the downtrend. I will be macro bearish until the 58-60k recovers. And I am optimistic about the local area,” he Summarize Regarding his position on the weekend.

Pentoshi and others urged the switch to ether (Ethereum) Based on the strength of altcoins to provide Convenient way “Reduce risk” in the case of Bitcoin’s poor performance.

Data from TradingView shows that Bitcoin’s market value advantage reflects this advantage. Since May, the market value of Bitcoin has fallen below 40% for the first time.

Bitcoin advantage 1 week candlestick chart. Source: TradingView

On-chain indicators predict “sustainable price trends”

For those hoping to get a glimmer of hope from flat price movements, there is no shortage of on-chain indicators to breathe a sigh of relief.

The farther the market is from last month’s rapid correction, the more attractive Bitcoin investments based on historical trends will be.

In its latest communication Capriole director Ryan McCoy, released on December 31, emphasized that the changing trend of investors’ sales habits is consistent with the later stages of the previous revision.

Of particular interest is the short-term holder spending profit output ratio (SOPR) from the on-chain analytics company Glassnode, which shows the level of gain or loss of coins recently spent—especially those that last moved in the past 155 days. Of coins.

Currently, the median score of SOPR is below 1, indicating that the number of tokens spent at a loss is declining-a potential form of seller exhaustion.

“Usually, when the indicator starts to bottom and then rises, a more sustainable price trend has begun,” McCoy explained.

“The 30-day median is still below 1 (which means that the average price of mobile tokens is lower than their purchase price), but after a major corrective event, there are signs that we may be in a later stage of the current correction. “

SOPR (30-day moving average) chart for short-term Bitcoin holders.Source: Caprio

Cointelegraph has Widely reported The habit of Bitcoin holders, long-term investors still believe in not selling.

“Although it has fallen -38% since November, long-term holders continue to hold diamond hands of Bitcoin,” McCoy concluded.

“The last time the price of Bitcoin was $47,000, its long-term holdings fell by 10%. So far, despite the volatility, the distribution has not been significant. That is bullish.”

The fundamentals have (almost) never been better

Continue to maintain enthusiasm, and the fundamentals of the network underscore the firm beliefs of another important group of Bitcoin market participants.

Miners, despite seeing a record high of $69,000, accumulation, Do not sell their coins.

At the same time, the network hash rate hit a record high, the last time it appeared in March and April, when the drastic changes in China’s ban triggered months of migration.

If the old adage “price follows hash rate” still holds true, miners’ confidence in Bitcoin’s long-term profitability provides a key indicator of market direction.

“Indicators like this are actually outdated fundamental outlook materials, largely ignored by explaining price dynamics, supply and demand updates, and more sexy methods, but their ability to explain system and infrastructure support cannot be ignored. Ensure the security of the protocol. The point effectively supports the entire encryption economy,” Capriole added.

Bitcoin hash rate chart. Source: MiningPoolStats

It is estimated that the hash rate currently exceeds 190 exahashes per second (EH/s) Pool statistics.

At the same time, later this week, the difficulty of the Bitcoin network will increase by approximately 2.4%.

Bitcoin difficulty chart.Source: Blockchain

This reflects the competitiveness of the current mining landscape. Since China’s early peak, the difficulty will soon exceed 25 trillion again. data From the blockchain show.

With each increase, the difficulty will strengthen network security, thereby creating a stronger ecosystem.

How sustainable is this “extreme fear”?

Bitcoin sentiment will start from 2022, and the feet will be severely cold. Crypto Fear and Greed Index Measure “extreme fear”.

related: The 5 most noteworthy cryptocurrencies this week: BTC, LUNA, FTM, ATOM, ONE

As Cointelegraph Report, Investor sentiment becomes highly sensitive to smaller price changes within the current range.

Although the price trend has hardly changed, fear and greed reflect this and have risen by 8 points since the weekend.

At the time of writing, the index is 29/100, but it is still in the “fear” zone.

Crypto fear and greed index. Source: Alternative.me

As pointed out by on-chain analytics resources EconometricsAt the same time, this sentiment has never been effective for a long time.

“Bitcoin is back in extreme fear. Historically, this means that there is limited downside for 30 days,” it tweeted a chart for indexing and BTC/USD.

Crypto Fear and Greed Index and BTC/USD chart.Source: Econometrics/Twitter