‘Wild Driving’ Low cost for BTC? 5 issues to find out about Bitcoin this week

Bitcoin (BTC) started a new week still in holiday mode with the US financial markets off for Independence Day.

The largest cryptocurrency, stuck below the increasingly difficult $20,000 mark, continues to feel pressure from the macro environment as the discussion of lower levels still looms large.

After a quiet weekend, holders find themselves trapped in a tight range while the prospect of a breakout to the upside appears increasingly implausible.

As a trader and analyst choosing July 4th as the site of the “wild race to the downside” for the crypto markets, the countdown is on for Bitcoin to overcome the aftermath of the fall. The Federal Reserve’s most recent interest rate hike.

What else could be in store next week? Cointelegraph will be looking at potential market moving factors in the coming days.

BTC Price Passes Its Time During Long Weekend

Bitcoin emerged from the weekend unscathed, but the classic pitfalls of off-peak trading remain.

The US won’t return to the trading desk until July 5, providing ample opportunity for some classic weekend price action in the meantime.

So far, the market has stalled when it comes to volatility – with the exception of a brief spike to $18,800, BTC/USD has been hovering around the $19,000 to $19,500 region for a few days.

Even with the weekly close there is no real trend change, as data from Cointelegraph Markets Pro and TradingView shows, with $20,000 psychologically important unchallenged.

BTC/USD 1-week candlestick chart (Bitstamp). Source: TradingView

“While below the low, we can expect a drop to $18,000,” said popular trading account Crypto Tony repeat for Twitter followers as part of a new update on July 4th:

“There have been a few very boring days in the market, and this is classic for the mid-range.”

In terms of downside targets, others continue to eye the area around $16,000.

Meanwhile, with a meaningless Bitcoin futures gap and flat performance in the Asian markets, meanwhile, there are few short-term price targets for short-time frame traders.

The US dollar, meanwhile, continues to hold near twenty-year highs after bouncing back from its latest retracement.

The US Dollar Index (DXY) stands above 105 at press time.

US Dollar Index (DXY) 1-hour candlestick chart. Source: TradingView

Gold nearly “booms” compared to US stocks

With Wall Street closed on Independence Day, the US stock market could take a break on July 4.

However, for a popular chartist, attention is focused on the stock’s strength against gold (XAU) in the current environment.

In a Twitter thread, gold watcher Patrick Karim specifically marked that the precious metal is about to hit a historic “boom” area against the S&P 500 index (SPX).

After bottoming out in late 2021, the gold to S&P ratio has recovered throughout the year and is now about to cross a boundary, which has previously led to significant upside momentum.

“Gold closed in the ‘boom zone’ against US stocks. Previous takeoffs have delivered important returns for Silver & Miners,” commented Karim.

The situation couldn’t be the same for the US dollar, with dollar strength keeping XAU/USD firmly under $2,000 since March.

For silver fans, however, the implication is that even a modest boost to the XAU/SPX ratio would yield substantial returns.

The forecast once again raises questions about how likely Bitcoin is to break with macro trends. A breakout against BTC for gold would be natural if Karim’s scenario plays out, thanks to the ongoing correlation with equities.

“After breaking out of a sideways pattern that has formed over a period of 1.5 years, the correlation coefficient has increased sharply to 86% against the S&P 500,” said prominent trader and analyst CRYPTOBIRB summary last weekend:

“Now, at 0.78, it’s still very positive.”

Analyst Venturefounder noted that Bitcoin is also still tied to Nasdaq moves.

Meanwhile, against the dollar, Cointelegraph, report that Bitcoin’s inverse correlation is currently at a 17-month high.

End time for Hayes .’s “wild trip to the lowlands”

July 4th, in addition to being Independence Day, is seen by one particular market player as a holiday like no other – at least for Bitcoin.

With the market closed and BTC price action leaning toward support, Arthur Hayes, former CEO of derivatives platform BitMEX, has seen this long weekend as a day of reckoning for the crypto market. death.

The inference seems logical. At the end of June, the Federal Reserve raised its key interest rate by 75 points, creating fertile ground for an adverse reaction from risk assets. Low-liquid “out of hours” holiday trading increases the chances of price moving up or down. Hayes warned last month, combined, this cocktail can be very strong.

“On June 30 (the end of the second quarter), the Fed will issue a 75 basis point rate hike and begin shrinking its balance sheet. July 4 falls on a Monday, and is a federal and bank holiday,” he said Written in a blog post:

“This is the perfect setup for another major crypto dump.”

So far, however, signs of what Hayes says will be a “wild ride to the bottom” have yet to materialize. BTC/USD has practically not changed since last weekend.

The deadline will be July 5, as the return of traders and their capital can provide the liquidity needed to stabilize the market as well as buy any coin cheaply in case last minute recession.

Hayes added that his previous forecasts of BTC/USD bottoms out at $27,000 and Ether (ETH)/USD at $1,800 was “in ruins” in June.

Mining difficulty is still increasing

Despite considerable concern about miners’ ability to withstand the current BTC price decline, Bitcoin the fundamentals of the network remain calm.

An impressive demonstration of miners’ determination to maintain the network, difficulty does not plan to decrease in the upcoming correction this week.

After a modest 2.35% drop two weeks ago, the difficulty, which automatically rises and falls taking into account fluctuations in miner participation, should be mostly flat this time around.

Follow According to estimates from on-chain monitoring resource BTC.com, difficulty will even increase if current prices hold, adding 0.5% to the metric still near all-time highs.

Overview of the fundamentals of the Bitcoin network (screenshot). Source: BTC.com

When it comes to the miners themselves, it is argued that it is the less efficient players – possibly newcomers with a higher cost base – that have been forced out.

Data uploaded to social media by Capriole Asset Management CEO Charles Edwards last week, putting the production cost for miners at around $26,000. Of that, $16,000 is in electricity, meaning that the cost of mining will directly affect their ability to limit losses in the current environment.

Edwards noted: “We were trading below the Cost of Electricity in June, however, the floor price has dropped due to underinvestment by miners.

Bitcoin mining machine production cost chart. Source: Charles Edwards / Twitter

A low sea

Bitcoin on-chain indicators point to Oversold record is nothing new this year and especially in recent weeks.

Related: Top 5 Cryptocurrencies to Watch this Week: BTC, SHIB, MATIC, ATOM, APE

This trend continued into July, when the network returned to scenarios not seen since the cross-market crash in March 2020.

Follow for online chain analytics firm Glassnode, the loss of coins is now the highest since July 2020. Glassnode analyzed the weekly average of lost unused transaction outputs (UTXOs). hole.

Bitcoin UTXO in loss chart (7-day moving average). Source: Glassnode

Similarly, UTXO’s profit percentage hit a two-year low, just over 72% on July 3.

Bitcoin % UTXO in profit chart (7 day moving average). Source: Glassnode

Bear markets could make for some welcome, if rare, silver lining fabrics. Bitcoin transaction fees, once appallingly high during the bull run of intense network activity, are also now at their lowest level since July 2020. The average fee, Glassnode revealed, is 1.15 dollars.

Bitcoin average transaction fee chart. Source: Glassnode

As Cointelegraph reported, the same is true for Ethereum network gas fee.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move is risky, you should do your own research when making your decision.