Home CryptocurrencyAltcoin The Fed, The Merger And $22,000 BTC – 5 Things You Should Know About Bitcoin This Week

The Fed, The Merger And $22,000 BTC – 5 Things You Should Know About Bitcoin This Week

by SuperiorInvest

Bitcoin (BTC) begins the pivotal week on solid footing as bulls successfully erase weeks of losses.

After closing the last weekly candle at $21,800, the highest since mid-August, BTC/USD is back on the radar as a long bet.

The end of the long bearish period interspersed with sideways price action now appears firmly over, with volatility expected to be the main theme in the coming days.

In fact, few weeks in the history of Bitcoin have been as hectic as this one is likely to be.

In addition to Ethereum (ETH) Merged on September 15 The inflation trend in the United States will be under scrutiny on September 13 with the release of August Consumer Price Index (CPI) data. There is a recipe for unpredictability.

How will Bitcoin weather the storm? While the macro picture for risk assets looks muddy as the US dollar surges, data from the chains continues to point to a price bottom already in the making.

In addition, Bitcoin network fundamentals are poised to hit new all-time highs this week, underscoring the resilience and recovery of miners along with confidence in profitability.

Cointelegraph takes a look at some of the main areas to watch as Bitcoin gives ‘Septembear’ a shot at success.

Solid weekly close boosts BTC short-term bets

The latest weekly close provided much-needed relief to Bitcoin bulls.

After weeks poor performanceBTC/USD finally managed to seal convincing weekly gains, even avoiding a last-minute correction to close the candle, data from Cointelegraph Markets Pro and TradingView shows.

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

The 9/11 event just above $21,800 set a solid base for the week thanks to significant volatility.

At the time of writing, this level forms a consolidation zone that coincides with an important trendline in the form of Bitcoin’s realized price. According to an on-chain analytics company Glassnodeit currently costs around $21,770.

Bitcoin realized price chart. Source: Glassnode

BTC/USD has yet to deal with the more prominent bearish levels it lost as support last month, most notably the 200-week moving average, which is now near $23,330.

Still, Bitstamp’s rise to $22,350 overnight caught the attention of traders and supported existing calls for continued growth.

“That was just a pre-delivery at 22,300,” popular Twitter account Il Capo of Crypto he wrote in one of the last few updates.

“I still think 23 grand is likely. Then we see a turnaround.”

AND another tweet however, he warned that “major resistances” are now coming into play for bitcoin and altcoins.

“In my opinion, we will soon see the final stretch of 5-7%, then the ltf distribution, then the nuke. Get ready,” it said.

In a sign of upcoming volatility, fellow trader Cheds is starting he remarked that Bitcoin marked its upper Bollinger band on the daily time frames, the bands are now slowly widening to make way for a wider trading range.

BTC/USD 1 Day Candlestick Chart with Bollinger Bands. Source: TradingView

Incoming CPI is combining with a decline in the dollar

One of the two main talking points in BTC price action this week comes from a familiar source: the United States Federal Reserve System.

CPI data is available for August and hopes are for the downward trend in inflation to continue beyond July print showed that a peak had formed.

If that were the case, it would be a boon for risk assets, which are suffering heavily at the hands of a rising US dollar.

According to CME Group’s FedWatch toolHowever, the Federal Open Market Committee is likely to raise interest rates again by 75 basis points at its September meeting next week.

Chart of Fed rate target probabilities. Source: CME Group

However, for dollar watchers, there is already reason to believe that risk asset returns should consolidate in the coming days.

US dollar index (DXY), fresh from twenty year highsdown nearly 2.7% in just four days.

“One thing that makes me question my negative bias for Bitcoin and cryptocurrencies in general after the ETH merger is DXY,” analyst Mark Cullen, creator of the AlphaBTC trading resource, exposed.

“We see the potential for 3 units [bear] The divergence created on the RSI and the September FOMC is next Wednesday. I wonder if we will see $DXY break the parabola and move risk assets higher.”

Phoenix Copper boss Donald Pond, meanwhile, called the USD-DXY chart “the most important there is.”

“The dollar is too strong atm and it’s killing everything else,” he said he tweeted on that day.

“It has fallen rapidly over the past few days, but is still in a strong uptrend. No sustainable rebound for the markets until the trend breaks.”

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

The merge is here!

The addition of encouraging inflation data is a purely internal price trigger – the so-called Ethereum Mergerdue around September 15th.

The event, which will now become a reality after months of uncertainty, sees Ethereum as the network transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) as its hashing algorithm.

Hype is building on and off social media, and now analysts are wondering what the immediate fallout will be — specifically, whether investors will “sell the news” and drive markets lower immediately after the merger is completed.

IN dedicated update Published on September 10, trading platform Decentrader emphasized the need to be cautious and avoid “only” thinking.

“It’s important to remember that there are several potential headwinds that could tip things in favor of the bears, namely a bug in the Merge code, a significant portion of the Ethereum network moving to a fork that carries market value, and also macro. headwinds from August US CPI data next week,” he wrote.

“It’s also important to note that overall macro and geopolitical systematic risk remains, which could put a stop to the most bullish story on ETH. We’ll see if the price holds up after the merger.”

Decentrader compared it to the hard forks of Bitcoin that occurred in the second half of 2017 and later. Now, as then, the risk of distraction remains.

“Longer term, the Merger has major changes that we interpret as bullish for Ethereum, but the actual event will undoubtedly prove volatile as the market struggles between stories,” the update concluded.

“Be extremely wary of scams, fork tokens, etc., we’ve already seen a few around the Merge and ETHPoW forks.”

ETH/USD was down for the second day in a row at the time of writing, tracking $1,760 after reaching local highs of $1,790.

ETH/USD 1 Hour Candlestick Chart (Binance). Source: TradingView

Difficulty, hash rate solves all-time highs

Bitcoin fundamentals have been anything but bearish recently, and this week the trend continues to new heights.

Both Bitcoin mining difficulty and hash rate have either reached or are set to hit new all-time highs in the coming 48 hours from September 12th.

According to estimates from the monitoring source BTC.comthe difficulty will increase by 3% on the next auto-reset, sending it further into unknown territory with a total of 31.91 trillion.

This follows on from the previous one jumbo reset up 9.26% two weeks ago, marking the biggest increase since 2021 and also acting as a clear signal that competition for miners is healthier than ever.

Bitcoin network basics overview (screenshot). Source: BTC.com

Actually since their last “surrender” phase it’s over last month, according to chain data, miners were racing to add hashing power to their operations. This is illustrated by the hash rate – the estimated combined hashing power of the Bitcoin network – itself rising to unprecedented levels in recent days.

According to MiningPoolStats, this peak came on September 5 and included a brief trip to 298 exahashes per second (EH/s). The hash rate is currently just under 250 EH/s.

Reactingmeanwhile, analytics platform TheTIE noted that the increase in the hash rate has shifted the timing of the next bitcoin block grant halving action forward.

“As Bitcoin’s hashrate rises to all-time highs, there is an important second-order effect to remember: Halving. It was previously expected to be 2024, but now the predicted date for the next BTC halving has moved to Q4’23,” the company commented alongside the hash rate chart.

Extreme fear proves sticky

As optimistic as the data and analysis seem, the overall cryptocurrency market still can’t quite shake the sense of foreboding.

Related: Cryptocurrency traders watch ATOM, APE, CHZ and QNT as Bitcoin flashes lower signs

The Crypto Fear & Greed Indexafter a brief breakout higher, it has been back in “extreme fear” since September 12, indicating that a definitive trend reversal is yet to occur.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

“Extreme Fear” is where Index spent most of 2022, including his longest consecutive stint lasting over two months.

For Santiment, a platform dedicated to analyzing crypto sentiment, there was reason to be cautious thanks to profit-taking activity on both Bitcoin and Ethereum.

“Bitcoin climbed back above $22K today for the first time in over 3 weeks in summary.

“$BTC’s profit-to-loss transaction ratio is at its highest since March, and many seem to have seen this slight jump as a trigger to trade again.”

Annotated Cryptocurrency Profit Picking Chart. Source: Santiment/Twitter

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and trading step involves risk, you should do your own research when making a decision.

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