“Worst Quarter Ever” for Stocks – 5 Things to Know About Bitcoin This Week
Bitcoin (BTC) begins a new week still struggling for support at $20,000 as the market endures a week of severe losses.
What seemed near impossible just a few weeks ago is now a reality as $20,000 – the all-time high from 2017 to 2020 – returns to give investors a grim sense of deja vu.
Bitcoin fell to $17,600 over the weekend and tensions are high ahead of Wall Street’s June 20 open.
Although BTC price losses have been statistically present before – and even lower – concerns are growing for network stability at current levels, with particular focus on miners.
Add to that the consensus that macro markets probably haven’t bottomed out, and it becomes understandable that sentiment around Bitcoin and crypto is at all-time highs.
Cointelegraph takes a look at some of the top areas of interest for hodlers when it comes to Bitcoin price action in the coming days.
Bitcoin saves $20,000 on the weekly chart
At $20,580, Bitcoin’s latest weekly close could have been worse – the largest cryptocurrency managed to hold a key support level at least on weekly timeframes.
The wick below stretched over $2,400, however, and repeated performance could compound the pain for those betting $20,000, forming a significant price level.
Overnight, BTC/USD hit highs of $20,629 on Bitstamp before returning to consolidate immediately below the $20,000 mark, indicating that the situation remains precarious on shorter timeframes.
Think prices should rise a lot now, punishing panic sellers and forced sellers. Recover at least half of the drop from two Fridays ago (CPI day). I want to see a quick reaction within the next two days. The best rallies are those that don’t offer a commitment to latecomers.
— Alex Kruger (@krugermacro) June 19, 2022
While some are calling for a quick recovery, the general mood among commentators remains one of more cautious optimism.
“Over the weekend, with fiat rails closed, $BTC fell to lows of $17,600 down nearly 20% from Friday on good volume. The smell of a forced seller sparked a race for stops,” Arthur Hayes, former CEO of derivatives trading platform BitMEX, argued in a Twitter thread on June 2.
Hayes posited that the recovery came as soon as those forced selling ended, but greater pressure on the sell side could still occur.
“Is it over yet… idk,” another message read:
“But for those skilled knife catchers, there may still be additional opportunities to buy coins from those who must beat every bid, regardless of price.”
The role of crypto hedge funds and related investment vehicles in exacerbating BTC price weakness has become a key topic of debate since the May Terra implosion. With Celsius, Three Arrows Capital and others now joining the chaos of forced liquidations resulting from multi-year lows may be what is needed to stabilize the market in the long term.
“Bitcoin Isn’t Finished Liquidating the Big Players,” Investor Mike Alfred argued June 18:
“They’ll bring it down to a level that will cause the most damage to the most overexposed players like Celsius, and then all of a sudden it’ll bounce back and rise once those companies are completely wiped out. A story as old as time.
Elsewhere, $16,000 is still a popular target, which in itself only equates to a 76% decline from Bitcoin’s all-time highs in November 2021. As Cointelegraph reported, estimates are currently that low. than $11,000 – 84.5%.
“$31,000-32,000 was broken out and used as resistance. The same thing happens with $20,000-21,000. Main target: $16,000-17,000, specifically $16,000-16,250,” Crypto’s popular Il Capo Twitter account abstract.
He more describe $16,000 as a “power magnet”.
Stocks and bonds have ‘nowhere to hide’
A soft outlook for stocks ahead of Wall Street’s open, meanwhile, offers little upside prospect for BTC on June 20.
As noted by analyst and commentator Josh Rager, the correlation between Bitcoin and stocks remains in full force.
Stock futures are down
Therefore $BTC follows https://t.co/pXih3MdbzZ
— Rager (@Rager) June 20, 2022
The stars seem to align for the shorter ones. Globally, stocks are lining up for their “worst quarter ever,” according to data as of June 18, with crypto markets giving investors a taste of reality months in advance.
Nowhere to hide: Stocks and bonds are on course for their worst quarter ever. Meanwhile, credit markets have also been hit hard. #Bitcoins has lost more than two-thirds of its value since hitting a high of nearly $70,000 in November (via BBG) pic.twitter.com/CP3zmzhVTl
— Holger Zschaepitz (@Schuldensuehner) June 18, 2022
Thus, it seems that the only market player capable of reversing the trend is the central bank, and in particular the Federal Reserve.
According to some, monetary tightening cannot last long, because its negative impact will force the Fed to start increasing the supply of US dollars again. This, in turn, would see cash flow to risky assets.
It’s an outlook even shared by the Fed itself should the US encounter a recession – something that has a high chance of happening, depending on the interpretation of the Fed’s recent comments.
Referring to the accommodative environment with ultra-low rates, Fed Governor Christopher J. Waller said in a June 18 speech:
“Hopefully we never get two more years like 2020 and 2021, but due to the low interest rate environment we’re currently facing, I think even in a typical recession there are good chance that we will consider policy decisions in the future similar to those we have built over the past two years.
In the meantime, however, policy dictates increased rate hikes, with these being the direct trigger for the increased risk asset losses when they were announced by the Fed earlier this month.
Miners in no mood to surrender
Who is selling BTC at the lowest levels since November 2020?
The on-chain data tracked the cohorts of investors contributing to the selling pressure – some forced, some voluntarily.
Miners, who may already be underwater when it comes to participating in the search for blocks, have shifted from buyers to sellers, halting a multi-year accumulation trend.
“Miners have spent around $9,000 BTC of their treasury this week and are still holding around $50,000 BTC,” said on-chain analytics firm Glassnode. confirmed June 19.
The cost of producing miners, however, is difficult to calculate accurately, and different setups face drastically different mining conditions and expenses. As such, many can still be profitable even at current prices.
– MAGS ⛏️ (@Crypto_Mags) June 18, 2022
Data from BTC.com, meanwhile, delivers surprising news. Bitcoin’s network difficulty is not about to drop to reflect an exodus of miners. Instead, it should adjust higher this week.
Difficulty allows the Bitcoin network to adapt to changing economic conditions and forms the backbone of its particularly successful proof-of-work algorithm. If miners give up due to lack of profitability, the difficulty automatically decreases to reduce costs and make mining more attractive.
So far, however, the miners remain on board.
Likewise, the hash rate, while hitting record highs, remains above around 200 exahashes per second (EH/s). The hardware power dedicated to mining is therefore at similar levels to before.
Seller or hodler, Bitcoiners see ‘massive’ losses
Overall, though, hodlers big and small that couldn’t weather the storm suffered “massive” losses when they sold, Glassnode says.
“If we assess the damage, we can see that almost all portfolio cohorts, from shrimp to whales, now hold massive unrealized losses, worse than March 2020,” the researchers noted alongside a graph showing how much BTC holdings had fallen relative to the cost base:
“The least profitable portfolio cohort holds $1-100 BTC and has unrealized losses equal to 30% of market capitalization.”
The numbers indicate a state of panic among even seasoned investors, arguably a surprising phenomenon given Bitcoin’s history of volatility.
A look at the HODL Waves indicator, which groups coins by when they were last moved, meanwhile records who is selling and who is buying on the dip.
Between June 13 and June 19, the percentage of overall BTC supply that last moved between a day and a week ago increased from 1.65% to almost 6%.
Sentiment nears historic lows
It was already “comparable to a funeral” in December 2021, but the crypto market sentiment has outdone itself.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC, SOL, LTC, LINK, BSV
According to Crypto watchdog resource Fear & Greed Index, the average investor is more fearful now than at almost any time in the history of the industry.
On June 19, the index, which uses a basket of factors to calculate overall sentiment, fell to a near-record low of just 6/100 – deep in its “extreme fear” category.
The weekly close only slightly improved the situation, with the index adding three points to persist at levels that have historically marked bear market lows for Bitcoin.
It wasn’t until August 2019 that Fear & Greed scored lower.
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