Bitcoin (BTC) is starting a new week where traders are still digesting the impact of the drop. What awaits BTC this week as a sense of dejà vu fills the markets? Here are 5 factors that can affect the market…
Will we see a Bullish 2022?
cryptocoin.com As we reported, as the price predictions for BTC, which dropped to $ 48,000 after approaching $ 50,000 this weekend, dry up, attention is focused on the revival in 2022. “I think we need to consolidate/range, create a mixed negative funding rates/premium regime before Q1 boost,” William Clemente said in a Twitter discussion.
The focus on the sustainability of the price recovery will be the derivatives markets after gradual position liquidations. Events on Friday managed to somewhat “reset” the open position in Bitcoin futures to levels seen in September.
New CPI data, new inflation woes
Macro markets are already on the brink, but this week’s fresh consumer price index (CPI) data could impact the market, according to experts. The US CPI data for November may even surpass the 6.2 percent annual shock in October. Economists’ forecasts were noted by Lyn Alden, financial commentator and founder of Lyn Alden Investment Strategy. Bitcoin is reacting to such developments.
Economists on average expect next week’s CPI print for what happened in November to be 6.7% year-over-year (up from 6.2% in the month prior) and for the month-over-month print to be 0.7% (down from the month) prior’s 0.9%). pic.twitter.com/ljOEZQVDBz
— Lyn Alden (@LynAldenContact) December 5, 2021
Inflation, on the other hand, made headlines again last week after Federal Reserve Chairman Jerome Powell hinted that “temporary” was no longer the appropriate definition for it. Cryptocurrency is arguing to be the best possible workaround for purchasing power protection, despite the recent surge.
Watch out for the futures gap!
Michaël van de Poppe said that Bitcoin is facing a “huge” futures gap this week, that it may not be closed. He stated that investors should not forget this. CME futures closed Friday at $53,545 – a full $5,000 higher than spot price levels at the time of writing.
According to experts, BTC/USD could rise to “fill” this gap, at least a $50,000 payback; It could pave the way for support and possibly even $1 trillion market cap. “There will be a massive CME gap of up to $53.5K today,” Van de Poppe predicted on Sunday. “I expect real volatility to kick in once the weekly open takes place and US futures resumes.”
March 2020 echo in bitcoin markets
Despite taking place months after the price surge in September, last week’s turmoil is compared quite frequently to the events of March 2020. At that time, the coronavirus panic created an unstable ground, with Bitcoin falling 60 percent in a week. This time, the drops weren’t that high. A key difference lies in the market composition: 18 months ago, leveraged traders and their effects on the markets were a much smaller phenomenon.
“This Bitcoin drop was not driven by emotion,” Danny Scott, CEO of CoinCorner exchange, said in a series of tweets on Saturday. It was driven by gamblers who used leverage and liquidated.” While sentiment remains intact, Scott argues, the timing raises the positive mood and 2021 will end with a boom rather than a drop. Meanwhile, the Crypto Fear and Greed Index scores 16/100, showing both “extreme fear” and the lowest score since July.
Bitcoin hashrate on the rise
Panic among spot traders and various media outlets does not seem to have stifled Bitcoin’s mainnet activity. Even the $42,000 drop wasn’t enough to compromise performance, and hashrate, a measure of network dedicated computing power, hovered near all-time highs.
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