Bitcoin (BTC) enters a new week with a question mark about the fate of the market ahead of another important US monetary policy decision. After a successful weekly close, BTC/USD is much more cautious as the Fed prepares to raise interest rates to combat inflation. While many hope that the pair will break out of the last trading range and continue to rise; The weight of the Fed is clearly visible. Adding pressure to the already fragile risky assets market. So what else will happen this week, which is expected to be a tense week for stocks, Bitcoin, altcoins and more?
Fed to decide next rate hike
The event that will hit the agenda next week will undoubtedly be the interest rate hike by the FED. The Federal Open Markets Committee (FOMC) will allow policymakers to decide on the scope of the next interest rate on July 26-27. This ratio is estimated to be 75 or 100 basis points. U.S. inflation, like many jurisdictions, is at a four-year high, and its rise seems to have taken the establishment by surprise, as calls for a peak have been met with even greater gains.
“It should be another fun,” Blockware analyst William Clemente summed up on July 25. The interest rate decision will be made on July 27 in the evening, Turkey time. One analyst warned that this situation has the potential to worsen due to low summer liquidity and a lack of faith among buyers. Twitter account Mac10 mentioned that the market turned into overbought in the midst of the lowest liquidity of the year. A previous post also noted that Q2 earnings reports potentially contributed to a downside move in line with the market.
Asian markets this week are flat compared to last week’s bullish tone accompanied by a resurgence in Bitcoin and altcoins. One argument is that the Fed cannot raise rates any further without shaking up the economy. Meanwhile, Tedtalksmacro pointed to the employment market as a target for continued hikes. He stated that Bitcoin will struggle to exceed $ 28 thousand until the data is corrupted.
Spot prices fail to hit key moving average
Bitcoin’s latest weekly close marked a kind of halfway point for the bulls. While BTC/USD managed its best performance in over a month, it failed to regain the key 200-week moving average (MA) at $22,800. After the close around $22,500, Bitcoin started to fall below its latest trading range. At the time of writing, it’s still under $22,000. Meanwhile, other account Crypto Chase suggested that a return to the 200-week MA would result in a more modest rise. The analyst stated that he will watch $ 22.8 thousand. A later update saw $21,200 as a potential bearish target. This creates a support/resistance level on the daily chart.
However, at $21,900, Bitcoin is still higher around $1,200 than the same spot a week ago. Elsewhere, recent price action wasn’t enough to change long-term views. For Venturefounder, a contributor to on-chain analytics firm CryptoQuant, a macro bottom had yet to emerge. This indicates a potential drop to $14,000. The analyst used the following statements:
In line with past halving cycles, this is still my best guess for Bitcoin before the next halving: BTC will capitulate in the next 6 months and hit the bottom of the cycle (anywhere between $14-21k), then often $28-40k will be cut around. It will be at ~$40k again until 2023 and the next halving.
Difficulty returns to March levels
Turmoil can now be seen on the Bitcoin network, in a sign that miners’ troubles due to price weakness may be just beginning. Difficulty, which is the measure of competition among miners that adjusts for participation, has been falling since the end of June. Now, it’s back to levels not seen since March.
The latest edit was particularly notable, cutting the difficulty total by 5 percent and heralding a change in miner activity. This was the biggest drop since May 2021. The next drop in ten days is currently estimated to reduce the difficulty by another 2 percent. As arguably the most important aspect of the Bitcoin network, difficulty adjustments level the playing field for miners, setting the stage for recovery. The lower the difficulty, the “easier” or less energy-intensive mining BTC is due to the less competition overall.
However, the data show that the need to survive, meanwhile, remains a preoccupation. According to CryptoQuant, miners sent 909 BTC to exchanges on July 24 alone, the highest in one day since June 22.
What does the MVRV-Z score show for Bitcoin?
One of the ten hottest chain metrics in Bitcoin has crossed zero, arguably its most important level. On July 25, Bitcoin’s MVRV-Z Score returned to negative territory after a short week above, thus falling into the zone typically reserved for macro price dips. MVRV-Z shows how much BTC is overbought or oversold relative to “fair value”. It is popular for its uncanny ability to identify price floors.
Its reversal could mark a new period of price pressure, as accuracy in catching bottoms has a two-week margin of error. At the beginning of July, MVRV-Z; He gave the worst case scenario of $15,600 for BTC/USD.
Emotions drop from four-month high
The latest figures from the Crypto Fear and Greed Index show a steady decline from what was the most positive market sentiment since April. As of July 25, the Index stands at 30/100 – still described as “fear” driving the overall mood. However, it is still five points above the “extreme fear” range where the market previously set a record 73 days. Still, Sentiment has made a pretty good comeback since mid-June when Fear & Greed hit some of their record lows of just 6/100.
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