Bitcoin (BTC) is still starting the week in holiday mode. The biggest cryptocurrency that remains below $20,000 continues to feel the pressure from the macro environment. After a quiet weekend, investors are stuck in a tight range. Meanwhile, the possibility of an upside break seems increasingly difficult to believe. What else could be next next week? Here are the developments that can affect BTC, SHIB and other cryptocurrencies…
SHIB, ETH, DOGE, BTC: Prices wait for time to break
Bitcoin came out of the weekend unscathed, but the classic pitfalls of off-peak trading remain. The United States won’t be back on the trading desks until July 5th, providing ample opportunity for some classic weekend price action in the meantime. So far, the market has been stagnant when it comes to volatility. Except for a short drop to $18,800; BTC/USD hovered around the $19,000 to $19,500 region for several days.
“We can expect it to drop to $18,000 while below the low range,” popular trading account Crypto Tony told his Twitter followers as part of the new update on July 4. He said that in the current situation, there have been a few boring days in the markets. In terms of downside targets, others continued to watch the region around $16,000. There was no significant Bitcoin futures gap and steady performance in Asian markets. That is, there was little in terms of short-term price targets for short-term traders. Meanwhile, the US dollar continued to hold close to its highs in two decades.
Gold near ‘explosion’ against US stocks: how will BTC and SHIB be affected?
US stocks could breathe on Monday with Wall Street closed for Independence Day in the US. But for a popular chartist, attention is focused on stocks’ strength against gold in the current environment. Gold analyst Patrick Karim specifically stated in a Twitter thread that the precious metal is about to hit a historic “burst” zone against the S&P 500.
After bottoming out at the end of 2021, the gold-to-S&P ratio has recovered throughout this year. Now it’s about to cross a border that historically led to a significant upswing later on. USD strength has kept XAU/USD firmly in place below $2,000 since March. However, this situation cannot be said to be the same in terms of US dollars. The forecast re-questions Bitcoin’s ability to break macro trends. Thanks to the ongoing correlation with stocks, a breakout for gold against BTC could provide a natural on-chain effect if Karim’s scenario does come true.
“After recovering from the horizontal pattern that formed over a 1.5-year period, the correlation coefficient rose sharply to 86 percent compared to the S&P 500,” popular trader and analyst CRYPTOBIRB said over the weekend. The other analyst, Venturefounder, noted that Bitcoin is also sticking to movements on the Nasdaq. Meanwhile, the inverse correlation of Bitcoin against the dollar is currently at a 17-month high.
Critical time for Hayes’ ‘wild downhill journey’
In addition to being Independence Day, July 4 is followed by a market player as a unique public holiday, at least for Bitcoin. With the markets closed and BTC price action already swaying on the verge of support, Arthur Hayes, the former CEO of derivatives platform BitMEX, has chosen this long weekend as a long day of reckoning for the crypto markets.
The reasoning seems logical. At the end of June, the Fed increased key rates by 75 basis points. It provided fertile ground for a negative reaction from risk assets. “Out-of-hours” holiday trading with low liquidity increases the potential for volatile price movements up or down. The factors Hayes warned about last month can be powerful when combined.
“By June 30, the Fed will have raised interest rates by 75 basis points and will start shrinking its balance sheet. It’s Monday, July 4th, and it’s a federal and banking holiday,” he wrote in a blog post. But so far there have been no signs of what Hayes said will be a “wild journey downhill.” BTC/USD has remained almost static since the end of last week.
Mining difficulty still on the rise
Despite significant concerns about miners’ ability to withstand the current BTC price drop, Bitcoin’s network fundamentals remain calm. Impressive proof of the miners’ determination to stay on the net, this week’s reorganization doesn’t plan to reduce the hassle. After a modest 2.35% drop two weeks ago, the difficulty automatically rising and falling to account for fluctuations in miner participation has not changed much in this time.
On-chain tracking resource BTC.com estimates that if current prices stay the same, the difficulty will increase, adding 0.5% to a metric close to all-time highs. Meanwhile, data uploaded to social media last week by Charles Edwards, CEO of asset manager Capriole, puts the miners’ production cost collectively around $26,000. $16,000 of that is electricity, meaning miners’ overhead directly impacts their ability to limit losses in the current environment.
What does the on chain data show?
On-chain Bitcoin metrics, which indicate record oversold, are nothing new. The trend continues in July as the network returns to scenarios not seen since the March 2020 cross-market crash. According to on-chain analytics firm Glassnode, the number of coins spent at loss is currently at its highest level since July 2020. Glassnode analyzed the weekly moving average of out-of-loss and unspent transaction output (UTXOs). Similarly, the percentage of UTXOs in profit hit a two-year low of just over 72% on July 3.
Bear markets, on rare occasions, can show positive things. Bitcoin transaction fees, once exorbitantly high as a result of heavy network activity, are now at their lowest level since July 2020.
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