General uncertainty means an unusual end to the Q4 bull market for Bitcoin this year, according to crypto analyst William Suberg, but a price floor may be closer than many think. Bitcoin is starting a new week with analysts looking for a bottom, but the analyst thinks that this may not mean $40,000 or lower. This week’s events that could affect the crypto market, accompanied by analysis by William Suberg cryptocoin.com We took a look at it for our readers.
“$50,000 seems a long way off for bitcoin bulls”
Bitcoin failed to produce any significant moves over the weekend, but now attention is turning to a potentially volatile “bottom” for the market. At $46,000, BTC is firmly settled in a familiar range, with bulls failing to find the momentum for a fresh attack at $50,000.
The buyout is occurring mainly among small individual investors, but lower levels are likely for experienced market participants. For popular trader Pentoshi, these may still avoid a $40,000 retest. In a tweet on Sunday, the major exchange highlighted Bitfinex and its large-volume traders as a possible source of support. Referring to market events at the end of September, Pentoshi shared:
Finex makes highs and lows in BTC. Believe me this is a similar situation where they will only absorb sales at these key levels. Look at the 40.7k footer at the end of September. Now I’m looking for 42-46k sub imo.
Others were more optimistic and other trader Galaxy called for a “green week” led by altcoins. In its latest market update, trading platform Decentrader has brought Bitcoin’s Advanced NVT indicator as a possible springboard to higher price levels:
The historical cycle metric, which is still bottoming out, could come as a surprise to traders as it nearly hits its lowest ever level of ‘overbought’. Will we see the same this time with a splash and a rally over the Christmas break? Or will we see more year-end profits? Right now BTC is at a key decision point level, so it’s definitely wise to carefully manage one’s risk until a clear trend emerges.
Miners keep grumbling
A group of Bitcoin hodlers who are not in the mood to sell at current prices are miners whose output has reached a three-month low. According to data from Glassnode, miner exits have almost halved in just over a month, repeating the turn in market dynamics since all-time highs. A similar dramatic drop came in September, and spot markets bottomed two weeks later. Therefore, this month’s action has a historical precedent.
Other data suggest that unspent supply is about to hit all-time highs. This is the culmination of the miners hodling trend that started in 2020. In other words, miners are in no rush to spend their block subsidies after a new block has been successfully mined.
Macro outlook replaces 21-month bull run for volatility
Sources warn this week that macro volatility will continue into 2022, a trend that has been plaguing investors. Just like Bitcoin, an unexpected downtrend means that the fourth quarter of this year could end with a moan and the market could reject the classic “Santa Claus rally”.
The culprit is both the coronavirus and the United States political turmoil. The latter comes in the form of a senator rejecting President Joe Biden’s warring $2 trillion spending package. Robert Schein, chief investment officer of Blanke Schein Wealth Management, told Bloomberg:
Investors should be prepared for Covid to continue to be a major factor in market performance well into 2022. After the bull run we’ve seen in the last 21 months, investors are not used to prolonged periods of volatility.
Schein was referring to the rebound in global markets since March 2020, when a cross-market crash plunged Bitcoin as low as $3,600. In the midst of all this, the US dollar is strengthening. The analyst points out that there is a potential new upside for BTC, which has traditionally been inversely proportional to the dollar.
Grayscale Bitcoin Trust hits biggest drop ever
Under $50,000 Bitcoin should arguably look like an opportunity for big-volume investors, but one industry benchmark tells a different story, according to the analyst. Grayscale Bitcoin Trust (GBTC), the largest institutional BTC instrument, is currently trading down over 20%.
With plans to evolve into a Bitcoin spot price exchange-traded fund (ETF) next year, GBTC saw major changes in market behavior in the second half of 2021. The mutual fund, which spent the first part of its life trading at a high premium, now offers BTC, the de facto ‘bargaining basement’, to institutional buyers. At 22.95% as of December 18, the discount has never been bigger. An interesting phenomenon that points to what some are claiming is the lack of demand for GBTC shares.
Regulatory uncertainty surrounding spot-based ETFs remains a talking point for the US. As futures-only products got the green light this year, the industry continues to rally around this issue, arguing for a change in 2022.
Sentiment around Bitcoin is weaker than ever
Not much may have happened over the weekend when it comes to spot price action, but that offers little consolation for nervous traders. According to the Crypto Fear and Greed Index, sentiment around crypto is weaker than ever. Continuing its cross-trend, the Index returned to the “extreme fear” zone on Monday without even breaking 30/100 throughout December. For comparison, let us remind you that Fear & Greed 84/100 at ATH of $69,000 on Nov. 9 was measured as “extreme greed”.
But as popular trader and analyst Rekt Capital often repeats, such extreme fear ‘precedes financial opportunities’. Referring to the events after the Chinese mining ban, where BTC reversed 50% and Fear & Greed hit multiple bottoms on 10/100, Rekt Capital shared:
This BTC downtrend channel reminds me of the downtrend channel that BTC formed in May.
After this bottoming and consolidation, it took only a month for the Index to return to the “extreme greed” territory.
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