Bitcoin (BTC) starts the new week with several obstacles, but strong internal support – can the old resistance below $ 50,000 finally break?
The correction has been going on for almost three months and is disappointing for many, but favorable conditions may soon emerge for a new battle against opportunistic bears, says an increasing number of analysts.
With rising inflation and US lawmakers getting ready to announce Bitcoin mining discussions this week, there are many potential pitfalls.
However, it is beginning to look like Bitcoin has reached the point where it is able to deliver a classic surprise when most of the mainstream economy does not expect it.
Cointelegraph looks at five factors to look for when planning BTC price action next week.
Bitcoin maintains key closing level
Bitcoin is definitely not interested in breaking local resistance levels at the beginning of the week.
After a range-limited weekend with little or no unique price action, BTC / USD achieve lower lows in shorter time frames, while avoiding large areas around $ 44,000.
With Wall Street closed for the holidays, there may be more offers on Monday before the markets give direction.
However, Bitcoin managed to end the week at exactly the critical moment that trader and analyst Rekt Capital identified as useful in supporting bullish momentum.
On Sunday, he wrote with the accompanying price chart: “A weekly close above ~ $ 43,100 (black) would be a good sign that BTC will continue to rise from now on.
“By responding to support for Weekly, $ BTC will confirm re-entry in the $ 43,100 to $ 51,800 range.”
Annotated BTC / USD chart. Source: Rect Capital / Twitter
The ensuing fall sent the largest cryptocurrency down, hitting $ 42,337 on local Bitstamp on Monday at the time of writing.
Cautiously optimistic is also the other popular crypto trader Ed, who is looking at a potential re-offer to top $ 44,000 last week, an order that was later canceled.
“Even if this is just the beginning, it feels like the start of last week’s movement. Let’s cross our fingers!” He summed up part of his latest update on Twitter.
Meanwhile, the Cointelegraph reported last week that bullish breakout sentiment is the end result of the current range.
Congress to discuss “cleanup” of cryptocurrency mining
The scene is set on many fronts this week as inflation returns and haunts both US markets and politics.
In the midst of a new wave of headlines about how inflation affects consumers, the highest consumer price index (CPI) in 40 years has already reached President Joe Biden’s approval rating.
Goldman Sachs predicted last week that holding back CPI growth by 7% year-on-year could lead to the Federal Reserve making at least four major rate hikes in 2022 alone. This puts more pressure on tired consumers.
“Everything will be ready in the coming weeks,” Bentoshi said.
Closer to home this week, US lawmakers will discuss the alleged environmental impact of cryptocurrency mining.
Since a significant portion of bitcoin’s hashrate currently comes from the United States, any hostile policy will mean more when it comes to sentiment. No one will welcome a repeat of the mass migration to China since May 2021 and its detrimental effect on hash speeds and network security.
As noted by the Cointelegraph, hash rates are now back to all-time highs, having fully recovered from last year’s events.
A hearing of the subcommittee on supervision and investigations is scheduled for Thursday entitled “Crypto Cleanup: The Energetic Impact of Blockchain Networks.”
The hearings will be broadcast live throughout the day.
Bitcoin “fire filled with gasoline”
Bitcoin’s volatility drops to its lowest levels over several years, which encourages acceptance as a major resource, but many do not expect this to continue.
According to the Bitcoin Volatility Index, which calculates the standard deviation of Bitcoin’s daily return over the last 30 and 60 days, since November 2020, Bitcoin has been less volatile by 2.63%.
So the current price action is similar to what it was before BTC / USD entered prices after breaking its all-time high of $ 20,000 since 2017.
For trader, entrepreneur and investor Bob Lucas, everything is ready for a possible recurrence of these events.