Bitcoin starts another week of research in a wild macro environment after posting its lowest weekly close in nearly two years.
With the decline in risky assets in the global economy and the rise of the US dollar, the largest cryptocurrency is in a precarious position.
September, which started on the upside, is now living up to its unofficial “September” moniker, and the BTC/USD pair is currently down 6.2% since the beginning of the month.
The bad news continues for traders who are clinging to more and more passive currencies as the dollar rises unchecked and the underlying desire to diversify into riskier plays continues to fade.
As the macro should remain in the spotlight this week, Cointelegraph takes a look at what BTC price action can expect.
In an economic environment that rivals any significant period of historical turmoil over the past century or more, here are some factors to consider when considering the next trend for bitcoin.
Weekly close brings BTC/USD back to November 2020
While not in line with last week’s losses (3.1% vs. 11%), the past seven days still managed to trigger Bitcoin’s lowest weekly close since November 2020, data from Cointelegraph Markets Pro and TradingView show.
As the pullback continues to build, Bitcoin is turning back in time to the breakout that crossed the all-time high of the previous halving cycle.
BTC/USD Weekly Candlestick Chart (Bitstamp). Source: TradingView
The average worker does not welcome the feeling of déjà vu – the vast majority of purchases and cold storage of the last couple of years are now underwater.
Popular Twitter analyst SB Investments summarized after “$BTC hit its lowest weekly close in this region”:
“It looks like stocks are also looking to break support. But on the other hand, this is what everyone expects.”
Whether the markets will be able to provoke a sudden move to “maximum pain” by eliminating short offset is an important alternative argument for bitcoin clients. For popular trader Omz, the weekly close of $18,800 represents a compelling local bottom.
The RSI deviation has not gone unnoticed elsewhere as it was spotted by trader JACKIS last week.
“We’ve only had a couple of touches in oversold territory lately and they’ve always been low,” he said in a tweet at the time.
Another trading account, IncomeSharks, also claimed that a reversal could follow the US intermediate in early November, but did not say that the bottom had already been reached.
He commented on the 4-hour daily chart:
“Continue to build the double bottom and new support, the medium-term rally is still in place. Break that structure, remove these targets and find a new bottom.”
BTC/USD 4-hour candlestick chart (bit stamp). Source: TradingView
Dollar wrecking ball the price of stocks, Fiat
Monday has just begun and the turmoil that accompanied last week has already returned, taking its revenge on the macro markets.
The unstoppable US dollar is wreaking havoc on the currencies of major trading partners, and the British pound made headlines on the day as it fell 5%, closing in on dollar parity by a few percentage points – its lowest level ever against the US dollar.
GBP/USD will follow as the euro fell below $1, while poverty forced Japanese authorities to artificially prop up the yen’s exchange rate last week.
GBP/USD 1-Day Candlestick Chart. Source: TradingView
EUR/USD briefly dipped below $0.96 before bouncing back slightly, while USD/JPY held on to its highest level since the 1990s despite the Japanese intervention.
At the same time, global bonds sound the alarm and fall to 2020 levels. Market watcher Holger Scheppitz, with Bloomberg data, warned:
“It appears that the bond bubble has burst. The value of global bonds has fallen by another $1.2 trillion this week, making ATH a total loss of $12.2 trillion.”
Stocks are unlikely to rise and futures prices will fall the day before Wall Street opens. Brent oil fell below $85 a barrel for the first time since early 2022.
“Global bonds are collapsing in their fiat currencies, which are collapsing against the dollar, which is rapidly losing purchasing power,” answered Seif El-Din Amo, author of the two well-known books The Bitcoin Standard and The Fiat Standard:
It will take months and years for the average user of paper money to realize how financially bankrupt they are. The new standard is poverty.
With the cryptocurrency still closely tied to stocks and inversely related to the strength of the dollar, the outlook for bitcoin is less than positive.