The bullish weekly close shows Bitcoin struggling at realization price as analysts speculate for significant volatility in the coming days.
Bitcoin (BTC) starts a key week on solid footing as bulls manage to liquidate weekly losses.
After closing the last weekly candle at $21,800, its highest since mid-August, BTC/USD has once again become a long bet.
The end of a long period of weakness punctuated by sideways moves appears to be drawing to a close and volatility is likely to be a big theme in the coming days.
In fact, several weeks in Bitcoin’s history have been as hectic as this one.
In addition to the Ethereum merger on September 15th, the US inflation trend will come under scrutiny on September 13th when the August Consumer Price Index (CPI) data is released. Here’s the recipe for unpredictability.
How will bitcoin weather the storm? While the macro picture for risky assets looks murky as the US dollar strengthens, online data continues to suggest that a price bottom is already forming.
Additionally, Bitcoin network fundamentals should set new all-time highs this week, underscoring miners’ resilience and recovery, as well as belief in profitability.
Cointelegraph looks at a few key areas to watch as Bitcoin gives “September” a chance to make its money.
A solid weekly close boosts short-term BTC prices
The recent weekly close has provided some much-needed relief for bitcoin bulls.
After weeks of miserable results, BTC/USD has finally managed to consolidate a convincing weekly gain and even avoided a last-minute candle close correction, according to Cointelegraph Markets Pro and TradingView.
Weekly candlestick chart BTC/USD (Bitstamp). Source: Trade View
Therefore, the September 11th event priced just above $21,800 provided a solid foundation for the week due to significant volatility.
As of this writing, this level forms a consolidation zone that coincides with a key trendline in the form of Bitcoin’s strike price. It currently sits at around $21,770, according to network analytics firm Glassnode.
Bitcoin realization price chart. Source: glass node
BTC/USD has yet to clear more significant bear market levels that lost support last month, with the most important being the 200-week moving average, which now stands around $23,330.
However, Bitstamp’s jump to $22,350 overnight caught traders’ attention and reinforced existing calls for continued growth.
“This is just a pre-delivery for 22300,” popular Crypto Twitter account Il Capo wrote in one of several recent updates:
“I still think 23,000 is likely. Then we see a reversal.”
However, another tweet warned that “serious resistance” in Bitcoin and altcoins are now coming into play.
“In my opinion, soon we will see the last phase of growth of 5-7%, then the proliferation of LTF, then nuclear weapons. Get ready,” the statement said.
In a sign of impending volatility, fellow trader Chads noted that Bitcoin has marked its upper Bollinger Band on the daily timeframes, the bands are now slowly widening to make room for a broader trading range.
1-day BTC/USD candlestick chart with Bollinger Bands. Source: Trade View
Inbound CPI combines with dollar slump
One of the two main topics of discussion during the week in BTC price action comes from a trusted source: the US Federal Reserve.
The CPI data is set to be released in August, raising hopes for the downward trend in inflation to continue after the July data peak.
If so, it would be a boon for risky assets that have been hit hard by the surging US dollar.
The Fed’s Federal Open Market Committee is still likely to repeat a 75 basis point rate hike at its September meeting next week, according to CME Group’s FedWatch tool.
Fed interest rate target probability chart. Source: CME Group
However, dollar watchers already have reason to believe that the return of risky assets should take root in the coming days.
The US Dollar Index (DXY), which just hit a 20-year high, fell almost 2.7% in just four days.
“One thing that makes me question my fondness for bitcoin and crypto in general even after the ETH merger is DXY,” said analyst Mark Cullen, creator of trading resource AlphaBTC:
“We see potential for 3 drivers of [bearish] divergence, di
