Bitcoin (BTC) saw a classic dive following its latest weekly close, as the latest gains evaporated, leading to a retest of $30,000 support zone. Traders and analysts had widely predicted the correction, arguing that it would constitute a healthy retracement to prepare for the continuation of the uptrend. BTC price now hangs in the balance with much at stake for traders. The temptation to sell at 10-month highs must be clear, with the percentage of the overall BTC supply now in profit at an impressive 75%. However, long-term holders currently outnumber short-term holders or speculators significantly, with the 2022 bear market sparking a shakeout that has left the market more resilient to price fluctuations.
Under the hood, it appears to be business as usual for Bitcoin, with network fundamentals already at or near all-time highs, showing no definitive signs of a comedown this week. The hash rate is also continually setting new highs, and since the start of 2023 alone, over 4 trillion has been added to the difficulty tally. Since the beginning of the year, the difficulty has been growing every two weeks, which has not happened since February 2022.
The coming week offers risk asset traders some comparative respite, and the focus will be on earnings. There are earnings due, among others, from heavyweights Tesla and Netflix, as well as a slew of banks. S&P 500 vs. VIX volatility index chart shows that the new bull market is not yet confirmed until S&P500 moves above the monthly 20MA and sustains such a move by defending it as support. The big question is whether the recent liquidity injections, which have contributed to suppressed volatility, will be enough to sustain a move above resistance as the economy approaches a recession per the Fed staff.
The Crypto Fear & Greed Index shows that crypto “greed” inches from November 2021 peak. BTC may be far from its all-time high of $69,000, but one metric rapidly homing in on repeating the climate of November 2021 is the Crypto Fear & Greed Index. Also, mean on-chain transaction volumes have hit multimonth highs, according to data from analytics firm Glassnode. Overall, more than three-quarters of the mined BTC supply is now in profit- the most in a year and arguably a clear incentive to take some of that profit off the table.
The key support zone hovering around $30,000 can make or break the upcoming trend for BTC. Traders looking to buy in at lower prices can wait for prices to drop to $28,600, and those who sold above $30,000 can wait for BTC to test the resistance at $40,000, hoping for another pump. The focus will be on whether those altcoins can hold at their higher levels during the retracement phase. Crypto investors need to have a watchful eye on both the short-term and long-term outlooks of Bitcoin to catch a potential price trend. The ongoing trend from now will depend on whether the market can sustain BTC’s price levels or not.