The general pessimism in the markets continues to cause problems for Bitcoin, which has already lost close to 11% in the last week alone, and to find out where the price may be headed, we make a weekly forecast below.
At the time of writing, BTC is trading at $34,301, accumulating a daily loss of 4.64%.
After a 50 basis point rise in interest rates in the United States, downward pressure continued to be added to the stock market.
The crypto market has only followed this tide, as institutional capitulate or run short of liquidity, creating a sense of fear among investors.
Given this situation, the US dollar is benefiting greatly, and has just broken record highs not seen for 20 years.
As commented in the weekly Glassnode review carried out last Monday, a large part of Bitcoin holders are analyzing the possibility of continuing or not maintaining unprofitable positions, thus fueling the possible scenario of a capitulation event.
Various indicators and metrics indicate that Bitcoin could already be undervalued
Although short-term bearish pressure is a very dominant force, several indicators are reaching levels that are typically seen near the bottom of bear markets.
For example, in the Revived Supply 1 year metric (which compiles all the on-chain volume of Bitcoins that were purchased before the big sale in mid-May 2021), we can see that it is declining and approaching all-time lows, which which generally occurs near the peak of bear markets, as this is where long-term holders prefer to accumulate.
Another very popular indicator among analysts is the Mayer multiple, which is an oscillator that measures the relationship between price and a 200 period shifted moving average.
Although it is quite simple, it has been a very reliable indicator to identify tops and bottoms of Bitcoin cycles.
In an analysis of this indicator by Glassnode, they use a Mayer multiple of 0.8 (green line) as a level that has historically indicated undervaluation. The reason for this statement is that BTC has been less than 15% of its history below or at this level.
Past bear market bottoms generally occur in two phases, relative to this metric. First at an early stage of the bear market, and then at a bottom reached as a result of a major capitulation event.
Currently, the market is just above that key undervaluation level, which could be cataloged as the second phase of the 2021-2022 bear cycle.
Hash rate hits new highs despite falling price
In addition to the huge list of metrics that in Glassnode’s analysis are showing signs of a possible reversal, other fundamentals also continue to strengthen.
Surprisingly, the hash rate, which had been largely unchanged since February, has been taking off very strongly, reaching an all-time high despite the USD/BTC exchange rate continuing to fall.
Furthermore, in the weekly summary made by CryptoQuant, we can see that most of the metrics, related to supply/demand and whale activity, are showing bullish signals.
Despite this, the recent strong bearish strength tells us that we could continue to see the price in trouble in the short term.
In fact, the futures market is still overheating, despite recent strong sell-offs. The leverage ratio is still close to its all-time high, and the funding rate is in neutral.
Bitcoin weekly forecast based on technical analysis
In the monthly time frame, the behavior seems quite worrying for the short term, since it indicates that at least we could see a capitalization event in the near future.
The price of Bitcoin is testing its most relevant support zone, around $35,000. Losing it would herald the start of a major fall.
The 8-month EMA and 18-month SMA have crossed lower for the first time since October 2018, just a few months before hitting the bottom of the previous bear market. The same thing happened in November 2014.
We are at a very important turning point. And even though we could see bulls putting pressure on very soon, it looks like we should see more bearish volatility first.
For analyst Will Clemente, the previous bullish momentum will only be resumed if $47,000 recovers. As long as this does not happen, it seems more likely that that crucial support zone around $30,000 will be tested again, and where all the oscillators that track macro behavior will possibly be reset.
All our publications are of an informative nature, so in no case should they be accepted as investment advice.