Bitcoin (BTC) enters the last full week of July on an uncertain footing as $30,000 becomes resistance.
In what promises to be an exciting – but potentially nervous – week for traders, BTC price action is looking down a combination of volatility triggers.
Chief among these is the US Federal Reserve’s decision on interest rates, this highlights an important mass of macro data.
Some hope that these alone will be enough to shake Bitcoin out of its month-long trading range, in which it has barely budged from the $30,000 mark. The market has so far offered little in the way of indications of where it might go next.
That said, traders have become impatient, and increasingly believe that BTC/USD will eventually break from current levels to head towards $25,000 or even less.
Cointelegaph looks at the main factors in the BTC price performance debate as July comes to a close.
BTC price tags $29,000 in bearish start to week
Bitcoin delivered a classic volatility burst into the July 23 week-end, giving bulls a glimpse of $30,000 support potentially returning.
This was short-lived, however, and with hours still remaining until the weekly candle close, BTC/USD recovered its last-minute gains to end the week at almost exactly $30,000.
Overnight price action was still weaker, and at the time of writing, Bitcoin was headed for $29,000, according to data from Cointelegraph Markets Pro and TradingView.
Overall, though, the all-too-familiar range continues to hold up.
When the weekend came to an end, Michaël van de Poppe, founder and CEO of trading company Eight, highlighted what he called the “crucial area” to break through bulls.
“The decisive level has not been broken for Bitcoin, so we will continue the sideways cut,” he continued in the day
“The scenarios remain the same; – Miss above $30,200-30,400 – Miss when we reach $29,000.”
Popular trader Daan Crypto Trades noted that the spike to $30,300 has effectively opened and already closed a CME futures gap.
“Don’t fall for the weekend deviations,” he told Twitter followers.
A cautiously optimistic take on last month’s range came from fellow trader Credible Crypto, who suggested that Bitcoin could avoid more significant losses.
“Over the last 30 days, the price has been in a narrow range and overall OI has oscillated between 2 key levels,” he summarized.
“Price ranges, OI builds, then we see a flow up/down that resets OI before the cycle repeats. If it continues, downside should be limited here at the lows.”
Fed rate hike decision leads to ‘week full of action’
One event is dominating the macro landscape this week, and not just in crypto.
The Fed’s Federal Open Market Committee (FOMC) will meet on July 26 to decide how long – if at all – to raise benchmark interest rates.
Markets have little doubt that a hike is coming – unlike last month, language from Fed officials led them to almost unanimously predict a 0.25% increase.
According to the latest data from CME Group’s FedWatch ToolThe probability of this happening currently stands at 99.8%.
The week’s macro data releases will only come after FOMC, leaving no room for these to swing a decision in time. The releases are no less important, however, and include Q2 GDP, as well as the Personal Consumption Expenditure (PCE) Index.
“Nothing like an action-packed week in the markets. 20% of S&P 500 companies reporting earnings along with a Fed meeting and inflation data to top it off,” financial commentary resource The Kobeissi Letter. wrote in part of a Twitter summary.
“After a few weeks of low volatility, things should be interesting this week. It’s a great week to be a trader.”
Key Events This Week:
1. Consumer Confidence Data – Tuesday
2. New Home Sales data – Wednesday
3. Fed Interest Rate Decision – Wednesday
4. Q2 2023 GDP data – Thursday
5. PCE inflation data – Friday
6. ~20% of S&P 500 companies report earnings
Action packed week ahead.
— The Kobeissi Letter (@KobeissiLetter) July 23, 2023
Fellow financial commentator Tedtalksmacro noted that overall global central bank liquidity conditions, despite the potential inflow growth, appeared to be at macro lows.
“After a free fall since March, global CB liquidity could find a bottom here,” he commented next to comparison charts.
“Historically that has been good for BTC + risk.”
Foundations due to dip in Hash Ribbons “surrender”
Bitcoin’s stubborn trading range is once again damaging network fundamentals as fierce competition between miners cools.
According to the latest estimates of BTC.comBitcoin mining difficulty will decrease by about 4% at its next automatic readjustment on July 26th.
Currently at all-time highs, difficulty has only seen a handful of drops this year, and this week could be the biggest of 2023 so far.
Hash index tells a similar story of consolidation after hitting its own all-time highs this month. Analyzing the Hash Ribbons metric, Charles Edwards, founder of crypto asset manager Capriole Investments, marked a new phase of “surrender”.
Although absent from the market since late 2022, when Bitcoin was still suffering the consequences of the FTX meltdown, capitulation is nothing for traders to fear, Edwards argued.
Despite this, he called the explosive growth of hash rate of the past seven months “unsustainable”.
“We have a Hash Ribbon surrender. AKA a slowdown in the growth of Bitcoin’s Hash Rate after which there was an incredible (unsustainable) 50% increase in 2023,” he. commented last week
“HR capitulation is not a sell signal, but it is not bullish either. Risk management warranted until growth resumes.”
Cointelegraph continues to cover extensively the status quo among miners, with various theories emerging about BTC’s recent selling behavior.
NVT is at its highest since 2019
As Bitcoin mines its 800,000th block, a classic on-chain metric delivers a similar signal that — at least temporarily — BTC price conditions may be overheating.
The Net Value to Transaction (NVT) Ratio, which divides the Bitcoin market cap by the US dollar value of daily on-chain transactions, has reached four-year highs.
NVT seeks to provide an indication of when on-chain volume is out of sync with total network value, but its implications can vary.
As explained by its creator, analyst Willy Woo, NVT spikes can occur in both bull markets and periods of “unsustainable” price growth.
“When Bitcoin’s NVT is high, it indicates that its network valuation exceeds the value transferred in its payment network, this can happen when the network is in high growth and investors value it as a high return investment, or alternatively when the price is in an unsustainable bubble,” he wrote in one. accompanying introduction to the metric in his analysis center, Woobull.
In his latest interview with Cointelegraph, meanwhile, Edwards de Capriole argued that NVT was still in check against extreme highs, such as those seen during 2021.
“NVT is currently trading at a normal level,” he said, adding that “given its normalized reading today, it doesn’t tell us much; just that Bitcoin is fairly valued by this metric alone.”
Long-term holders control 75% of BTC supply
A silver lining in the making? The available supply of Bitcoin continues to shrink behind the scenes.
Related: Bitcoin may still hit $19K, trader warns ahead of BTC price ‘big move’
As noted by various market participants, the amount of BTC offered for purchase shows continued conviction among its most ardent hodlers.
“The Bitcoin Long-Term Holder Supply reached a new ATH of 14.52M BTC, equivalent to 75% of the circulating supply,” further analysis. highlighted this week
“This suggests that HODLing is the preferred market dynamic among mature investors.”
An accompanying chart showed the amount of BTC in the hands of so-called long-term holders, or LTHs, defined as entities holding coins for 155 days or more.
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This article does not contain investment advice or recommendations. Every investment and business move involves risk, and readers should do their own research when making a decision.