Bitcoin is back above $20,000. What to expect from cryptocurrencies this week?
The last candle on Bitcoin’s weekly chart closed at a two-year low, which means September has so far fully justified its title as one of the worst months in the cryptocurrency’s history. However, since the beginning of this week, BTC has risen in value, and today the coin is trading just above the important $20,000 support level. At the same time, the macro situation is not getting any better and the stock market continues to fall. So what to expect from crypto this week? Let’s take a look at what’s going on.
It should be noted that activity of traders and cryptocurrency investors is still relatively low. In the last 24 hours, trading volumes on exchanges amounted to the equivalent of $23.6 billion. At the same time, the 2022 low was 14.81 billion, while the high from mid-May was 48.61 billion.
Graph of trading volumes on cryptocurrency exchanges
What will happen to Bitcoin’s exchange rate
Today, BTC is trading in the $20,200 zone. In the past 24 hours, the coin has gained about 6.6 per cent in value, which is quite tangible.
Bitcoin 1-hour chart
According to cryptocurrency trader under the nickname IncomeSharks, the pattern of price movement points to a possible slow rise in Bitcoin’s price until after the US House of Representatives election in November. Here’s his rejoinder, in which the industry participant shares his own conclusions.
Crypto is falling in a lift and climbing in steps. As long as double bottoms and new support levels form on the chart, a Bitcoin rally could happen in the medium term. If the current structure on the chart changes, we should expect a fall to a new bottom.
As always, traders talk in terms of probabilities, although in reality it is simply impossible to predict developments in the coin industry. Still, the current world and geopolitical conditions are unprecedented, due to which investors' behaviour can be completely unexpected.
In any case, BTC’s surge earlier this week is important for bulls. Firstly, the cryptocurrency broke above the psychologically important $20,000 support level. Secondly, the rise in price was quite noticeable in a short period of just a few hours, which can be considered the first sign of increased buying activity.
What’s going on with the global economy
The Dollar Index (DXY), which shows the strength of the world’s reserve currency against other popular fiat currencies, continues to rise rapidly. By early this week it had reached its highest level since May 2002, which is also affecting the price of other assets.
The graph of the dollar index over the last year
The strengthening of the US currency is negatively affecting other currencies. Indicative of this was the massive collapse of the pound sterling, which came close to parity with the dollar. Such a thing has never happened before in history.
Graph of the pound sterling to dollar exchange rate over the past year
The euro also continues to fall, with the currency’s value against the dollar dropping to a low of 96 cents last week.
Graph of the euro sterling to dollar exchange rate over the past year
Experts also continue to talk about the collapse of the global bond market. According to Cointelegraph sources, its capitalisation has fallen to 2020 levels. Just last week this figure fell by $1.2 trillion.
Global bond market capitalisation
All of this is one consequence of US Federal Reserve policy. The authority is continuing to raise the country’s benchmark lending rate to fight inflation. That said, Fed Chairman Jerome Powell has previously hinted that America’s economy could even go into recession. That is, the Fed will do everything it can to keep inflation in check, even at the cost of significant concessions in stability.
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The panic in the cryptocurrency market continues to escalate
The Alternative portal’s Fear and Greed Index had re-entered the ‘extreme fear’ zone by the end of last week, with the index dropping to 21 points out of 100. This suggests that even the current rebound in the BTC price has not yet been able to positively influence market players’ perception of the situation.
Change in the Fear and Greed Index
Consequently, many are expecting a possible update of the lows on the BTC chart on a large scale. Most interestingly, the number of mentions of Bitcoin on social media has increased significantly relative to other coins: that is, BTC is still attracting more interest from investors, which means their appetite for more risk may be relatively low.
Number of mentions of BTC on social media
It seems that the situation in the cryptocurrency industry in terms of speculation is not good. The niche coins are still in a bearish trend, but the prospects of reaching that very price bottom remain unclear - especially given what's happening around the world. So, investors should watch carefully and make appropriate decisions, taking into account the not-so-best-case scenarios as well.
What do you think about what is happening? Share your opinion in our Millionaire Crypto Chat, where we discuss other important developments in the world of decentralisation.
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