BTC Price Sees New $20K Showdown – 5 Things to Know in Bitcoin This Week

by · September 5, 2022

Bitcoin (BTC) enters the second week of September still trying to cement $20,000 as support to gain control.

The biggest cryptocurrency is coming off a sideways weekend with a weekly close almost exactly at $20,000 – but the significant psychological level is already struggling.

Expectations already favored further downside during this month – the so-called “September Bear” phenomenon that normally sees the BTC price lose ground in September – and so far there has been little evidence that this year will be any different than most.

BTC/USD is down 1.5% in September 2022, and while the losses are modest, there are plenty of potential catalysts on the horizon.

Macroeconomic turmoil remains the name of the game in much of the world, with the emphasis shifting increasingly to Europe as the energy crisis unfolds and the euro hits twenty-year lows against the US dollar.

Equities are also struggling in the face of a continued strong dollar, leaving little room for a breakout to the upside for cryptocurrencies.

That said, macro BTC price bottom signals have poured in over the past few weeks, resulting in a handful of analysts remaining calm on the outlook.

Cointelegraph takes a look at five potential Bitcoin price triggers for the week ahead, as $20,000 takes center stage.

BTC only seals $20,000 weekly

Bitcoin bulls have had it easy this weekend as a lack of volatility resulted in two days of swings around $20,000.

The absence of overall direction meant that existing price forecasts remained intact and even the weekly close continued to leave the market guessing.

That came in the form of virtually exactly $20,000 on Bitstamp, followed by downward price pressure in the first hours of the new week, data from Cointelegraph Markets Pro and TradingView show.

BTC/USD 1-week candlestick chart (bitstamp). Source: TradingView

However, traders already expecting a retest of lower levels near June’s $17,600 saw little reason to change their perspective.

Popular trader Il Capo of Crypto repeated planning a short squeeze towards $23,000, followed by a reversal with $16,000 as a potential floor.

Dealing with Cheds in the meantime confirmed that the 4-hour chart “continues to range” after jumping from range lows to the weekly close.

In his latest updatemeanwhile, TMV Crypto revealed a downside bias on the same time frames, highlighting Relative Strength Index (RSI) data.

“H4 RSI is currently bearish. Losing 19700 would take $btc to sweep August lows and closer to July lows of 18777,” it said.

“If bulls can turn around 19986.5 levels on H4, support will look to extend until 20.8.”

Data from chain analysis resource Material Indicators in the meantime knew bulls “fighting” for $20,000 at the close, with new bid support just below on the Binance order book.

“Be careful. This week is going to be spicy,” a subsequent tweet concluded follows closely.

Europe’s energy crisis scares the macro phase

In macro markets, there is reason for the Federal Reserve to take a back seat this week with key economic data due next September 13 in the form of the Consumer Price Index (CPI) for August.

However, there is little chance for traders of risk assets to rest, as events in Europe are already providing a new theater for volatility.

As of September 5, the euro is trading at its lowest against the US dollar since September 2002, having passed below $0.99.

EUR/USD 1-hour candlestick chart. Source: TradingView

The weakness comes on the back of instability in the energy markets. Russia, which was due to reopen its Nord Stream 1 gas pipeline at the weekend, suddenly changed course over maintenance issues, with gas supplies now to be halted indefinitely.

This again followed news that the EU plans to implement a price cap on Russian energy in line with the G7, to which Russia responded with a threat to halt all energy imports.

As a result, gas markets are rising once again as the week gets underway, after plunging from record highs earlier.

For Arthur Hayes, former CEO of derivatives giant BitMEX, the only way for the euro was probably down.

Echoing an earlier hypothesis from a blog post earlier this year, Hayes described the euro as entering a “doomsday loop” over the weekend.

“Either: 1. USD liquidity increases to bring down the value of the dollar and help Europe afford its energy import bill, or 2. Europe reaches a Détente with Russia. I guess the third option is to turn off industrial and residential heating, » he wrote.

Such is the scale of the crisis that even PlanB, the creator of the Stock-to-Flow Bitcoin price models, suggested that buying the dip option should be second to fundamental needs – even with BTC/USD near two-year lows.

“People who have to choose between food and gas should not buy Bitcoin,” he tweeted last week.

The US dollar powers through two-decade highs

Like last week, a lasting headwind for cryptocurrency and risk assets more generally continues in the form of US dollar strength.

The US dollar index (DXY) has created a tradition of reaching twenty-year highs throughout 2022, and September has been no exception to the trend.

That said, the DXY has passed 110 for the first time since June 2002 this week, with the euro just one of several fiat casualties resulting from the violent bull run.

US Dollar Index (DXY) 1-Month Candlestick Chart. Source: TradingView

“The previous resistance was retested as support that basically nobody wants to see from the dollar,” Scott Melker, the popular trader and podcast host known as “The Wolf of All Streets,” in summary in the weekend.

“$DXY is currently breaking multi-decade resistance at 110. $BTC is consolidating and broke its daily bear flag two weeks ago,” popular trader Roman continued.

“I have a hard time seeing a bullish case here if the DXY continues. I expect a dump across stocks and crypto.”

Cheds, meanwhile, uploaded a DXY chart showing Bollinger Bands action calling for continued volatility on daily timeframes.

Hodlers continue to gain strength

In classic bear market style, long-term holders (LTHs) are scrambling to weather the BTC price storm – setting local records in the process.

Data from chain analysis firm Glassnode this week confirms that even coins last bought just a year ago are increasingly dormant.

Buyers, despite unrealized losses, refuse to capitulate.

The percentage of BTC supply is now stationary in the wallet for a year or more has thus reached a new all-time high of 65.78%.

2022, Glassnode additionally shows, has seen a marked steepening of the hodl trajectory of a year or more, indicating strengthening of resolve among the majority of LTHs.

Bitcoin % supply dormant for 1 year or longer chart. Source: Glassnode/Twitter

At the same time, a complementary measurement, the amount of coins being held or otherwise cut off from circulation overall, reached its highest level in nearly two years.

Hodled or lost coins now a total of 7,464,791 BTC.

Bitcoin headled or lost coins chart. Source: Glassnode/Twitter

Last week, meanwhile, other monitoring resource Whalemap noted that the Bitcoin spot price had fallen below the total realized price of coins between one and two years old.

“There have only been 3 times in the history of $BTC that it was below realized price for 1-2 year holders. Now is the third,” commented the Whalemap team.

Bitcoin realized price annotated chart. Source: Whalemap/Twitter

Realized price refers to the aggregate price at which a particular group of BTC last moved. Bitcoin’s total realized price is currently around $21,600.

Sentiment returns to six-week lows

Overall, the crypto market seems to have returned to its bullish phase, which began in the second half of July.

Related: Bitcoin Bottom — Are We There Yet? Analysts discuss the factors affecting the BTC price

This is symbolized as always by the Crypto Fear & Greed Index, the classic sentiment gauge which only hit 20/100 over the weekend.

Now well back in the “extreme fear” zone, the index has more than halved in the past three weeks alone, pointing to the extent of the sudden cold feet market participants are experiencing.

The last time 20/100 appeared was July 18.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

At the end of last month, PlanB characterized current sentiment as historically dire based on the gap between spot price and realized price.

“IMO everyone and their mother expects a worldwide mega recession and all markets to collapse, ie most things will have to be priced in. The slightest hint of recovery will pump the markets,” he added in associated comments.

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