“Bond Market Bubble Has Burst” – 5 Things to Know in Bitcoin This Week

Bitcoin (BTC) starts another week staring down a wild macro environment after sealing the lowest weekly trade in nearly two years.

As risk assets across the global economy take a hit and the US dollar rises, the biggest cryptocurrency is on the loose.

September, after starting on the bull side, is now living up to its informal crypto market nickname – “September Bear” – and BTC/USD is currently down 6.2% since the beginning of the month.

The bad news keeps coming for hodlers, who are clinging to dormant coins in increasing numbers as the dollar runs out and the mainstream appetite to diversify into riskier plays continues to fade.

With macro set to remain the main focus for everyone this week, Cointelegraph takes a look at what could be in store for BTC price action.

Under economic conditions that rival any major period of historical upheaval seen in the past century or more, here are some factors to consider when considering where Bitcoin might go next.

Weekly close sends BTC/USD back to November 2020

While not matching last week’s losses (3.1% vs. 11%), the past seven days still managed to trigger Bitcoin’s lowest weekly close since November 2020, data from Cointelegraph Markets Pro and TradingView show.

As the downside continues to come, Bitcoin has thus turned back the clock to pre-outbreak, taking it beyond the previous halving cycle’s all-time high.

The sense of deja vu is unwelcome for the average hodler – the vast majority who bought and cooled in the last two years are now under water.

“$BTC just made the lowest weekly close in this zone,” popular Twitter analyst SB Investments in summary after the conclusion.

“Looks bearish with stocks looking to break support as well. But on the other hand, this is what everyone expects.”

If the markets could pull one surprise “max pain” move to the upside, liquidating short bias, is an important alternative argument for Bitcoiners. For popular trader Omz, the weekly closing price of $18,800 represents an even one convincing local bottom.

The RSI divergence has not gone unnoticed elsewhere, with trader JACKIS flagging its arrival last week.

“We only got two touches of oversold territory in the past and they always marked the exact bottom too,” he tweeted at the time.

Fellow trading account IncomeSharks also claimed a reversal could follow the US mid-term elections in early November, but stopped short of saying the bottom was in.

“Elevator down, stairs up,” it commented on the 4-hour chart of the day.

“Continue to build double bottoms and new supports, the Midterm Rally remains on the table. Break this structure, remove these targets and find a new bottom.”

Dollar wrecking ball costs stocks, fiat

Monday has only just started and the turmoil that followed last week is already back with a vengeance on the macro markets.

An unstoppable US dollar is wreaking havoc on key trading partners’ currencies, with Bitcoin’s pound sterling making headlines on the day as it plunged 5% to come within a few percentage points of USD parity – its all-time low against the greenback.

GBP/USD would follow the euro becoming worth less than $1, while the woes forced Japanese authorities to artificially prop up the yen last week.

EUR/USD briefly dipped below $0.96 before a modest rebound, while USD/JPY remains near its highest since the 1990s despite Japan’s intervention.

At the same time, the alarm bells are ringing for global bonds, which have fallen back to 2020 levels. Market commentator Holger Zschaepitz warned along with Bloomberg data:

“Looks like the bond market bubble has burst. The value of global bonds has fallen by another $1.2 billion this week, bringing the total loss from ATH to $12.2 billion.

Stocks are set to fare no better, with futures down the day before Wall Street opens. Brent crude fell below $85 a barrel for the first time since the start of 2022.

“Global bonds are collapsing in their fiat currencies, which are collapsing against the dollar, which is rapidly losing purchasing power,” Saifedean Ammous, author of the popular books, “The Bitcoin Standard” and “The Fiat Standard,” reacted.

“It will take months and years for the average fiat user to realize how much they are being ruined financially. The ‘new normal’ is poverty.”

With crypto still highly correlated to equities and inversely correlated to dollar strength, the outlook for Bitcoin is thus less than positive as the status quo appears to remain.

The Eurozone Consumer Price Index (CPI) is due this week and is expected to show that inflation is still rising, while the US Consumer Price Index (PCE) printout should continue the US downtrend that began in July.

The US dollar index (DXY), meanwhile, shows no signs of reversing, now at its highest since May 2002.

Hodlers in classic bear market mode

In the midst of such chaos, it comes as no surprise that Bitcoin hodlers’ conviction is increasing and long-term investors are refusing to sell.

Steadfast hoddling is a hallmark of Bitcoin bear markets, and the latest data shows that mindset is back this year.

According to the research firm Glassnode on the chain, Bitcoin’s so-called Coin Days Destroyed (CDD) sets new lows.

CDD refers to how many rest days are deleted when BTC leaves the host wallet after a given period. When CDD is high, it indicates that more long-term stored coins are now on the move.

“The total volume of Bitcoin coin days destroyed in the last 90 days has effectively reached an all-time low,” Glassnode commented.

“This indicates that coins that have been held for months to years are the most dormant they have ever been.”

The news follows weeks of various hodl-focused metrics showing a commitment to keeping the BTC supply locked up for better days.

Glassnode additionally noted the growing prevalence of coins held for at least three months as a share of the USD value of the BTC supply.

“Bitcoin HODLers appear to be steadfast and unwavering in their convictions,” it agreed.

An accompanying chart showed Bitcoin’s HODL Waves metric – a depiction of supply divided by coin dormancy.

Whales still dictate support and resistance

As old hands move away from the “sell” button, Bitcoin’s biggest volume investors are on the radar of analysts when it comes to spot price movements.

The current trading area represents a zone of interest due to the extent of trading activity that has involved whale money in the past.

Large buys add weight to a specific support price, while the same goes for resistance levels, and according to on-chain monitoring resource Whalemap, BTC/USD is currently stuck between the two.

“Holding 19k-18k is key for $BTC,” Whalemap Team in summary late last week.

An accompanying chart showed whale resistance levels that are limiting relief for Bitcoin and limiting it to within the $20,000 zone.

Nevertheless, separate figures from research firm Santiment confirm that whales’ BTC exposure overall has fallen to a two-year low.

“Extreme Fear” enters its second week

In a familiar return to 2022 norms, crypto market sentiment has now been in “extreme fear” mode for more than a week.

Related: 5 Altcoins That Could Turn Bullish If Bitcoin Price Stabilizes

According to the Crypto Fear & Greed Index, which measures overall crypto market sentiment, the average investor couldn’t feel much more uneasy about the outlook.

As of September 26, Fear & Greed recorded a score of 21/100, with 25/100 the cutoff for “extreme fear.

Cold feet are nothing new for the market this year, which saw its longest ever “extreme fear” run of over two months.

A potential silver lining may lie in the interest in social media, which saw an uptick over the weekend, Santiment noted.

“Among crypto’s top 100 assets, $BTC is the topic of 26%+ of discussions for the first time since mid-July,” it revealed in part of Twitter comments this week.

“Our backtesting shows that 20%+ dedicated to Bitcoin is positive for the sector.”

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.