BTC price double top forming? 5 things to know in Bitcoin this week

Bitcoin (BTC) starts another week in volatile territory as news of an oil supply cut makes for a choppy start to the week.

Still trapped by major historical resistance, BTC/USD delivered an unappetizing weekly close on the back of news that oil production cuts will now kick in.

A subsequent rally could show the mettle of bulls, but the question for analysts is what happens next – will oil prices dictate market movements or can Bitcoin break through $30,000?

Under the hood, the picture is as rosy as ever – basic networks are set to hit new highs this week, while dormant supply also rises.

Cointelegraph takes a look at the state of Bitcoin markets as the world digests the latest move by Opec+.

Oil cuts boost dollar as inflation concerns returns

An important event over the weekend, which is now adding to macro conditions, is a decision to cut global oil production.

Opec+ has announced voluntary production cuts totaling 1.65 million barrels per day, and the impact was felt immediately – the US dollar is rising along with energy costs.

A classic headwind for risk assets including crypto, the US dollar index (DXY) traded above 102.7 at time of writing, up from April’s low of 102.04.

“Eyes on DXY this morning… This bounce could just be a void fill as I talked about last week. I was waiting for this filling,” popular trader Crypto Ed reacteduploads an explanatory diagram to Twitter.

“It’s time for DXY to show its direction (which should affect BTC’s PA).”

As the Opec+ move took its toll on assets from Bitcoin to gold, Alasdair Macleod, head of research at Goldmoney, argued that governments would need to inject liquidity to offset any energy price rises, thereby again boosting the performance of risk assets.

“Markets will soon react to the surprise OPEC production cut from this weekend,” financial commentary The Kobeissi Letter continued in its own dedicated analysis.

“Oil prices are likely to rise back above $80.00, an unwelcome development by central banks trying to fight inflation. Supply-side inflation will worsen on this news.”

Higher inflation will again increase the chances that central banks will continue to raise interest rates despite the ongoing banking crisis in the US and abroad.

According to the latest estimates from CME Group’s FedWatch Tool, markets currently believe the Federal Reserve will raise interest rates by another 0.25% in May, after being more in favor of a pause.

Bitcoin price rebounds from Opec+ news

Bitcoin initially felt the pressure from the Opec+ decision as the weekend faded, falling below $28,000 to end the week in disappointing style.

But during the April 3 trading session in Asia, BTC/USD made a sudden comeback, jumping $865 from an overnight low of $27,600 on Bitstamp.

Popular trading account Daan Crypto Trades noted that by doing so, Bitcoin had closed another CME futures gap, thus exhibiting classic Monday trading behavior.

Fellow analytics account Skew tracked short-term developments while predicting a “much bigger reaction” in the coming week.

Looking ahead, however, crypto analysis and education resource IncomeSharks maintained a bearish view on BTC.

“I just can’t see the double Mcdonalds pattern,” it wrote on the day, referring to the structure of BTC/USD in 2023 so far.

“Now you have a diagonal trendline break, low volume and weak OBV. Logic and objective sentiment say to sell/short this, I see no reason to be bullish in the short term YET.”

Trader and analyst Rekt Capital was not so sure.

“Not yet clear if BTC constitutes the second part of the Double Top formation,” he argued in his latest analysis.

“$BTC must drop to ~$27K (blue) soon if it is to fully develop the pattern pattern and form an M-like shape. Loss ~$27K -> Double Top validated. Something to consider.”

Another week, another Bitcoin mining record

Dip or no dip, Bitcoin network fundamentals are in no mood to turn bearish this week.

According to the latest estimates from BTC.com, the Bitcoin difficulty is due to further increase at the upcoming automated switch in three days.

This would take it to 47.92 trillion on a 2.3% increase, marking new all-time highs for difficulty.

Data from MiningPoolStats, meanwhile, shows a similar upward trend in hash rate, which in some measurements reached a record high of 400 exahashes per second (EH/s) in recent days.

Analyzing what could be behind the rapid growth, Sam Wouters, a research analyst at mining company River, suggested that it was probably sidelined rigs coming back into service thanks to price increases.

“Several large public miners are rumored to have significant holdings of unused ASICs. While Bitcoin’s price was so low and as much inventory as possible was brought online last year, at some point the maximum capacity of what the network could handle was reached,” wrote he in part of a dedicated Twitter thread on March 27.

“Now that the price has gone up again and some time has passed, more of that inventory has been able to go online.”

Data from on-chain analytics firm Glassnode, meanwhile, shows that miners have begun trying to keep more BTC than they earn.

On a rolling 30-day basis, the miners’ net position change is now positive again after two weeks of downtrending.

Dormant BTC supply sets further records

Bitcoin is known for its ability to create supply shocks, but latest data underlines the long-term trend.

Despite the BTC price’s comeback this year, the amount of available supply is now dormant for a decade or more at new all-time highs.

That record was broken once again this week, with 2,691,418.953 BTC not leaving the wallet since at least April 2013.

This equates to 12.81% of the total possible supply of 21 million BTC, or 13.91% of the supply mined so far.

Any mass interest in BTC will thus mean that buyers have a diminishing supply to buy. Currency balances, while rising slightly in 2023, are still close to the lowest since early 2018, confirms Glassnode.

“Too euphoric?”

Sentiment in the crypto market has yet to digest the possibility of a significant retracement.

Related: Bitcoin Liquidity Falls to 10-Month Low Amid US Bank Run

According to the classic sentiment indicator, the Crypto Fear & Greed Index, “greed” continues to dominate the general sentiment.

As of April 3, Fear & Greed measures 63/100, near the highest since Bitcoin’s all-time highs in November 2021.

“Crypto market getting too euphoric,” analytical resource Game of Trades warned late last month.

Although high, the level of greed depicted by the index still has considerable room for growth until it reaches “extreme” territory near 90, a classic signal that a major market correction is on the way.

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.