Sink or swim for $27K? 5 things to know in Bitcoin this week

Bitcoin (BTC) is fighting for the bull trend as the new week begins as the market trades within a decisive zone.

After closing the weekly candle just below $27,000, BTC/USD is trying to cement support that a stubborn trading zone has.

The stakes are already high – last week saw a flash dip below $26,000 and a two-month low for Bitcoin, leaving traders fearful of a bigger bearish breakdown to come.

Although this has not happened, nerves remain on both the shorter and longer time frames.

Where is price action likely to be headed next? A relatively cool week with macro triggers means less chance of volatility from external sources.

Add to that the upcoming difficulty adjustment that takes it to yet another record high, and the case may well be made for continued upside.

Cointelegraph takes a look at some of the key BTC price factors influencing the week ahead.

Bitcoin price weekly close offers mixed signals

After achieving a weekly close of around $27,930, Bitcoin is already heading higher, reaching $27,550 overnight, data from Cointelegraph Markets Pro and TradingView show.

While encouraging, the close still marked Bitcoin’s weakest since mid-March – something popular trader and analyst Rekt Capital is well aware of.

In part of the Twitter analysis on the day, he warned that $27,600 was now the level to turn to support.

“First, BTC failed to regain the $28800 level on the Weekly (orange). And then $BTC Weekly closed below $27600, failing to hold it as support (black).” in summary next to a chart showing recent weekly timeframe events.

“Turn $27600 into resistance and this could enable further downside to the low $20000s.”

That perspective reinforces existing warnings from the weekend, adding to a small group of well-known pundits still entertaining the possibility of a significant BTC price decline.

Moving on, however, Rekt Capital now sounded more optimistic about Bitcoin in general, looking beyond the current correction and its potential targets.

“Bitcoin has already broken its downtrend. Now it’s about continuing the new uptrend,” another tweeted justified.

“Whether a new test is necessary or not is the question. But history suggests that the outlook in the medium and long term looks positive.”

On weekly time frames, therefore, the key trendline remains the 200-week moving average (WMA), which at $26,200 has already received its first retest.

Direct Capital described the retest as “successful” but reiterated the need to claim back the $27,600 next time.

“The situation is very dynamic at this point,” he added.

Litecoin Leads Bitcoin, Altcoin “Continuation”

Others gave more credence to the strength of short-term rebound actions into the new week.

Michaël van de Poppe, founder and CEO of trading company Eight, described BTC/USD as “ready to go.”

“Holding a crucial $27,000 level and we’ll be set for a potential run to the tops,” part of a Twitter update tiredadding that Litecoin (LTC) provided a taste of what might come.

LTC/USD traded up over 8% in the 24 hours to the time of writing, hitting its highest since May 6.

Similarly, the long-term trend favored popular trader Mustache, who considered current weaker price movements such as Bitcoin and altcoins taking a “breather”.

“The opinion remains unchanged. Just a breather before things go completely crazy,” comments on a chart of the total market cap for crypto read.

“To the bears: I say it once and never again. You cannot compare a monthly chart with a daily chart.”

Trader and analyst Trader Tardigrade, also known as Alan, made similarly bullish forecasts based on Bitcoin’s weekly Relative Strength Index (RSI) readings.

For him, even the weekly conclusion was reason for optimism.

Flood of Fed speakers culminates with Chair Powell

Those looking for some macroeconomic risk asset triggers may be left out this week, as events in the US have been put to rest.

After a flurry of macro data has been printed the week before, the event in the coming days will come in the form of a speech by Jerome Powell, chairman of the Federal Reserve, on May 19.

As a financial commentary resource, The Kobeissi Letter notes, a total of 14 Fed officials are set to deliver comments over the coming days, with many potential conflicts to come.

Kobeissi added that volatility “should start to return to the markets” as a result.

A separate point of interest in the meantime comes in the form of US dollar strength. In a May 12 market update, trading firm QCP Capital saw a return to the downside for the US dollar index (DXY) as the key event needed for risk assets to get the green light.

“We see USD strength as the main reason to cap BTC, which has led the market’s reflexivity to blame familiar bearish factors such as the large upcoming US government offering and Mt. Gox,” it said.

The DXY saw a week of recovery through May 14, having returned to 101, near its lowest levels since last April.

BTC mining difficulty is set to resume all-time highs

In a return to what has become classic behavior in 2023, Bitcoin network difficulties are once again due to new all-time highs.

After the previous adjustment produced a slight decline, the difficulty will increase by around 2% this week, according to BTC.com estimates.

This would mark the continuation of a difficulty upward trend that has characterized most of the year, with competition for block subsidies among miners in “just up” mode.

The trend has been unaffected by recent short-term upheavals in the fee markets, and as Cointelegraph reported, miner earnings have increased dramatically as a result.

Also, accompanying hashrate estimates, depending on the source, show the processing power dedicated to mining at or near all-time highs.

Sentiment flush follows market cooling

Some much-needed relief for those worried about blatant “greed” affecting the crypto markets – sentiment has reset in recent days.

Related: ‘Don’t Short When It’s Dark Green’ — How to Trade the 2024 Bitcoin Halving

After reaching the highest levels since November 2021, the Crypto Fear & Greed index shows irrational exuberance that has taken a big hit thanks to the recent decline in the prices of several assets.

As of May 15th, Fear & Greed measures 50/100 – exactly midway between the two extremes and characteristic of “neutral” market sentiment.

In coverage on the day, research firm Santiment noted that the recent hype surrounding memecoins has also dissipated, with interest returning to stablecoins in a broad cooling of sentiment.

“With Bitcoin at $27.4k and #Ethereum at $1825, traders continue to bemoan the fact that markets have been stagnant,” the argued.

“Stablecoins are experiencing large social volume increases, typically indicating disinterest in the markets Polarizing assets such as $HEX & $PEPE have fallen heavily.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.