Things to know about crypto this week: "The bond market bubble has popped"

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Following its lowest weekly closing in nearly two years, Bitcoin (BTC) faces a volatile macro environment as the new week gets underway.

Septembear

The largest cryptocurrency is floundering as risk assets throughout the global economy take a beating and the US dollar soars. After a bullish start, September is suddenly living up to its colloquial moniker in the crypto market, “Septembear,” with BTC/USD down 6.2% from the month’s beginning. The bad news just keeps on coming for hodlers, who are holding onto dormant coins in greater and greater numbers as the dollar soars and the general public’s desire to diversify into riskier plays keeps dwindling.

This week, macro is expected to remain everyone’s top priority. We examine here what the price movement of Bitcoin might hold. Here are some considerations to make when determining where Bitcoin might go next, given economic conditions that rival any significant time of historical upheaval witnessed in the last century or more.

BTC/USD returns to November 2020 on the weekly close

The past seven days nonetheless managed to cause Bitcoin to settle at its lowest weekly level since November 2020, according to data from Cointelegraph Markets Pro and TradingView, but not matching the losses from the previous week (3.1% versus 11% decline).

Bitcoin has therefore gone back in time to before the breakthrough that propelled it over its previous halving cycle’s all-time high as the downside pressure intensifies.

The average hodler doesn’t like the feeling of déjà vu because the great majority of everything they bought and cold-stored over the previous two years is now under water. Popular Twitter analyst SB Investments stated after the close: “Looks negative with stocks looking to break support as well. $BTC just achieved the lowest weekly finish in this zone. On the other hand, everyone anticipates this.

A crucial counterargument for proponents of bitcoin is whether the markets might pull off a sudden “max pain” move to the upside, eliminating the short bias. The weekly close price of $18,800 even serves as a convincing local bottom for well-known trader Omz. In other markets, the RSI divergence has not gone unnoticed; trader JACKIS announced its coming last week.

At the time, he tweeted, “They have always marked the precise bottom as well. We only received two touches of the oversold territory in the past.” The U.S. midterm elections are in early November, and fellow trading account IncomeSharks continued to predict a reversal but refrained from declaring that the bottom had been reached.

On the day’s 4-hour chart it noted, “Elevator down, stairs up”:

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

Stocks, fiat destroyed by dollar wrecking ball

The instability that pervaded macro markets last week has already returned with a fury as Monday has barely even begun. The Great British pound sterling made headlines on the day as it plunged 5% to fall within a few percentage points of USD parity – its lowest levels versus the greenback ever. Key trading partner currencies are being destroyed by an unstoppable U.S. dollar. GBP/USD would follow the euro losing value and falling below $1, while the agony compelled the Japanese government to artificially support the yen exchange rate last week.

UR/USD momentarily dropped below $0.96 before making a minor recovery, while despite Japan’s involvement, USD/JPY is still close to its 1990s high. Alarms are also going off for international bonds, which have dropped to levels last seen in 2020. Bloomberg data was accompanied by a warning from market analyst Holger Zschaepitz: “Looks like the bond market bubble has burst. The value of global bonds has plunged by another $1.2tn this week, bringing the total loss from ATH to $12.2tn.”

Given that futures were lower on the day before Wall Street opened, stocks are expected to perform similarly. Since the beginning of 2022, Brent crude oil has never dropped below $85 per barrel. Saifedean Ammous, author of the best-selling books “The Fiat Standard” and “The Bitcoin Standard,” reacted to the statement that “global bonds are collapsing in their fiat currencies, which are collapsing against the dollar, which is fast losing purchasing power: “It will be months & years before the average fiat user realizes just how much they’re getting ruined financially. Poverty is the “new normal.”

The outlook for Bitcoin is therefore less than favorable as the status quo appears poised to persist because cryptocurrency is still inversely connected with dollar strength and highly correlated with stocks.

The Consumer Price Index (CPI) for the Euro Area is due this week and is anticipated to indicate continued inflation; however, the Personal Consumption Expenditures Price Index (PCE) print is anticipated to continue the U.S. downturn that started in July. The U.S. dollar index (DXY), which is currently at its highest level since May 2002, does not appear to be turning around.

Hodlers acting in traditional bear market mode

It is unsurprising that long-term investors are refusing to sell, and Bitcoin hodlers’ conviction is growing in the midst of such chaos. The latest data indicates that this year’s persistent hodling is a feature of bear markets in bitcoin. The so-called Coin Days Destroyed (CDD) indicator for Bitcoin, according to onchain analytics company Glassnode, is falling to new lows.

When Bitcoin leaves its host wallet at the end of a specified time period, the number of dormant days (CDD) is deleted. A high CDD indicates that more long-term stored coins are currently in motion.
According to Glassnode, “The total volume of Bitcoin coin-days destroyed in the last 90 days has, effectively, achieved an all-time low. This indicates that coins which have been HODLed for several months to years are the most dormant they have ever been.”

The announcement comes after several weeks of hodl-focused metrics demonstrating a dedication to keeping the BTC supply under lock and key for better times. As a percentage of the USD value of the BTC supply, Glassnode also highlighted the rising incidence of coins that have been hoarded for at least three months. It agreed that “Bitcoin HODLers seem to be firm and unshakable in their conviction.”

The supply was depicted using the Bitcoin HODL Waves measure, which breaks it down by coin dormancy, on the accompanying graphic.

Support and resistance are still determined by whales

When it comes to spotting price movements, analysts are keeping an eye on Bitcoin’s highest volume investors while veteran users stay away from the “sell” button. Due to the volume of trading activity involving whale money in the past, the current trading range is a zone of interest.

According to on-chain tracking tool Whalemap, BTC/USD is currently trapped between two resistance levels due to large buys lending more weight to a certain support price and the same is true of resistance levels. Holding 19k–18k is crucial for $BTC, according to a late-last-week summary by the Whalemap team.

A chart that accompanied the article revealed that Bitcoin could only recover to a maximum of $20,000 due to whale resistance levels. However, additional data from the research company Santiment shows that whales’ overall BTC exposure has decreased to two-year lows.

The second week of “Extreme Fear”

The cryptocurrency market sentiment has now been in “severe dread” mode for more than a week, returning to 2022 norms as usual. The typical investor could not feel more anxious about the future, according to the Crypto Fear & Greed Index, which gauges overall mood in the cryptocurrency market.

Fear & Greed’s score as of September 26 was 21/100, with a score of 25/100 denoting extremely high levels of fear. This year, the market had its longest-ever stretch of “severe fear,” lasting more than two months, so having cold feet is nothing new.

Social media interest, which increased over the weekend, may offer some hope, according to Santiment. This week, it was shown in part via Twitter comments that “among crypto’s top 100 assets, $BTC is the focus in 26%+ of talks for the first time since mid-July”.
“Our backtesting reveals 20%+ dedicated to Bitcoin is a good for the sector,” the author writes.

Tamadoge coin debuts on OKX exchange

Stay tuned to the crypto news feed here at InsideBitcoins for more updates on Tamadoge’s first exchange listing as the Sept 27th listing date approaches. The OKX website has announced that TAMA withdrawals will be open at 13:00 UTC on the day of the listing. Investors should do their own research and and consider all factors before making a decision with potentially high reward. The full paper and roadmap for TAMA can be read here.

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