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‘Best bear market ever’ — 5 things to watch in Bitcoin this week

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“Best bear market ever”, 5 things to watch in Bitcoin this week. Bitcoin (BTC) is off to a negative start this week, but it hasn’t shattered investor faith in the bull market.

BTC/USD had a tumultuous weekend, closing over $47,000 before giving up all of its gains and testing $45,000 support hours later.

It’s a tricky situation: as the Evergrande catastrophe in China unfolds, not only Bitcoin, but equities and mood are taking a pounding. What factors may have an impact on the crypto market?

We look at five elements to consider when charting where Bitcoin could be heading in the medium term, as analysts predict a “choppy” week for Bitcoin price movement.

El Salvador “buys the dip”

As the week begins, traders will find Bitcoin spot price activity to be uninspiring.

Overnight, a reversal of earlier gains was reinforced, as BTC/USD fell below $46,000.

With conventional markets in disarray, led by the Evergrande story in China, this week’s trades may not be successful. Pentoshi, a well-known trader, believes that now is the moment to assess the situation and wait for it to settle itself.

As reported, $44,000 is a support level that Bitcoin appears to be retesting. A deeper drop may produce $41,000 or perhaps $38,000, with the latter serving as a critical Fibonacci retracement level.

Overall, though, the attitude in cryptocurrency markets remains solidly in favour of a rebound to the upward in Q4.

Meanwhile, the government of El Salvador revealed on Monday that it had acquired another 150 bitcoins, bringing its total holdings to 700 bitcoins.

President Nayib Bukele stated in a series of usually tongue-in-cheek tweets on his country’s Bitcoin policy, “They can never defeat you if you purchase the dips”.

BTC/USD 1-day candle chart (Bitstamp). Source: TradingView

Bitcoin is holding up “like an absolute champ”

It’s a difficult climate out there, and Bitcoin is performing far better than predicted, according to experts.

The outlook is much less bright this week, whether it’s equities or safe-haven gold. For the first time since June, the S&P 500 is on course to fall below its 50-day moving average.

Gold is approaching its April lows, while the precious metal is virtually at 20-year lows when measured against the Nasdaq 100 Index, according to experienced trader Peter Brandt.

“Given the surge in the dollar (which is nearing a cycle high), weakness in stocks, and a drop in commodities, Bitcoin is behaving admirably as it resists the concept of going into a deep Cycle Low.

The strength of the US dollar is evident, with the US dollar currency index (DXY) approaching 94, creating a traditional headwind for Bitcoin.

Should the status quo begin to shift, the pressure on BTC to perform significantly better is apparent.

U.S. dollar currency index 1-day candle chart. Source: TradingView

Bitcoin prepares first five straight difficulty increases since 2019

The fundamentals of Bitcoin have never looked better – it’s a cliche, but the stats speak for themselves this week.

Both the difficulty and the hash rate are steadfastly refusing to fall, showing that miners’ fundamental belief in the bull market is unshakable.

On Tuesday, the mining difficulty, which has been dampening the impact of May’s Chinese mining crash for months, is set to rise for the fifth time.

This is an unusual occurrence; the last time the difficulty climbed five times in a row was in late 2019, just before the March 2020 cross-market crisis dampened sentiment. Even the ensuing bull market and surge to all-time highs of $64,500 couldn’t match the feat.

As a result, the future appears more optimistic than ever for those who think market movement must reflect network fundamentals.

The hash rate verifies it: despite mixed price performance over the last week, projections for the network remain around 140 exahashes per second (EH/s), which is just 17% behind all-time highs.

The current discrepancy between the measure and market price, according to investor Vince Prince, a frequent commenter on the hash rate’s performance, is grounds for optimism.

Last week, he noted, “While Bitcoin Was Massively Dumped, the Hash Rate Actually Increased”.

Bitcoin hash rate 7-day average chart. Source: Blockchain.com

Zooming out, it’s “up only”

Bitcoin’s realised capitalization has already surpassed the all-time high of $21,000 set in 2017 by the spot price. Its 200-week moving average (WMA), which is widely considered to be a solid price floor and which BTC/USD has never breached, is presently at $15,600.

Bitcoin 200WMA vs. realized cap vs. BTC/USD chart. Source: PlanB/Twitter

According to analyst PlanB, developer of the stock-to-flow Bitcoin pricing models, these are more than simply statistics.

The connection between realised cap and the 200WMA is a valuable indicator of market growth potential. Realized cap is a representation of market capitalization based on the price at which each Bitcoin last traded.

Previous price cycle peaks, such as those in late 2013 and 2017, were marked by a significant disparity between the two indicators. This time, however, the reverse is true, and Bitcoin appears to be a good “buy”.

According to reports, a six-figure BTC price is expected before the end of the year. Q4 should be the springboard, with a minimum monthly close of $63,000 in October laying a solid platform. Last week, PlanB said, “October $63K is just +31% from now”. Meanwhile, the monthly close for September’s “worst-case scenario” is $43,000.

“The best bear market ever”

Bitcoin is comparably near all-time highs, but hardly one is interested. It’s a typical setup that has historically prevented large periods of bullish price activity.

Despite trading around $50,000, BTC/USD is on the minds of fewer and fewer individuals this month – a trend that can be seen across the internet.

According to Google Trends, “Bitcoin” is just as unpopular now as it was in mid-July, when BTC/USD was trading just above $30,000.

Google Trends data for “Bitcoin.” Source: Google Trends

Only in December 2020, before the major part of the Bitcoin bull run truly kicked begun, was relative search interest lower.

However, as analyst William Clemente points out, such conditions are ideal for BTC price movement to give an unexpected jolt.

“Bitcoin burst out of a bull flag last night, reached a new high, and funding is at 0.01%, and my feed is completely silent. “Excellent”, he tweeted on Sunday, sarcastically referring to the current situation as the “best bear market ever”.

Crypto Fear & Greed Index as of Sept. 19. Source: Alternative.me

As Bitcoin approaches last barrier before $50,000, investor mood is likewise in good shape, with the Crypto Fear & Greed Index in “neutral” zone.

In accordance with the speculative trading, wipe-out observed earlier in September, “greed” has yet to return to play a substantial role in crypto markets, according to the metric.

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