Bitcoin (BTC) starts a new week still fighting for $20,000 support as the market experiences a week of serious losses.
What just a few weeks ago seemed impossible, has now become a reality as $20,000 – an all-time high from 2017-2020 – returns to give investors a bad sense of vu deja.
Bitcoin fell as low as $17,600 over the weekend and tensions are running high ahead of Wall Street’s June 20 opening.
Although losses on BTC prices have been reported here before – and even lower – concerns are growing for the stability of the network at current levels, with particular attention focused on miners.
Add to that the consensus that macro markets are likely not to bottom out and it is understandable why sentiment around Bitcoin and cryptocurrencies is at record lows.
Cointelegraph will look at some of the key areas that beginners are interested in when it comes to Bitcoin price action in the coming days.
Bitcoin rescues $20,000 on weekly chart
At $20,580, Bitcoin’s most recent weekly close could be even worse — the largest cryptocurrency managed to maintain a critical support level at least on the weekly time frame.
However, the wicket below lasts $2,400 and a repeating performance can add to the pain for those betting on $20,000 that constitute a significant price tag.
Overnight, BTC/USD hit a high of $20,629 on Bitstamp before returning to consolidate just below the $20,000 mark, suggesting that in the lower time frames, the situation remains precarious.
While some called for a quick recovery, the general mood of commentators remained one of more cautious optimism.
“Over the weekend, while Fiat tracks closed, $BTC fell as low as $17,600, down nearly 20% from Friday with good volumes.Arthur Hayes, former CEO of derivatives trading platform BitMEX, argued in a Twitter thread that day.
Hayes thinks the recovery will come as soon as those forced sales are over, but the pressure from the sellers could still come.
“Is it over yet… idk,” another post read.
“But for highly skilled knife-catchers, there may still be more opportunities to buy coins from people who have to assess every bid regardless of the price.”
The role of cryptocurrency hedge funds and related investment vehicles in exacerbating the weakening of BTC prices has been the main topic of debate since the Terra LUNA explosion in May.With Celsius, Three Arrows Capital and others now engaged in chaos, being forced to liquidate due to multi-year lows may be essential to stabilizing the market in the long term.
Investor Mike Alfred argued over the weekend: “Bitcoin has not been done to liquidate the big players.
“They’re going to lower it to a level that can do maximum damage to the most exposed players like C and then suddenly it’s going to pop up and go higher once those carriers are completely wiped out.It’s a story as old as time. ”
Elsewhere, $16,000 remains a popular target, which in itself is only equivalent to a 76% drop from Bitcoin’s all-time high of November 2021.As Cointelegraph reported, the estimate is currently at as low as $11,000- 84.5%.
“$31k-32k has been broken and used as resistance.The same goes for $20k-21k.Main target: $16k-17k, especially $16,000-16,250,” crypto’s popular Il Capo Twitter account summarized.
It also describes $16,000 as a “strong magnet.”
Stocks and bonds have “nowhere to hide”
Meanwhile, a limp outlook for stocks before Wall Street opens offers a bit of a bullish outlook for BTC on June 20.
As noted by analyst and commentator Josh Rager, the correlation between Bitcoin and stocks remains intact.
The stars appear to be lining up for short sellers – globally, stocks are lining up “worst quarter ever,” according to current data as of June 18, with the cryptocurrency market giving investors a realistic taste months in advance.
As such, it seems that the only player in the market that can turn the situation around is the central bank, and notably the Federal Reserve.
Monetary tightening, some now argue, cannot last long, as its negative impact will force the Fed to start expanding its U.S. dollar supply again.This will cause the cash flow back into risky assets.
This is a view even shared by the Fed itself in the event of a U.S. recession — something that is highly likely to happen, depending on how the Fed’s recent comments are interpreted.
Referring to the environment adapted to ultra-low interest rates, Fed Governor Christopher J. Waller said in a June 18 speech:
“I hope we never have two more years like 2020 and 2021, but given the low interest rate environment we are facing, I believe that even in a typical recession, it is still likely that we will look at policy decisions in the same way as what we have done in the last two years. ”
In the meantime, however, the policy of ordering a rate hike was a direct cause of the increase in risky asset losses when the Fed announced earlier this month.
Miners are not in the mood to surrender.
Who is selling BTC at its lowest level since November 2020?
Data on the chain tracked groups of investors who contributed to selling pressure – some forced, some voluntary.
The miners, who may have been underwater when involved in the search for blocks, have moved from buyer to seller, preventing the trend from accumulating for years.
“Miners spent about $9,000 of BTC from their coffers this week and still hold about $50k of BTC,” online chain analytics firm Glassnode confirmed over the weekend.
However, it is difficult to accurately calculate the production costs of miners and the different settings that face different conditions and mining costs.As such, many people can still be profitable even at the current price.
Data from BTC.com meanwhile yields surprising news.Bitcoin’s network difficulty is not about to decrease to reflect the migration of miners; instead, it will be revised upwards this week.
The difficulty allowed the Bitcoin network to adjust to change economic conditions and was the backbone of its only successful Proof-of-work algorithm.If miners give up due to lack of profitability, the difficulty will automatically decrease to reduce costs and make mining more attractive.
So far, however, the miners have remained on board.
Likewise, the hash rate, despite reaching a record high, remains above the estimated 200 exahashes per second (EH/s).Therefore, the hardware power dedicated to mining is at the same level as before.
Sellers or sellers, Bitcoiners see “big” losses
Overall, however, both big and small car sellers who couldn’t weather the storm faced “big” losses when they sold, Glassnode said.
“If we assess the damage, we can see that almost all wallet groups, from Shrimp to Whales, are currently holding large unfulfilled losses, which are worse than in March 2020,” the researchers note along with a chart showing how far btc holdings have fallen relative to the cost base.
“The least profitable wallet group holds $1-100 BTC and has unrealized losses equal to 30% of the Market Cap.”
The numbers point to the panicked state of even seasoned investors, which is said to be a surprising phenomenon in Bitcoin’s history of volatility.
Consider the HODL Waves indicator , which groups coins over the length of time they last moved, while also recording sellers and discount buyers.
Between June 13 and June 19, the percentage of total BTC supply that last moved between a day and a week earlier rose from 1.65% to nearly 6%.
Sentiment is almost at its lowest point in history.
It was “compared to a funeral” in December 2021, but cryptocurrency market sentiment has surpassed itself.
Related: The top 5 cryptocurrencies to watch this week: BTC, SOL, LTC, LINK, BSV According to the crypto Fear & Greed Index monitoring resource , the average investor is now more fearful than at most time in the history of the industry.
On June 19, the Index, which uses a basket of factors to calculate overall psychology, fell to near a record low of just 6/100 – deep in its category of “extreme fear.”
The weekly close only slightly improved the situation, with the Index adding 3 points to remain at levels that once marked the bear market’s lowest level for Bitcoin.
It was only in August 2019 that Fear & Greed scored lower.
The views and opinions expressed here are only those of the author and do not necessarily reflect the views of Cointelegraph.com.Every investment and trading move is risky, you should Do your own research when making a decision.
