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US inflation data will be 'messy' - 5 things to know in Bitcoin this week

US inflation data will be ‘messy’ – 5 things to know in Bitcoin this week

Pamela Lowe July 11, 2022 7 min read

Bitcoin (BTC) starts another week in a precarious position near $20,000 before a new macro-disruption occurs.

After posting its biggest weekly gain since March, the largest cryptocurrency is struggling to hold its recently recovered levels.

Major resistance areas remain high, and with inflation data due later in the week, the coming days could be worrisome for risky assets everywhere.

Meanwhile, crypto market sentiment is showing signs of recovery, and on-chain metrics continue to confirm what should be the latest macro price bottom for Bitcoin.

With conflicting data all around, Cointelegraph is taking a deeper look at potential market movers for the coming week.

The 200-week moving average causes headaches

At around $20,850, the weekly close on June 10 was hardly anything special for BTC/USD, but the pair still managed its best seven-day growth in several months.

After ending on Sunday a full $1,600 rise from its position at the start of the week, bitcoin closed off with an advance not seen since March.

However, the success did not last, as the hours following the weekly closing turned negative. At the time of writing, BTC/USD is targeting $20,400, data from Cointelegraph Markets Pro And the TradingView show up.

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

Bitcoin’s ability to hold current levels may be key in setting the mood at this time, as easing in global stocks will provide an opportunity for cryptocurrencies to erase some of their losses from recent months.

Commentators, including the trading group Decentrader, are looking at the weekly chart with interest.

Others were less enthusiastic, noting that BTC/USD still made another close below the basic 200-week moving average (WMA) at around $22,500.

In previous bear markets, the 200 WMA acted as a general support level, with Bitcoin dropping briefly below it to set macro bottoms. However, this time seems to be different, as $22,500 has been absent from the chart for a month.

Zooming out, meanwhile, the popular trader TechDev has called for a more optimistic outlook for the rest of 2022.

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By the end of the year, he argued over the weekend, restoring more important WMAs should lead to Bitcoin ending its “re-accumulation phase” altogether.

“BTC’s 32-35K Flip Possibly Confirms End of Reaccumulation and This Year + Correction,” TechDev Tell Twitter followers

“imo is more likely to happen once both 100W and 50W EMA are in that range. 100W is currently at 34.8K and 50W is at 37.2K.”

in another place, Continuing liquidation of assets from the embattled Celsius crypto lending platform which added to the selling pressure.

The dollar is back relentlessly as Asian markets decline

Asian stocks headed lower on July 11 as the start of the macroeconomic week overshadowed China social unrest news.

As protesters demanded the release of frozen funds amid a scandal involving both bank officials and local authorities accused of misusing COVID-19 tracking apps, markets felt the pressure.

At the time of writing, the Shanghai Composite is down 1.5%, while Hong Kong’s Hang Seng is down 3.1%.

Europe did somewhat better with modest growth for the German FTSE 100 and DAX, with the United States still opening up.

Ahead of Wall Street’s comeback, the US Dollar Index (DXY) was already making new strides higher, canceling a rebound that provided a cooler end to last week.

DXY was at 107.4 on July 11, just 0.4 pips from twenty-year highs in the previous days.

Analyzing the situation, an analyst at The Rock trading firm described DXY as “as extreme as it gets” in terms of year-to-date growth.

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“Based on the sharp rise so far this year, the DXY is now up 16% year over year,” he said. Wrote:

“This is as extreme as it has historically, and unfortunately, usually coincides with significant financial stress in the markets, a recession, or both.”

Bitcoin managed to dollar Its traditional inverse correlation with DXY last week, rising along with the index.

US Dollar Index (DXY) 1-day candlestick chart. Source: TradingView

Inflation tends to have a ‘chaotic week’

If that wasn’t enough, the old inflation topic is apt to provide an additional test of market resilience this week.

US Consumer Price Index (CPI) Read It is due on July 13, and the monthly figure is expected to be higher from year to year.

The higher the inflation rate, and the more it differs from those already high expectations, risk assets tend to respond in anticipation of the reaction of policy makers.

For macro analyst Alex Krueger, the likely trajectory for this week is clear.

Summed up on Twitter: “It’s going to be messy.”

While the CPI, while stripped of several key inflation indicators, caught the attention of key commentators over the weekend in a grim hint that this week’s numbers may put the cat between the pigeons.

“Since the US CPI inflation index next week may get very close to 9%, some will be quick to point out that this metric is looking back,” said economist Mohamed El-Erian. reaction:

“Yes … but it embodies the pain felt by many, especially the less fortunate in society; and it affects inflation expectations.”

In the meantime, any backlash could scare the bitcoin markets in line with other risk assets, or at least trigger significant volatility, as we saw during Previous CPI Events.

MACD hints that a price bottom is in progress

With multiple bitcoin price metrics either flashing “down” or even Hitting an all-time lowThere is no space for signs that a Bitcoin investment at current prices has a historically unparalleled risk/return ratio.

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This week, the latest measure to join the herd is the Moving Average Convergence Divergence (MACD) on the weekly chart.

MACD effectively tracks the trend of an already running chart. It involves subtracting the 26-period exponential moving average (EMA) from the 12-period exponential moving average.

When the resulting value is less than zero, Bitcoin tends to be at a bottom scenario, which means that the recent trip to $17,600 could also be if historical benchmarks are repeated.

Commentator Matthew Hyland, meanwhile, pointed The structure of the MACD is similar still playing out on the 3-day chart.

“The 3-day MACD is still in a bullish cross,” said market analyst Kevin Svenson added:

“Despite the pullback, I remain optimistic here in the medium term.”

As Cointelegraph recently reported, Bitcoin’s Relative Strength Index (RSI) is already in “oversold” territory. levels in history.

Meanwhile last week, one trader July 15th is called as the main date From which another feature in the chart calls the bottom, and this feature is made up of two separate moving averages.

Two-month highs for Crypto Fear & Greed

The latest data suggests that the average cryptocurrency investor is slowly regaining confidence, as a modest silver lining.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, UNI, ICP, AAVE, and QNT

Building on previous strength, crypto market sentiment reached its highest level since early May over the weekend and is now at 22/100.

While still in the “extreme fear” zone, Cryptographic Fear and Greed Index The revival offers a clear contrast to the events of the past two months, during which it fell to 8/100 – even lower than some of the previous bear market bottoms.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.