The price action of bitcoin, which has been moving sideways since FTX, might experience a sudden spike in volatility on account of the “most important” CPI print of the year.
The cryptocurrency Bitcoin is in a precarious position below $17,000 as one of the most important macro weeks of the year begins.
After its most recent weekly close, the Bitcoin to US Dollar exchange rate exhibited very little upward momentum prior to the opening of trading on Wall Street on December 12.
The most significant cryptocurrency is still trading within a relatively narrow range, and market watchers are growing increasingly impatient for new catalysts to drive price action.
They are in agreement that these should come within the next few days; economic data from the United States is due, and the content of this data as well as its impact on economic policy will likely have a significant impact on cryptocurrency markets.
Aside from that, the uncomfortable status quo is still in place: Bitcoin miners are having a hard time, sentiment is uninspired, and traders are increasingly comparing the current market to the depths of previous bear markets.
In which direction do you think the price of bitcoin will move over the next week? This article from Cointelegraph examines five factors that are likely to have an impact on trajectory.
The “key focus” CPI print forms are considered to be “most important.”
This week, the Consumer Price Index (CPI), which is the primary indicator of inflation in consumer prices in the United States, is the phrase that everyone is talking about.
The latest CPI print, which is due on December 13 for the month of November and comes out every month, has additional importance for the market even though it is published every month. There are still two weeks left until the end of the year, and the odds of risk assets participating in a “Santa rally,” for example, are currently in limbo.
In addition to the CPI report itself, this week the Federal Reserve’s Federal Open Market Committee (FOMC) will decide whether or not to raise interest rates, and Chair Jerome Powell will deliver a speech that market commentators will analyse closely for indications of a shift in policy.
The Consumer Price Index (CPI) report will be released on Tuesday, and JPow will speak on Wednesday. Keep an eye out for swings in the market,” an on-chain analytics resource Over the course of the weekend, Material Indicators provided a summary.
A well-known trader by the name of MisterSpread stated that additional decisions made outside of the United States made for “one of the most (if not the most) important” weeks of the year.
A market update written by a trading firm called QCP Capital stated that “Tuesday’s CPI will yet again be ‘the most important CPI release ever.'” The reason for this is that the market has set it up to be “the most important CPI release ever” with its epic 2-month short squeeze rally.
QCP continued by saying, “A higher-than-expected CPI print and more hawkish Fed have the potential to invalidate this rally, similar to what we saw in the reversals in April and August. On the other hand, a further disinflationary print might encourage many investors to chase a continuation of the rally into the end of the year.
The release of the Consumer Price Index (CPI), regardless of whether it is higher or lower than expected, has a tendency to cause volatility in the market, and calm only returns after the rates decision and Powell’s accompanying speech.
According to the FedWatch Tool provided by CME Group, the current consensus calls for a smaller increase in interest rates of fifty basis points this month. This would indicate a comedown for the Federal Reserve in what may yet turn out to be a significant turning point in policy.
At the time this article was written, the probability of fifty basis points stood at approximately seventy-five percent.
This week has been referred to as the “biggest week of the year” by a financial commentary resource as well. Despite this, the Kobeissi Letter contained a cautionary note for investors.
Part of a tweet that was sent out on December 8 read, “This is why you don’t want a Fed controlled market.” The tweet went on to say, “Imagine the madness if the Fed doesn’t pivot or November CPI is above October’s 7.7% print.”
The spot price of bitcoin is currently awaiting action.
Traders are aware that, with everyone’s attention focused on the Fed, monetary policy and macroeconomic numbers will, in fact, dictate the direction that BTC/USD takes over the next few days.
There may not be much that can be done other than wait for the data to come in, barring any unforeseen circumstances.
According to data compiled by Cointelegraph Markets Pro and TradingView, the Bitcoin to US Dollar exchange rate has continued to range in a region that is all too familiar, hovering around the $17,000 mark.
The pair has not moved in several days, and it appears to be drifting aimlessly as the aftermath of the FTX implosion continues to settle.
According to a summary provided by the analytics resource On-Chain College regarding the medium-term trend, “BTC has been bouncing between Realized Price (green) and Balanced Price (yellow) since June.”
“What I’m looking for is a sustained movement outside of this range, which hasn’t happened yet.”
The price performance of bitcoin was analysed more categorically by some. Bitcoin should “complete the overall correction higher,” according to Matthew Dixon, founder and CEO of the cryptocurrency rating platform Evai. This would help to make up for the majority of the losses caused by FTX.
At the same time, a well-known commentator by the name of Profit Blue maintained that $10,000 would make a comeback prior to the beginning of the year 2023.
“The price of bitcoin is on track to reach $10,000, where it will most likely remain for some time. “Make sure you pay attention to the specifics,” the accompanying chat’s commentary read.
The United States dollar shows signs of regaining its strength
While this was going on, trader Bluntz was keenly anticipating a change in trend for the U.S. dollar, and he warned that Bitcoin could still deliver a bearish end to the year.
The U.S. Dollar Index (DXY), which has been under pressure for several weeks, has recently begun to seal higher lows on daily timeframes, which may be setting the stage for a rebound in dollar strength.
Because of the inverse correlation between the two, this would be bad news for the cryptocurrency markets in general.
In a tweet update on that particular day, Bluntz referred to “quite an ugly 4h about to close here, looking like a lower high on 4h timeframe and lots of catalysts upcoming this week,” and he elaborated on the following:
“dxy is also making a higher low on the daily chart, and it’s looking strong.” My instincts tell me that we are headed for a new low for Bitcoin that is below 15,000 dollars, which I will gladly purchase.
A previous post dated December 5 predicted that the $15,000 zone would be reached in the first quarter of the following year.
In the meantime, a fellow trader by the name of Doctor Profit observed that the DXY had returned to a significant “breakout” zone that had been established in June, and that short-term cues should therefore be decisive for trajectory.
The previous week, he made the following statement: “DXY successfully retested its June breakout for the first time. The mother of all decisions is coming, expect huge volatility next week.” The impending DXY move will determine the future of both the cryptocurrency market and the stock market.
DXY has not yet regained its position above its 200-day moving average (MA). On the other hand, the absence of which was recently referred to as “lights out” for the United States dollar.
The supply shock ratio is getting close to a 10-year high.
Bitcoin is sending out oblique hints behind the scenes, suggesting that things may not be as bad as they seem in terms of the overall strength of the network.
According to the Illiquid Supply Shock Ratio (ISSR) metric, the likelihood of a significant supply-driven rush for Bitcoin is currently higher than it has been at any point in the last nine years and a half.
On-chain analytics company Glassnode explains that the ISSR was developed by a statistician named Willy Woo and a crypto researcher named William Clemente. ISSR “attempts to model the probability of a Supply Shock forming.”
To put it more simply, it determines how much of the available supply there is in comparison to the current demand, and given the ongoing trend of squirrelling away BTC into cold storage, the signal is quite clear.
As of the 10th of December, the ISSR registered 3.537, which is its highest value since August of 2014.
According to Hayes, the sale of Bitcoin miners “is over.”
The research on Bitcoin mining that was done by Arthur Hayes, a former CEO of BitMEX, may provide a final glimmer of hope for the future.
In his most recent blog post, which was published on December 9th, Hayes, who is well-known in the industry as a commentator, took issue with the prevalent narrative that surrounds the financial buoyancy of miners and the effect it has on markets.
According to a report by Cointelegraph, growing concerns that a major capitulation event could flood the market with liquidity have been prompted by increasing sales of Bitcoin (BTC) by miners who are struggling to stay afloat.
According to Hayes, this is not the case, and he goes on to demonstrate that “even if miners sold all the Bitcoin they produced each day, it would barely impact the markets at all.”
According to his conclusion, “as a result, we are free to disregard this persistent selling pressure because it is readily absorbed by the markets.”
Hayes continued by saying that it was likely that the majority of BTC sales had already been completed by both miners and lenders, also known as centralised lending firms (CELs).
“I believe that the CELs and miners are no longer obligated to sell Bitcoin to customers against their will. “There is no reason why you would hold on if you had an urgent need for fiat to remain a going concern,” he wrote. “There is no reason why you would hold on if you needed to sell, because you would have already done so.” There are no more miner loans or collateral to be liquidated because almost every major CEL has either stopped allowing withdrawals (which points to insolvency at best) or gone bankrupt.
The data provided by Glassnode indicates that the 30-day change in supply held by miners, despite the fact that it is still decreasing, is cooling from recent highs, lending support to the hypothesis that sales are slowing down.
In response to Hayes’ article, Bitcoin mining analyst Jaran Mellerud said, “Fears of distressed bitcoin miners creating selling pressure are blown up.”
Cointelegraph.com was cited as the source.
