Bitcoin (BTC) is approaching its second attack on pivotal resistance this week as bulls remain firmly in the driver’s seat.
After a mixed weekend that saw both a run on $48,000 and a major rejection at that level, Bitcoin is already back, having made up all of its losses.
With conditions broadly favorable for continued strength, it may only be a matter of time before the next impulse move reshapes the BTC/USD spot market.
Cointelegraph suggests five factors worth taking into account when assessing where Bitcoin might be headed in the coming days.
Bitcoin returns to challenge $48,000
It was a rags-to-riches story for Bitcoin this weekend.
Saturday began on a high after BTC/USD jumped above $47,000, a zone which immediately borders a large resistance wall which so far remains in place.
Thereafter a failed attack on that zone ended in a sharp reversal, with Bitcoin dropping to local lows of $45,500 before recovering.
That recovery, which took place through Sunday, ultimately brought Bitcoin back to where it had begun the weekend’s action, and Monday’s picture provides a firm sense of deja-vu for traders.
“Bitcoin needs to regain $46.5K,” Cointelegraph contributor Michaël van de Poppe warned before the latest run-up was confirmed.
“If that happens, then I’m assuming the highs will be tested again. If not, $44K next.”
With the prospect of a rematch now on the cards, sellers are nonetheless steadfast at $48,000. A look at buy and sell levels on major exchange Binance shows the extent of the resistance, with support $45,000 now also substantial.
Fellow trader and analyst Rekt Capital meanwhile considered an ascending triangle structure for BTC/USD, with Sunday providing a test of its upper boundary, but not a breakout.
“BTC has formed a new Lower High on this most recent successful retest attempt,” he tweeted Monday.
“Has $BTC now transitioned into this current market structure?”
Hash rate, difficulty point to the sky
Some familiar good news from a familiar source: Bitcoin network fundamentals are still climbing towards all-time highs.
After the latest automated readjustment on Friday, difficulty saw an increase of 7.3%, completing its best performance since Bitcoin’s May price sell-off.
As Cointelegraph continues to report, mining power is returning to Bitcoin after being forced out of China, while existing operations are adding to their capabilities.
The result is a larger Bitcoin mining hash rate, and with it more competition for the Bitcoin block subsidy, a process which in turn leads to difficulty rising to keep the network in equilibrium. This also increases network security, and underscores miners’ long-term commitment to Bitcoin — investment in return for profits.
#Bitcoin difficulty adjusted +7.3% this morning as hashpower starts coming back online (having left China)
— Alistair Milne (@alistairmilne) August 13, 2021
Hash rate stood at 113 exahashes per second (EH/s) on Monday, now firmly above the 100 EH/s mark and 30 EH/s above the post-May lows. The all-time high for hash rate, which was in situ before the China episode, is 168 EH/s, according to monitoring resource MiningPoolStats.
Dollar celebrates 50 years with a whimper
Favorable headwinds look set to add to Bitcoin’s strength from the wider macro environment this week.
After a tough end to the week for the U.S. dollar, Monday has so far delivered only a modest reversal. This weekend marked 50 years since the U.S. ended the dollar’s gold convertibility. Dollar weakness, while not a guarantee of easy returns for BTC, still remains a useful indicator of crypto market potential.
At the time of writing, the U.S. dollar currency index (DXY) stood at a 92.6, down from over 93 last week.
In a market summary, Justin d’Anethan, head of exchange sales at NASDAQ listed crypto firm EQONEX, reiterated a falling dollar’s potential to be a boon for hedge assets such as gold as well.
“One could also observe the dollar falling, supporting risk assets and also gold, trying to make a comeback,” he wrote Monday.
“In the crypto space, you can feel the bullishness as well; investors are a lot richer now than they were last week or the week before that.”
D’Anethan was also hopeful of an additional macro catalyst from the U.S. government in the form of the contentious infrastructure bill having its crypto tax language amended in the near future.
“If a more lenient wording can go through, this will be very supportive,” he added.
Greed hits highest since April
A slight counterpoint to the desire for sustained bullish momentum on Bitcoin is market sentiment, which is already flirting with “extremes.”
These come in the form of the Crypto Fear & Greed Index, which over the weekend flashed its highest score in four months.
Leveraging a basket of factors to determine whether crypto in general is oversold or conversely due for a sell-off at certain prices, the Index reached 76/100 Sunday, corresponding to “extreme greed.”
By contrast, just last month, it measured 10/100 — the polar opposite of today, or “extreme fear.”
A potential further attack on $50,000 for Bitcoin could thus serve to upend sentiment once more, increasing the risk of a knee-jerk correction as the market heads towards April’s all-time highs.
Altcoins shine as Bitcoin coils
One coin’s loss is another coin’s gain this week — and it looks like altcoins may be the main beneficiaries of current sentiment.
Related: Top 5 cryptocurrencies to watch this week: BTC, ETC, LUNA, KLAY, AXS
With Bitcoin up around 8% versus a week ago, major altcoins are nonetheless outperforming its gains.
Out of the top 50 cryptocurrencies by market cap, many have seen weekly returns in excess of 20%, with Solana (SOL) leading with 60% on Monday.
As Cointelegraph reported, hopes are high that some form of “alt season” can still return this summer, possibly fuelled by a DeFi resurgence.
At 43.7%, Bitcoin’s market cap dominance is also falling despite its strong performance, opening up the potential for altcoins to lead the way into Q4.
