Bitcoin this week: Why cryptocurrency was down this past week

By May 7, 2022Bitcoin Business
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If you are new to crypto and perhaps you are still looking for the besttrading platform for beginners, note this! Irrespective of what you have heard, the cryptocurrency market does not feel right at the moment. The uncertainty in the market cannot be described, and the fear-greed index just gives us a holistic view of the market, not its full expression. Bitcoin spearheads this uncertainty, and the crypto market leader just achieved a feat it last achieved roughly two years ago; its fourth consecutive red weekly candle. The $40,000 mark, which used to be the support, has become a resistance level, and there is little to no comfort for bulls in this market.

Having lost almost $4,000 in the last few days, rumors are flying that we might be testing lower support levels at the $35,000 and $28,000 mark. While this more than toasts traders, there is increasing optimism amongst long-term holders and especially miners about the prospects of bitcoin being a viable investment over the years.

There are many macroeconomic factors that will influence the price of bitcoin in the coming days, and let’s look at five of these defining factors.

The French election results are out, but China remains a big factor

The French presidential results came out a few days ago. While the election was one of the closest in recent French history, The incumbent leader, president Macron, emerged victorious once again. Macron’s victory is bound to spell success for the French stock exchange and help relieve the selling pressure on the battered Euro. The Euro has been the subject of much debate in recent weeks. Like the United States, it is faced with a high risk of inflation, yet, the European Central Bank has not batted an eye at tackling the problem or reducing its almost $10 trillion balance sheet.

While this Macron news would give bitcoin some momentum on a normal day, the market didn’t respond at all to the announcement. It was not that it was expected or not a big enough piece of news; rather, news of increasing cases of Covid-19 in china has led to the bearish market sentiment. The market is pricing the risk of COVID increases in China, spreading up to the US and Europe, and not meeting effective strategies for its containment.

Dollar up heads down

A defining point of the macroeconomy that is making crypto traders devastated is that the dollar is gaining strength.

After reaching its two-year high last week, the index tracking the dollar looks to continue its upward projection. Currently above the 101 mark, the DXY is almost at its March 2020 levels when global assets around the world crashed due to the coronavirus. The inverse correlation between the dollar and crypto has made it news of disdain for the crypto market. It doesn’t seem right, though; the Feds recently announced a 50BP hike effective from May, and the Yen is collapsing. All signs point to the dollar being in an unbelievable position with its current upward trend.

Hodlers keep holding

The volatility in the market is not one many short-term traders have seen before. Only the experienced can avoid getting burnt. This fear is making traders back off and stay on crypto for now. We know this by looking at bitcoin’s supply from on-chain data. It has been on the same level for over a year, but recently, it touched an all-time high. More tokens are being held rather than being spent. Data received from Glassnode, a prominent crypto analytics platform, shows that bitcoin’s supply has crossed the 64% mark for the first time since data have been taken. This data shows that beyond the holders refusing to touch their tokens, miners are also being optimistic yet careful.

Weekly chart goes for four red.

Oops!! Bitcoin is everything but rising. The weekly chart of the crypto market leader closed its fourth consecutive week in the red. April 25th is the fourth straight week, and the last time this happened was in June 2020, at the turn of the covid season. Bitcoin then went further down this past week to touch lows of $39,000. Most traders are trying to gauge its next movement using different pairs, but in all, the bulls seem to be far suppressed.

Solid fundamentals, weak showing

The claim that “if your fundamentals are still right, don’t give up on the asset” is very true. The growing trend reveals a bullish and neutral trend of miners. Although the price has not been indicative of it, the cryptocurrency’s hash rate and difficulty are set to touch all-time highs. The difficulty should hit a record of 29.3 trillion dollars with just a 2% increase.

The hash rate, on the other hand, has reached an all-time high, and the sentiments point to it still going higher.

Conclusion

Bitcoin’s price increase is certain, and although we have endured a rough year in terms of return on investment, turning the cup over shows, we have been given enough time to either average down or get the crypto at a lower price. No one knows how soon bitcoin will turn bullish, especially with the number of factors attached to it, but one thing is sure; since all other things are right, it is just a matter of time. You can see details on transactions, wallets, and epochs on the best Bitcoin explorer.

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