Fed takes on stablecoins: 5 things to watch in Bitcoin this week

Fed takes on stablecoins: 5 things to watch in Bitcoin this week

Bitcoin (BTC) emerges into a new week with middling price action and optimistic fundamentals — what could the coming days have in store?

Still holding $30,000 support, there’s little about Bitcoin to truly excite traders, but volatility has already reminded them of its presence over the past week.

Our top trading bots

As a recovery in mining continues, everyone is playing a game of “wait and see” when it comes to the 2021 Bitcoin bull market.

Cointelegraph takes a look at five things that might give BTC price action some direction in the short term.

Dollar sees strength as stocks calm advance

It’s a classic summer picture in equities — a slight comedown last week followed all but constant gains, with caution coming from Covid-19, inflation and other triggers.

This time of year, however, is renowned for its lack of action, and even recent changes amount to little on a wider scale.

“The Covid backdrop is just one of several factors that may be adversely impacting the reflation trade,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, wrote in a note quoted by Bloomberg.

The U.S. dollar gained some strength from the modest shake-up in stocks, with the U.S. dollar currency index (DXY) climbing toward 93.

As Cointelegraph reported, DXY’s inverse correlation to Bitcoin remains in the spotlight for some — a short-term peak for the index may correspond to price pressure for BTC/USD.

Another focus is oil on the back of a lessening of tensions among OPEC+ members and a fresh agreement to boost output. While traditionally less impactful on Bitcoin behavior, any unexpected volatility can provide fuel for a low-volume cryptocurrency market.

This was witnessed last week, as reports of Bank of America greenlighting Bitcoin futures trading for select clients swiftly sent BTC/USD $1,000 higher.

Actions by another bank, namely the U.S. Federal Reserve, may be more important this week. A working group on stablecoins will get the attention of Treasury Secretary Janet Yellen when it is convened with the goal of "intra-agency work."

Weekly candle raises risk of $29,000 drop

On spot markets, Monday began with hope for the future rather than confidence in current price events.

The weekend saw seesawing from BTC/USD, still unable to beat resistance at $32,000 or higher but likewise apt to avoid tests of $31,000 support.

At the time of writing, $31,750 formed a focus on lower timeframes, with ranging firmly the defining feature of the hourly chart.

Fed takes on stablecoins: 5 things to watch in Bitcoin this week
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

“It's time for a green week for Bitcoin,” popular trader Michaël van de Poppe ventured.

Talk of if and when a Bitcoin price bottom could occur remains a major talking point. As Cointelegraph noted on Sunday, the drawdown from the most recent all-time high of $64,500 has now lasted for three months — the second-longest ever within a bull cycle.

With popular opinion favoring a return below $30,000, Van de Poppe argued that a bottom may not be as dramatic as expectations demand.

“A bottom usually doesn't look great, as the majority of the people are expecting further downwards movements of the markets,” he told Twitter followers.

“A bad weekly candle doesn't have to mean prices are going to fall further.”

That candle did indeed disappoint, with Sunday’s weekly close on BTC/USD being its lowest of 2021 so far.

For trader and analyst Rekt Capital, an ability to reclaim $32,000 is a problem in itself, opening up the path to levels around $29,000.

“Bitcoin is threatening to lose its Weekly support (~$32000). Today is the last day for $BTC to reclaim this support,” he warned Sunday alongside an accompanying chart.

“Lose it and there is little higher timeframe support to stop BTC from another revisit of the green area.”
Fed takes on stablecoins: 5 things to watch in Bitcoin this week
BTC/USD scenario with support and resistance zones. Source: Rekt Capital/ Twitter

Difficulty beats expectations

In contrast to price, Bitcoin’s network fundamentals continue their march back to strength after the unprecedented events of May and June.

The network hash rate, still holding up above its local low of 83 exahashes per second (EH/s), has not seen any further major setbacks as miners relocate away from China.

The real signs of progress, however, come from difficulty.

This weekend’s automated readjustment saw difficulty dip by a modest 4.8% — a pleasing contrast from prior estimates. Two weeks beforehand, difficulty was forecast to decrease more than ever — by almost 29% — which slowly improved through the two-week difficulty cycle.

Now, Bitcoin is on track to have its first positive readjustment since before the May price crash.

The changes speak to Bitcoin’s unflinching ability to monitor itself and incentivize miners back to the network while continuing to process transactions unhindered.

As such, commentators believe that the worst of the recent upheaval is firmly in the past.

“The hangover of a difficulty adjustment downwards from the China crackdowns should conclude after this adjustment,” Kevin Zhang, vice-president of Digital Currency Group mining advisory subsidiary Foundry Services, said at the weekend.

“Expecting to see the hashrate and difficulty to slowly recover from here.”
Fed takes on stablecoins: 5 things to watch in Bitcoin this week
Bitcoin difficulty chart. Source: Blockchain

Meanwhile, both hash rate and difficulty have dipped below their levels at the May 2020 block subsidy halving.

Funding rates stay cool

On-chain indicators are anything but bearish, but it’s the sustained nuanced signals, which are on the radar this week.

Specifically, funding rates across exchanges have remained neutral or lightly negative throughout the recent price volatility — a hopeful insight into traders’ mindset.

As Cointelegraph reported, large whales appear alone in being apt to sell at current levels, with other investor profiles conversely buying up the supply.

In terms of volume, however, a $30,000 Bitcoin is predictably uninteresting. Both futures and PayPal volumes have decreased significantly, the former returning to levels from late last year.

Fed takes on stablecoins: 5 things to watch in Bitcoin this week
Crypto futures open interest and volume chart. Source: Bybt

Infamous Bitfinex shorts "unwind"

The weekend’s price action was accompanied by fluctuating bets among large-volume investors.

Short positions on Bitfinex, a driver of short-term volatility as witnessed throughout the past weeks, ebbed and flowed.

On Monday, shorts were decreasing further, as the market waited for cues over general direction.

Fed takes on stablecoins: 5 things to watch in Bitcoin this week
BTC/USD shorts 1-day candle chart (Bitfinex). Source: TradingView
Continue reading about Cointelegraph
Institutional demand for Bitcoin evaporates as BTC struggles below $31K
The rocky road that Bitcoin (BTC) has been on for the past two months continued on July 19 as a widely predicted move downwards materialized in the early...
Nifty News: Walking Dead invade Sandbox, mining lease NFTs, CryptoPunk in art gallery
Tokenized Walking DeadEthereum-based NFT metaverse “The Sandbox” has partnered with Skybound Entertainment to incorporate a Walking Dead game in the virtual...
Crypto traders say negative funding rates are buy signals, but are they?
Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. This fee ensures there are no exchange risk imbalances. Even...
Not sure if the bulls are back? Here’s how the golden cross spots trend reversals
The most important aspect in trading is to correctly identify the long-term trend. Once this is done, the rest of the steps are not very difficult because...
'Cash, candy or Bitcoin': Paying minors in 2021
A Bloomberg contributor will be paying his son Bitcoin in exchange for chores above and beyond his usual scope, but he is seemingly unable to decide on...
Reports suggest Goldman Sachs is now offering Bitcoin derivatives
Investment banking giant Goldman Sachs has reportedly opened up futures trading on Bitcoin to Wall Street executives.According to Bloomberg Law, last month...
The crypto FBAR: Implications beyond
The United States Department of Treasury is again sharpening its sword upon crypto. In January 2021, the Department of Treasury’s Financial Crimes Enforcement...
Here's why April may be the best month yet for Bitcoin price
The U.S. dollar is starting to weaken once again as sellers are pushing the U.S. Dollar Index (DXY) downward, which could strengthen the momentum of Bitcoin...
NFTs come to Saturday Night Live in rap sketch
The craze behind non-fungible tokens, or NFTs, has seemingly reached peak parody after NBC's famed Saturday Night Live sketch comedy featured it in a skit...
Price analysis 3/19: BTC, ETH, BNB, ADA, DOT, XRP, UNI, LTC, LINK, BCH
A report by Deutsche Bank Research said that Bitcoin (BTC) has become “too important to ignore” and may attract regulation by the end of 2021. Deutsche...
Unpopular opinion? The problem with blockchain gaming is blockchain
The use of blockchain in crypto-based games could be a hinderance to the adoption as well as an exciting unique selling point. Now, before you start taking...
1 in 7 Chinese Piled in Cryptos, Only 2% Not Familiar With BTC
Chinese are not only aware what cryptos are but they also gladly pile funds into them. The survey results are showing that 1 in 7 Chinese citizens have...
Las Vegas Strippers Are Paid in BTC Via QR Tattoos on Bodies
Legends Room, a Las Vegas adult entertainment club, is a unique place, where strippers accept BTC as payment for their performances. Moreover, the club...
Putin Says Russia Can’t Stand By When Other Countries Adopt Blockchain
Russian President Vladimir Putin happens to be among the supporters of cryptocurrency technologies. According to his words, Russia cannot lose the race...
Putin to Evade Western Sanctions Thanks to “Cryptoruble”?
Christmas and New Year holidays are almost here, so it’s quite a time to think about best gifts you can make for your loved ones. Wait, you want to cryptograffiti,...