BTC stock correlation ‘not what we want’ – 5 things to know in Bitcoin this week

Bitcoin (BTC) starts the second week of April with a whimper while bulls struggle to maintain support above $ 40,000.

After a refreshing weekend of low volatility, the recent weekly closing saw the market nerves back, and in classic style, BTC / USD fell in the last hours of April 10th.

There’s a sense of being caught between two chairs for the average hodler at the moment – macro forces promise big trend shifts, but are getting slow to unfold. At the same time, “serious” buyer demand is also absent from cryptocurrencies more widely.

But those on the inside show no hint of doubt about the future, as evidenced by the all-time high Bitcoin network fundamentals and more.

The combination of these opposing factors is price action that simply does not seem to know where to go. Can anything change in the coming week?

Cointelegraph takes a look at five potential Bitcoin price signals as a $ 40,000 genetic test approaches.

No “massive downsizing” for BTC?

April 11 starts with a $ 42,000 buyback for BTC / USD, which the pair briefly lost during the night as it dived into the weekly close.

Bitcoin hit $ 41,771 on Bitstamp in the process, thus experiencing its lowest levels in weeks, matching them from March 23rd.

BTC / USD 1-hour light chart (bit stamp). Source: TradingView

In doing so, the largest cryptocurrency also gave up all its gains from the intervening period in order to fall back to the top of its trading area from last month. However, this may end up being a genetic test of past resistance as support. Instead of fearing the worst, many traders hope that a turnaround will begin soon.

“Bullish genetic test of flipped weekly level, finex whale filling bid, I buy the dip. If you want to wait for confirmation, you can wait for a monthly closing to confirm, ”the popular Twitter user Credible Crypto wrote as part of overnight comments.

Credible Crypto commented on both Bitfinex whale purchases and fresh chart data, showing that Bitcoin’s Aroon indicator has turned bullish in recent days.

Designed to identify trends or downtrends in an asset, Aroon has only delivered such bearish-to-bullish “crosses” six times since 2017 – the time of Bitcoin’s previous blow-off peak.

As Cointelegraph recently reported, trader and analyst Rekt Capital also had plenty of reasons to adopt a bullish thesis for Bitcoin. But at around $ 42,150, the weekly closure ultimately disappointed compared to his required $ 43,100.

“A BTC Weekly Candle Close like this and the genetic test of ~ $ 43,100 when new support would be successful,” he explained along with a chart on April 10th.

“Therefore, BTC would be positioned for a move higher within the ~ $ 43100- $ 52000 range, as in the previous blue circle.”

Cointelegraph contributor Michaël van de Poppe, meanwhile, also noted that the late dive on April 10 had closed the potential for a CME Group futures gap to provide a short-term price target at the start of trading on April 11.

Share the pressure across the board

It’s a gloomy day for equities so far, as Asia leads with extensive losses, not a small part thanks to China’s recent COVID-19 lockdowns.

Both the Shanghai Composite Index and Hong Kong’s Hang Seng fell over 2% in morning trading.

In Europe, markets were not yet open at the time of writing, but ongoing geopolitical tensions focused on Russia showed no signs of change.

A glimmer of hope for the euro came in the form of a potential lead for incumbent French President Emmanuel Macron against rival Marine Le Pen in the polls.

Beyond the short term, however, analysts are looking at trends: rapidly rising inflation, losses in the bond market and an apparent inability of central banks to react so far.

The European Central Bank (ECB) is to meet this week with a central focus on inflation control – stopping asset purchases and raising interest rates.

The situation underscores the difficulties that equities and risk assets face in the current climate. As commentators agree that the inflationary environment and associated central bank measures will reduce the demand for Bitcoin and crypto, the true extent of the economic reality is already clear.

In an earlier Twitter post last week, Holger Zschaepitz wrote revealed that for all the gains in, for example, the S&P 500, the Fed’s acquisition of assets means that progress has actually been flat since the global financial crisis.

“Just to put things in perspective: the S&P 500 may have hit a new ATH today, but if you put the index in relation to the Fed’s balance sheet, it trades at the same level as in 2008, so shares have been traded sideways since 2008, basically and due to counterbalancing balance expansion, ”he wrote.

Down together?

For Arthur Hayes, former CEO of derivatives giant BitMEX, the bullish case for Bitcoin as a stockpile in the face of failing fiat is still there.

The problem is that such a scenario is not a reality – yet.

In his latest blog post, published on April 11, Hayes reiterated warnings that pain would take precedence over gain for the average investor with significant risky exposure.

The future could very well see a shift away from US dollar hegemony towards various assets of nation states and individuals, but in the meantime, macroeconomic forces will continue to take their toll on crypto.

If stocks are to dive while central banks trade, theoretically to fight inflation, the rising correlation of cryptocurrencies to them means only one thing.

“The short-term (10-day) correlation is high, and the medium-term (30-day and 90-day) correlations are moving up and to the right. That’s not what we want,” Hayes argued of cryptocurrencies with the Nasdaq 100 (NDX). ).

“In order for me to hoist the flag in support of selling fiat and buying crypto prior to an NDX meltdown (30% to 50% meltdown), the correlations across all time frames must trend demonstratively lower.”

Could stocks really see half of their value removed as a result of the Fed and its actions? That would be everyone’s guess, Hayes replied.

“Down 30%? […] Down 50%? […] your guess is as good as mine, ”he added.

“But let’s be clear – the Fed is not planning to increase its balance sheet again at some point, which means stocks are not rising.”

Federal Reserves balance per. April 4 (screenshot). Source: Federal Reserve

The mood differs from the traditional markets

With the macro gloom on the horizon, it’s no surprise that market sentiment is taking a hit.

After sensing “greed” across crypto in late March, the Crypto Fear & Greed Index is now firmly back in “fear” territory.

An analogue of the traditional market Fear & Greed Index, the metric has thrown away half of its normalized score in under two weeks as cold feet return to traders.

On April 11, Crypto Fear & Greed measured 32/100, while its traditional market counterpart was higher at 46/100, defined as “neutral.”

Deserved or not, Van de Poppe, meanwhile, reminded readers not to act based on sentimental signals.

“Everyone was super bullish on the markets, but now the markets are starting to recover and the fear is taking over,” he said. summarized.

“The feeling is not a good indicator of how you should normally act.”

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

Basics preserve faith

A glimmer of hope comes from a well-known source this week. For all the price reductions, Bitcoin’s network problems are due to fall by only 0.4% over the next few days.

Related: Top 5 cryptocurrencies to see this week: BTC, NEAR, FTT, ETC, XMR

Probably the most important aspect of the Bitcoin network’s self-maintenance paradigm, the difficulty will adjust downward from all-time highs to reflect changes in mine composition.

The small size of the adjustment suggests that miners remain affordable at current levels and are not struggling despite last week’s 10% BTC / USD dip.

Bitcoin difficulty 7-day average chart. Source: Blockchain

Additional data supports the argument that hash rate estimates from the monitoring resource MiningPoolStats also linger at record high levels.

As Cointelegraph recently reported, mining continues to attract major investment, including from Blockstream, which last week announced a solar-powered farm that would generate 30 petahashes per year. second in hash rate when operational.

Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStats

The views 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.