Bitcoin (BTC) is approaching its second attack on pivotal resistance this week as bulls remain firmly in the driver’s seat.
After a weekend of mixed results that saw a run at $48,000 and major rejection at that level Bitcoin is now back. It has recouped all its losses.
The conditions are favorable for continued strength and it is likely that the next impulse move will reshape the BTC/USD spot exchange.
Cointelegraph recommends five factors to consider when assessing the future direction of Bitcoin.
Bitcoin challenges $48,000
This weekend was all about Bitcoin.
Saturday started on a high note after BTC/USD rose above $47,000. This zone immediately borders a large resistance wall that has so far remained in place.
After that, an unsuccessful attack on the zone resulted in a sharp reversal. Bitcoin plummeted to $45,500, before recovering.
The recovery that took place Sunday through Monday brought Bitcoin back to the point it was at the weekend’s beginning. Monday’s image provides traders with a strong sense of déjà-vu.
“Bitcoin needs to regain $46.5K,” Cointelegraph contributor Michael van de Poppe warned before the latest run-up was confirmed.
“If that happens, then it’s my assumption that the highs will again be tested.” If not, $44K is next.
Sellers are still holding firm at $48,000 despite the possibility of a rematch. A look at buy and sell levels on major exchange Binance shows the extent of the resistance, with support at $45,000 now also substantial.
Analyst and fellow trader Rekt Capital meanwhile considered an ascending triangle structure BTC/USD. Sunday provided a test of its upper boundary but no breakout.
“BTC has formed a new Lower High on this most recent successful retest attempt,” he tweeted Monday.
“Has $BTC been converted into the current market structure?”
Hash rate, difficulty point towards the sky
A familiar source has some good news: Bitcoin network fundamentals continue to climb towards all-time highs.
The difficulty rate increased 7.3% on Friday after the automated readjustment. This is its highest performance since Bitcoin’s May price drop.
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.
This results in a higher Bitcoin mining hashrate and more competition for the Bitcoin Block Subsidy. This process leads to difficulty in maintaining equilibrium. This increases network security and underlines miners’ long-term commitment for Bitcoin — investing in return for profits.
On Monday, the hash rate was 113 exahashes per minute (EH/s), which is now well above the 100 EH/s mark. It also stands 30 EH/s higher than the post-May lows. According to MiningPoolStats monitoring resource, the all-time highest hash rate was 168 EH/s. This was before the China episode.
With a whimper, Dollar celebrates 50 Years
Favorable headwinds are expected to increase Bitcoin’s strength in the macro environment this week.
The United States dollar suffered a difficult week, with Monday only showing a slight rebound. This weekend marked 50 year since the U.S. ceased gold conversion. While not an indicator of crypto market potential, dollar weakness is still a useful indicator.
The U.S. currency index (DXY), at 92.6, was the current writing. This is down from 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.
He wrote Monday, “One could also see the dollar falling, supporting risks assets and also as gold trying to make it back.”
“You can feel the bullishness in the crypto space; investors are much richer now that they were last week or the previous week.”
D’Anethan also hoped for an additional macro catalyst by the U.S government in the form the contentious infrastructure bill, which would see its crypto tax language modified in the near future.
He said, “If you can come up with a more gentle wording, it will be very supportive.”
Since April, Greed is at its highest level
Market sentiment is a slight counterpoint to the desire to sustain bullish momentum on Bitcoin. It is already flirting in “extremes”.
These come in the form of the Crypto Fear & Greed Index, which over the weekend flashed its highest score in four months.
The Index was calculated using a variety of factors to determine if crypto is in general oversold or due for a sale-off at specific prices. It reached 76/100 on Sunday, which corresponds to “extreme greed”.
It was 10/100, which is the extreme opposite of today or “extreme fear.”
As the market moves towards April’s record highs, a potential attack on Bitcoin at $50,000 could cause more panic and increase the risk of a correction.
Altcoins shine like Bitcoin coils
One coin’s loss this week is another coin’s gain — and it seems like altcoins could be the main beneficiaries from current sentiment.
Major altcoins have outperformed Bitcoin’s gains, with Bitcoin now up around 8% compared to a week ago.
Many of the top 50 cryptocurrency market capitalizations have seen weekly returns exceeding 20%. Solana (SOL), however, is leading with 60% Monday.
As Cointelegraph reported, hopes are high that some form of “alt season” can still return this summer, possibly fuelled by a decentralized finance resurgence.
Bitcoin’s market dominance of 43.7% is falling despite its strong performance. Altcoins have the potential to lead the Q4 revolution.
