This week with our 9th edition of the Bitcoin Moves blog series, bitcoin is facing pressure at the $12k resistance level.
Bitcoin started the week out strong, looking like it was going to continue its steady rise in price. On Tuesday, it seemed like bitcoin might break out past $12k and surge higher, given that the price continued to test the level. On Wednesday morning, the price dropped down to about $11,200, a 7.5% loss from the day’s high at $12,061.
TL;DR:
- Despite the day’s losses, the market continues to show positive momentum with bitcoin finding support at the about $11,200 after facing selling pressure at $12k
- Bloomberg writer Vildana Hajric wrote an article discussing the potential for bitcoin to again reach the critical $12,000 level based on a technical indicator
- Intotheblock’s BTC short term signals point to a mostly bearish market, analyzing live market and network data
- Cointelegraph Markets Editor Horus Hughes points to high volume surge looking at the 20-MA bollinger bands
- PlanB’s stock-to-flow (S2F) Indicator shows a ~$15,000 price prediction
Where is BTC going next? We want to know what you think — tell us on Twitter.
Here’s your market snapshot:
All prices are in USD and time zones are PT.
Bitcoin price movements
- Current Bitcoin price: USD $11,394, up 0.7% from last week (USD $11,310)
- 24hr high: USD $12,061
- 24hr low: USD $11,156
- 24hr change: -4.99%
- 24hr BTC volume sits around USD $26 billion, up 18% from last week (USD $22 billion)
- Bitcoin Dominance sits ~55.20%
- 30 day high / low: USD $12,359/ $11,012
- 90 day high / low: USD $12,359 / $8,975
- Bitcoin Volatility Index (BVI), 30day: 1.00713%, flat over last week (1.00713%)
- Hashrate: 125.16 EH/s, up 1% over last week (123.92 EH/s)
- Network value to transaction ratio (NVT): 77.23
- US dollar index (DXY): 92.82 down 0.3% from last week (93.10)
- SPX-BTC 90d correlation: 0.308, up31% over last week (0.235)
Impact of the US dollar
While we’re seeing an increase in the value of the US dollar on the day, the dollar has been steadily weakening over the past six months.
The markets have been closely watching the dollar slide, expecting a decrease in value based on the level of quantitative easing by the Federal Reserve. This has been the catalyst for much of the institutional interest that we’ve seen in bitcoin over the summer.
US Dollar Index (DXY), 6 months, via MarketWatch
Today, some analysts point to the performance of the dollar as a reason for BTC’s dramatic price change since yesterday, noting that nothing about bitcoin’s bullish fundamentals have changed. But as fears continue to mount on the weakening of the US dollar as a global reserve currency and the rising rate of inflation, some analysts note that this could be the end of the recent bitcoin rally.
$12k remains a resistance level
On Monday, Bloomberg writer Vildana Hajric wrote an article discussing the potential for bitcoin to again reach the critical $12,000 level based on a technical indicator: “over the weekend, the largest cryptocurrency bounced off the lower Trading Envelope band, a move that suggests it’s likely to retest $12,000. The measure tends to smooth moving averages to map out higher and lower limits.”
On Tuesday we saw that happen as BTC again tested the $12k level several times. Bloomberg’s analysis that bitcoin was likely to surge higher proved correct in the short term, but more importantly points to the kind of engaged adoption that we’ve been seeing from institutions. It’s likely that as BTC continued to flirt with $12k over the past few weeks — and that the gap between $12k and $20k has remained unknown territory since 2017 — investors were eager to pull some gains off the table at the year’s high to validate their positions.
Horus Hughes, Cointelegraph Markets Editor gave us his take on the recent price activity: “Bitcoin price finally managed to push through the resistance cluster at $11,600 – $11,850 on a high volume surge that pushed the price through the 20-MA of the bollinger band indicator. This move coincided with a bull cross on the moving average convergence divergence (MACD).
Traders will now look for the 20-MA to hold as support and if Bitcoin is able to sustain previous bullish momentum, then an attempt at flipping the $12,200-$12,400 resistance zone to a new level of support could be possible.”
BTC-USD, 1hr line, looking at 20-day MA with bollinger bands
In the very short term, Intotheblock’s BTC signals point to a bearish market, analyzing live market and network data.
Bitcoin S2F model highlights investor interest in asset scarcity
Bitcoin’s store of value narrative has been finding support from institutions recently, as we discussed in our recent blog post highlighting MicroStrategy’s notable BTC investment in August. The scarcity of bitcoin is a significant driver in its increasing value, particularly in the past few months since the third bitcoin halving on May 12th, 2020.
BTC-USD 1day line, BTC price since May 12 halving
Scarcity appears to be one of the most important aspects of bitcoin when it comes to evaluation, particularly by institutions. Since the bitcoin halving, we’ve seen the price rise from $8948 to over $12,000 today — a 34% increase.
One of the tools that some traders use to analyse bitcoin’s future value is the stock-to-flow ratio (S2F), that measures bitcoin’s scarcity. As we noted in a blog post making predictions for the May 12th bitcoin halving, S2F is a ratio traditionally used to determine the abundance of assets like gold and silver, by dividing the commodity’s inventory by its annual production.
Before the halving, bitcoin’s stock-to-flow (S2F) ratio was 24, and was expected to double to 48 after the halving. Today, the realized S2F is 32, according to the Clark Moody bitcoin dashboard, with a projected S2F price of $15,216 and forward S2F ratio of 55.
“I think the first principle that scarcity has value, like Satoshi mentioned and intended, is key.” PlanB explained to OKCoin. “The fact that there seems to be a relation between totally different asset classes is to me more worthy than the time series aspect.”
PlanB points to an updated version of the S2F model, the BTC S2F cross asset model S2FX, which enables valuation of different assets like gold, silver, and BTC with one formula. In an April 27th blog post introducing S2FX, PlanB clarifies that the S2FX model is “a working hypothesis.”
PlanB also noted the most quoted part in the original S2F article, which appears to be an accurate prediction, looking at the movement in recent markets:
“People ask me where all the money needed for $1trn bitcoin market value would come from? My answer: silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey etc), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs.”
In the news
Protection Over Profit: What Early Mining Patterns Suggest About Bitcoin’s Inventor
New research from RSK/IOV’s Sergio Demian Lerner reveals that Patoshi, an early Bitcoin miner assumed by many to be Satoshi Nakamoto, mined using an algorithm that was not included in Bitcoin’s first client release. Read more from Coindesk.
Grayscale trust premiums
Grayscale publicly launched two new cryptocurrency funds last week, a litecoin trust and a bitcoin cash trust, with demand driving one of the funds to a staggering 1,000% premium. Read more from Forbes.
We recently explained these Bitcoin Cash and Litecoin trusts.
Recommended reads
Bitcoin, MicroStrategy, and Macro Price Trend
What MicroStrategy’s $250M bitcoin purchase could mean for BTC’s future price action. Read the post.
What Has Driven CELO Up 130% Since the Start of August?
The asset is up significantly since OKCoin listed it on August 11th, here we look at the reasons why.
With market participants supporting a continued BTC rally, now appears to be a good time to make moves into bitcoin. Choose the right exchange: OKCoin has industry-low fees and is consistently reliable without downtimes.
