‘Biggest week of the year’ — 5 things to know in Bitcoin this week

Bitcoin (BTC) begins one of the most important macro weeks of the year in a precarious position below $17,000.

After its most recent weekly close, BTC/USD showed little upside ahead of the Dec. 12 Wall Street open.

With volatility yet to appear, the biggest cryptocurrency continues to trade in a tight range and analysts are increasingly impatient for new catalysts.

They agree that these should come in the next few days – US economic data is expected and its content and impact on economic policy will likely have a significant impact on cryptocurrency markets.

Elsewhere, the uneasy status quo continues – Bitcoin miners are struggling, sentiment is uninspiring and traders are increasingly drawing comparisons to the pits of previous bear markets.

Where might BTC price action be headed next week? Cointelegraph looks at five factors influencing the trajectory.

The “most important” CPI print is the main focus

The phrase on everyone’s lips this week is the Consumer Price Index (CPI), the main measure of consumer price inflation in the United States.

The latest CPI print for November, which will be released on December 13, holds additional significance for the market as it arrives each month. With two weeks to go until the end of the year, for example, the chances of the Santa rally risk asset are now in the balance.

It’s not just the CPI report itself; The Federal Reserve’s Federal Open Market Committee (FOMC) will decide on a rate hike this week, and Chairman Jerome Powell will deliver a speech that will have market commentators scrutinizing signs of a policy shift.

“CPI Tuesday Report, Fed rate hike and JPow talk on Wednesday. Follow us for volatility, on-chain analytics resource Material Indicators summarized at the end of the week.

Famous trader MisterSpread he added Outside the US, where the next decisions are made for one of the “most (if not the most) important” weeks of the year.

“Tuesday’s CPI will again be the ‘most important CPI release ever’ as this time the market has built it up with an epic 2-month short compression rally,” trading firm QCP Capital said in a market update.

QCP continued:

“A higher-than-expected CPI print and a more hawkish Fed have the potential to derail this rally, as we saw in the April and August changes. On the other hand, another print that lowers inflation could see many chasing the rally to continue until the end of the year.

Whether it’s up or down, the CPI causes market volatility around the release, with calm returning only after Powell’s accompanying speech.

According to CME Group’s FedWatch Tool, the current consensus calls for a smaller 50 basis point hike in interest rates this month, signaling that the Fed may yet have a significant turning point in policy.

At the time of writing, the probability of 50 basis points was around 75%.

Chart of Fed target rate probabilities. Source: CME Group

Financial commentary resource The Kobeissi Letter, which described this week as “the biggest week of the year,” nevertheless issued a warning for investors.

“Imagine the frenzy if the Fed doesn’t turn around or if November CPI is above October’s print reading of 7.7%,” part of a December 8 tweet read. to read:

“That’s why you don’t want a market controlled by the Fed.”

BTC spot price is waiting to move

With everyone focused on the Fed, traders understand that policy and macro numbers will de facto dictate what happens to BTC/USD in the coming days.

Barring force majeure, there may be little to do but sit back and wait for the data to come in.

Meanwhile, data from BTC/USD, Cointelegraph Markets Pro and TradingView shows that it continues to fluctuate in the all-too-familiar territory around the $17,000 mark.

BTC/USD 1 day candlestick chart (Bitstamp). Source: TradingView

Unchanging for days, the pair appear disoriented as the dust from the FTX explosion continues to settle.

On-Chain College analyst resource “BTC swings between Realized Price (green) and Balanced Price (yellow) since June” summarized on the medium-term trend:

“I’m interested in a sustained move beyond that range that hasn’t happened yet.”

BTC/USD “Bear Market Levels” chart. Source: On-Chain College/ Twitter

Some had more categorical views on BTC price performance. Matthew Dixon, founder and CEO of cryptocurrency rating platform Evai, he called “Completing a general correction higher” to reverse most of the losses from FTX for Bitcoin.

BTC/USD chart. Source: Matthew Dixon/Twitter

At the same time, the famous commentator Profit Blue is kept He said that $10,000 will be back on the radar before the start of 2023.

“Bitcoin is headed for $10,000 and will likely drop there soon. Pay attention to the details,” read a comment on the accompanying chat.

BTC/USD chart. Source: Profit Blue/Twitter

The US dollar has strengthened

Meanwhile, anticipating a trend reversal for the US dollar, trader Bluntz warned that Bitcoin could still end the year lower.

Under pressure for weeks, the US Dollar Index (DXY) has begun to seal higher lows on daily time frames, potentially setting up dollar strength for a rebound.

This will cause problems for cryptocurrency markets due to inverse correlation.

“It looks like a pretty ugly 4 hours to close here, lower on the 4-hour time frame and a lot of catalysts coming up this week,” Bluntz said. he wrote in a Twitter update a day:

“dxy is also trading higher and lower on a daily basis and looks strong. my gut tells me we are headed for a new low of 15k for btc which I will gladly buy.”

A previous post from December 5th called for reaching the $15,000 zone in the 1st quarter of next year.

Meanwhile, trader Doctor Profit noted that the DXY has returned to the main “breakout” zone since June, and short-term indications should be decisive for the trajectory.

“DXY successfully tested its June output for the first time,” he said reported last week:

“The mother of all decisions is coming, expect big volatility next week. The upcoming DXY move will decide the fate of the cryptocurrency and the stock market.”

DXY has yet to recover its 200-day moving average (MA). But his loss happened recently described “Lights out” for the US dollar.

USD Index (DXY) 1-day candlestick chart with 200 MA. Source: TradingView

The supply shock ratio is approaching a 10-year high

Behind the scenes, Bitcoin is giving subtle hints that things might not be so bad when it comes to overall network power.

According to the Liquid Supply Shock Ratio (ISSR) metric, the probability of a major supply shock for BTC is higher than it has been at any point in almost a decade.

Created by statistician Willy Woo and cryptocurrency researcher William Clemente, ISSR “attempts to model the probability of a Supply Shock occurring,” explains on-chain analytics firm Glassnode.

It simply measures how much supply is available against current demand, and given the ongoing trend of BTC being put into cold storage, the signal is clear.

As of December 10, the ISSR measured 3,537, the highest since August 2014.

Bitcoin Liquid Supply Shock Ratio (ISSR) chart. Source: Glassnode

Hayes Says Bitcoin Miner Sale Is ‘Over’

Bitcoin mining research by former BitMEX CEO Arthur Hayes is the final silver lining for the future.

Related: Bitcoin’s Dull Price Action Gives XMR, TON, TWT, and AXS Gains

In his latest blog post on December 9th, Hayes, who is known as an industry commentator, took exception to the prevailing narrative about miners’ financial stability and its impact on the markets.

As Cointelegraph reported, a surge in BTC sales by miners struggling to stay afloat has fueled concerns that a major surrender event could flood the market with liquidity.

That’s not the case, Hayes says, “even if miners sell all the Bitcoin they produce every day, they will have almost no impact on the markets.”

“Therefore, we can ignore this ongoing selling pressure as it is easily absorbed by the markets,” he said.

Hayes continued that the majority of BTC sales by both miners and lenders known as centralized lending firms (CELs) have already taken place.

“I believe the forced selling of Bitcoin by CELs and miners is over. If you had to sell, you would have done it already,” he wrote.

“If you need a Fiat urgently, there is no reason to stop. Given that almost every major CEL has either stopped issuing money (pointing to bankruptcy at best) or gone bankrupt, there are no more miner loans or collateral to liquidate.

Meanwhile, data from Glassnode shows that while the 30-day supply change held by miners is still declining, it is cooling off from recent highs, supporting the theory that sales are slowing.

Bitcoin mining analyst Jaran Mellerud says, “Fears of Bitcoin Miners Worrying Creating Selling Pressure Exploded” he addedResponds to Hayes’s work.

Bitcoin miner net position change chart. Source: Glassnode

The views, opinions and opinions expressed herein are solely those of the authors and do not reflect or represent the views and opinions of Cointelegraph.