Bitcoin (BTC) is set to break out of a difficult November just above $16,000 – what could be on the menu for BTC price this week?
In a period of what analyst Willy Woo calls “unprecedented deleveraging,” Bitcoin is far from out of the woods after losing more than 20% this month.
The impact of the FTX explosion remains unknown, and even after the first wave of crypto business failures, warning signs continue to emerge.
This week in particular, eyes are on miners who have seen their profits squeezed by falling spot prices and rising hashrates.
A crash is in the air, and if another “capitulation” occurs among miners, the entire ecosystem could be in for another shock.
As “maximum pain” approaches for the average hodler, Cointelegraph takes a look at some of the key factors influencing BTC/USD in the short term.
Bitcoin Miners Due To ‘Capitulate’ – Analyst
Like others, Bitcoin miners see a great deal of trouble when it comes to selling their accumulated BTC at a profit.
Exactly how much financial pain the average miner is experiencing remains to be seen, but one classic measure is once again set to call “capitulation.”
A few months after the last such period, Hash Ribbons warns that conditions have again become unsustainable.
Hash Ribbons uses two moving averages of the hash rate to infer the participation of miners in the Bitcoin network. The intersection of the trend lines represents the stages of capitulation and recovery.
It’s almost time for the first one to appear again for Crypto Mevismi, a contributor to the CryptoQuant on-chain analytics platform.
“So right now bitcoin difficulty is really high for miners, which means; costs increase and it becomes difficult to do business in this environment,” he wrote in a blog post.
“That’s why the miners are not working at full capacity. If they have efficient next-generation mining machines, they put them to work, but that’s about it. Inflation is high and people are feeling the cost of living effects, the price of bitcoin is going down, and mining costs and difficulty are going up. A tough environment for miners.”
Crypto Mevismi added that a significant change in mining difficulty could help the situation.
For the next correction on December 6, BTC.com’s calculations show a difficulty reduction of 6.4% at the time of writing. If it works, it would be the biggest decline since July 2021.
BTC.com and others similarly estimate that the hashrate is now below record lows as miners cease operations.
BTC/USD volatility is expected at the monthly close
BTC/USD managed to avoid significant weekly losses on the last candle that closed on November 27th.
The weekly close at around $16,400 was slightly higher than the previous week, with the pair still near two-year lows, data from Cointelegraph Markets Pro and TradingView show.
With the lack of volatility characterizing intraday price action, traders and analysts remain cautious on the next move.
“It’s a long holiday weekend, so expect things to get interesting as we head into the weekly and monthly close,” chain analyst resource Material Indicators he wrote in part of a tweet last week.
Next post he repeated With the possibility of a November 30 shutdown likely to trigger new volatility, BTC/USD is currently down 21.25% since the beginning of the month.
This makes November 2022 Bitcoin’s worst November since the previous month in 2018, data from Coinglass confirms.
In shorter timeframes, popular trader Crypto Tony, meanwhile, highlighted $16,000 as a key zone to move to higher levels, considering the long-term trend.
“Lower highs with consolidation below key resistance zone. Please wait for landing if you want to enter safely” summarized at the end of the week.
As Cointelegraph has widely reported, Bitcoin’s next bear market bottom is currently the talking point of the moment, and certain targets have become more popular than others.
One vocal commentator calling for further declines, Crypto’s Il Capo, reiterated his view that $12,000 could thus be next for BTC/USD.
Emphasize relationship between constant futures trading volume and the spot price, he warned that the current market structure does not support future gains.
“There is a possibility of 12,000-14,000. 40-50% discount for altcoins,” he stressed.
Under the sea of Bitcoin hodlers gather
Big or small, the population of the Bitcoin ecosystem is “aggressively” adding to BTC exposure this month.
In a positive sign for future supply crunches — where demand is pushing against a larger portion of illiquid supply — hoarding is accelerating.
Retail investors are largely responsible for the current trend, according to chain analytics firm Glassnode.
The number of small investors, called “crabs” and “shrimps” by different names depending on their wallet balance, is increasing.
“Bitcoin Shrimp (< 1$BTC) added $96.2kBTC to their holdings after the FTX collapse, the highest balance increase of all time. This cohort now holds over $1.21 million in BTC, 6.3% of the circulating supply,” Glassnode showed Twitter thread about the phenomenon.
Another post noted:
“Crabs (up to $10BTC) has also seen aggressive balance growth of $191.6kBTC over the past 30 days. This is an all-time high, surpassing the peak of $126,000 BTC per month in July 2022.”
As reported by Cointelegraph, part of the increase in small wallet numbers may be due to exchanges that users withdraw money to private storage.
Woo notes the “maximum pain” coming
For Willy Woo, the analyst behind popular statistics resource Woobull, on-chain metrics indicate that Bitcoin’s next macro bottom is imminent.
Highlighting three of them this weekend, Woo showed that for all intents and purposes, Bitcoin is behaving as it did in previous bear markets.
The portion of BTC supply held by unrealized loss, for example, is approaching macro lows, a phenomenon covered by the “Max Pain” model.
“Bitcoin’s bottom is approaching under the Max Pain model. Historically, BTC price hits macro cycle bottoms (orange) when 58%-61% of coins are underwater. The green shade corresponds to coins locked within the GBTC Trust “Wu he explained next to the chart.
Continuing, he noted that the MVRV Ratio value for BTC/USD also targets the “buy” zone, which has historically given investors maximum profit potential.
MVRV is the market value of a bitcoin divided by the realized cap – the cumulative price at which each bitcoin last moved. As a result, the buying and selling zones corresponding to the price extremes have been presented.
“The MVRV ratio is deep in the value zone,” comments Woo reported:
“Based on this signal, we were already at the bottom of (1) until the latest FTX white swan failure pushed us back into the buy zone (2).”
Woo’s third chart, Cumulative Value Days Destroyed (CVDD), was recently covered by Cointelegraph.
“Use these charts at your own discretion, we are in a period of unprecedented decline,” he said, warning that “past periods do not necessarily reflect the future.”
China’s protests rocked macro sentiment
Some key economic data from the US is due this week, but crypto analysts are more focused on China.
With an already fragile status quo dependent on inflationary trends, unrest in the world’s factories could derail market performance, some warn.
China is in the grip of a wave of protests against the government’s COVID-19 policies, with many cities defying lockdowns to demand an end to “Covid zero”.
With this in mind, risky assets can be in trouble if things get out of hand.
“Bitcoin’s important area failed to break, so we are still consolidating in this range. Now about support,” Michaël van de Poppe, founder and CEO of trading firm Eight, he explained:
“If this is lost, I would expect markets to see new lows this week depending on China and FTX contagion.”
Even the mainstream media warned of the potential implications on a day when John Toro, head of trading at Exchange Independent Reserve, told Bloomberg that “a high risk of contagion is being profiled in the cryptocurrency complex.”
Asian stock markets were modestly lower on the day, with Hong Kong’s Hang Seng and Shanghai Composite down 1.6% and 0.75% respectively at the time of writing.
Bonus: Bitcoin Crude Bottom
On a related macro note, Bitcoin is now “underperforming” in US dollar terms, according to a prominent analyst.
Related: Bitcoin May Need $1B More Losses on Chain Before Falling Below New BTC Price
In terms of WTI crude oil, BTC price action is already at macro lows – and the date calls for a recovery that includes a significant bullish trend against the USD.
“We are finally at the bottom of the channel” TechDev confirmed Weekend:
“Bitcoin’s crude oil (energy) purchasing power peaked in April 2021. It now appears poised for further performance (and growth in USD value).”
An accompanying chart drew specific parallels with bitcoin’s performance in the pit of its last bear market in late 2018.
As Cointelegraph reported, meanwhile, TechDev is far from the only voice calling for bullishness to characterize BTC price action heading into the new year.
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.