First 6-week losing streak since 2014 — 5 things to know in Bitcoin this week


Bitcoin (BTC) begins the second week of May 2022 bringing down ghosts of its past: how much worse could the picture be for hodlers?

After falling to nearly $ 33,000, the largest cryptocurrency is giving market participants, new and old, a run for their money, and the fear is palpable.

A brutal combination of macro signals, which is expected to continue this week and beyond, is the backdrop for some historical chart disapprovals that no one wanted to see again.

As long as the requests for capitulation continue, there is still a lack of agreement on how far BTC / USD could or should fall to put a convincing fund in the long run.

Cointelegraph looks at the factors that are poised to contribute to market movements in the coming days as Bitcoin approaches its 2022 lows.

Six weekly closes in red

Either way, there’s little to be optimistic about when it comes to Bitcoin price charts this week.

The weekly close on May 8 at $ 34,000 meant that BTC / USD delivered its sixth consecutive weekly red candle.

That graphical feature hasn’t been seen in nearly eight years – the latest occurrence began in August 2014 – data from Cointelegraph Markets Pro and TradingView show.

Back then, as now, Bitcoin was in the second year of its four-year halving cycle, having seen its first jump above just over $ 1,000 in November 2013. This cycle, however, was different. since that blast cap either did not arrive or was much quieter than previous cycles.

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

Meanwhile, macro conditions have fueled any hopes of a belated rise among most analysts, who now expect the financial tightening of central banks around the world to keep risk-tight assets such as cryptocurrencies firmly under control.

Back on the chart, BTC / USD has already lost more than $ 4,000, or 11.1%, in May.

Historically, the worst month of May was, in fact, last year, in which the couple lost 35.3%, according to data from the Coinglass chain tracking resource.

After the April performance, however, the chances of a comeback are slim. For four consecutive years before 2022, Bitcoin, on the other hand, recorded gains of at least 32% in April, but this year recorded a loss of 17.3%, the worst recorded.

Graph of BTC / USD monthly returns (screenshot). Source: Coinglass

The 100-week moving average BTC falls

Therefore, the advice of analysts when it comes to short-term Bitcoin price actions is virtually unanimous when the week begins: be careful.

After the weekly close, the BTC / USD continued to fall to $ 30,000 at the time of writing, seeking to test the $ 33,000 and January lows of $ 31,800.

“Don’t Try to Catch This Knife,” Material Indicators Chain Analysis feature said his Twitter followers alongside a chart showing support for offers disappearing from Binance’s order book.

The May 8 order book shows a significant $ 33,000 bidding wall. It was put there as another wall of buying interest of about $ 33,800 was quickly dealt with by the market, showing the veracity of the selling pressure in the current environment.

BTC / USD (Binance) order book data. Source: Material indicators

“Historically, $ 69.5 million in BTC’s supply liquidity would serve as support, but historically it also had a significant amount of liquidity below it. That doesn’t seem to be the case here,” said Material Indicators. added on that first line of defense.

Last week’s weekly candlestick also saw Bitcoin fall below its 100-week moving average (WMA) for the first time since March 2020.

Then, as with some previous 100 WMA piercings, BTC / USD went on to test the 200 WMA as support. For the popular Bitcoin Back Twitter account, the implications of this return are obvious.

“Both previous times have led to the capitulation to the 200-week moving average in 2014 and 2018,” he said. he wrote part of its latest update.

“Today’s chart has a lot of differences with those two times, and those two times were very similar to each other.”

1 week candlestick chart BTC / USD (Bitstamp) with 100, 200 WMA. Source: TradingView

However, Blockchain Backer added that it expected a “big dive” on May 8 after the latest show of weakness.

Meanwhile, as Cointelegraph recently reported, expectations even long before the weekly close were for Bitcoin to fall to or below $ 30,000 in the coming weeks.

The U.S. CPI is poised to continue the inflation narrative

The summary of Bitcoin in the first week of May was overwhelmingly thanks to the broader macro weakness that is now firmly in the global market.

Actions are particularly problematic in this regard, as the ongoing correlation of cryptography with those indices makes investments a bleak path.

Things peaked last week after hardening U.S. Federal Reserve confirmations, as the S&P 500 capped its first weekly low of five in a row since 2011.

Now, amid the ongoing conflict between Russia and Ukraine and the associated financial pressures, another force must return.

Inflation, which has been at its highest level in the United States since the early 1980s, has only worsened as a result of trade disruptions and sanctions on Russia.

Consumer price index (CPI) data for April will be released this week, and the numbers are likely to reflect the extent of geopolitical turmoil like no other before.

U.S. President Joe Biden will speak on the topic of inflation on May 10 before the May 11 printout of the CPI.

The March CPI was 8.5%, while the noises of the analytical circles already come from the fact that inflation may be reaching its maximum now or in the near future.

“The best scenario for a fund for me would be to capitulate somewhere in the next few days, followed by a lower-than-expected CPI impression on Wednesday,” the popular Daan Crypto Trades trading account. he argued:

“That would be my key to betting big.”

Big or small, CPI events tend to cause short-term BTC price volatility in recent months.

Calculation of capitulation

On the subject of “capitulation” – a massive sell-off as investors panic selling their Bitcoin – the data shows that the temptation to start can be strong.

Currently, more than 40% of Bitcoin’s supply is lost, and this is the highest proportion since April 2020, just after the COVID-19 crash.

At that time, there was a real capitulation event, as evidenced by the price.

The analysis of unrealized gains and losses among hodlers at the time, as defined by the chain analysis firm Glassnode, also confirmed the capitulation on March 16, 2020.

Just nine days later, the company ‘s unrealized profit / loss metric left the “capitulation” zone and reached “hope – fear”, a shadow towards recovery.

Currently, the metric measures “optimism – anxiety” and is traveling down to the “hope – fear” territory.

Bitcoin unrealized gains / losses chart. Source: Glassnode

The feeling collapses to the lower macro zone

No wonder the general sentiment in the crypto market has not benefited from the events of May so far.

Related: 5 major cryptocurrencies to watch this week: BTC, SOMETHING, XMR, XTZ, THETA

According to the Crypto Fear & Greed Index, however, only this week the reality of the situation has come home to most.

As of May 9, the classic sentiment indicator measures 11/100, firmly in its “extreme fear” stretch and also at levels that have historically formed bottoms.

Crypto Fear & Greed has halved its value in just two days.

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

The traditional equivalent of the financial market, the Fear & Greed Index, began diverging from crypto, constant at 30/100, or “fear,” on May 9, even after last week’s chaos.

“With Bitcoin now at $ 33.9,000, traders’ sentiment has dropped to a six-week low,” research firm Santiment said. he commented about the situation:

“We usually prefer to see signs of capitulation like this, as weak hands leaving space are usually what it takes for a truly remarkable rebound.”

Index of fear and greed (screenshot). Source: CNN

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you must conduct your own research when making a decision.