New ‘inflation spike’ in the USA — 5 things you should know about Bitcoin this week
Bitcoin’s 2023 debut is a quiet one. Volatility remains absent, and BTC price tips favor new downsides. Markets News Ho,ho-ho! Source: TradingView. Markets News Ho-ho-ho! Source: TradingView. Traders are cautious about what lies ahead for BTC/USD, as signs of a fundamental shift in market behavior remain absent. The bull trap has been in place since 2022, but people don’t know.” Il Capo of Crypto stated on the day. “12k is very probable.”BTC/USD annotated charts. Source: Il Capo of Crypto/ TwitterHis comments were made alongside a slight shift upward in Bitcoin’s price, which reached $16,700 for its first time in several days. (Bitstamp) Source: TradingView. Toni Ghinea, a fellow analyst, reiterated his support for $12,000 as a key support area for Bitcoin. Source: Pentoshi/ TwitterFellow analyst Toni Ghinea meanwhile doubled down on a $11,000-14,000 floor for BTC/USD. This is in line with the Twitter commentary of Jan. 1. Despite the fact that interest rates have been falling at a rapid pace, the Federal Reserve has not yet indicated that it will change its mind. Source: CME Group. The Fed target rate probabilities chart. Source: CME Group. The Fed will release minutes of its Federal Open Market Committee meeting on Jan. 4. This will provide clear guidance on future policy. He warned that it was not the end of this cycle in a tweet on January 2. “We will likely see CPI lower, possibly even negative in 2H 2023 and the US in recession according to any definition. Fed will reduce and government will stimulate. We will see another inflation spike. It’s not difficult.” The Fed policy results have been obvious for 2022 stock market performance. For example, the S&P 500 finished the year 1,000 points lower than many of the most popular estimates. It’s not difficult.” While markets wait for the first Wall Street trading day in 2023, the U.S. Dollar index (DXY), is already struggling in what could prove to be the year’s first silver lining to crypto assets. The DXY is on the verge to break down again, with 10yr yields hitting resistance, WTI crude rebounded at resistance and gold paused at resistance. Callum Thomas, founder of macro research house Top Down Charts summarized the day in part of Twitter comments. dollar index (DXY) 1-week candle chart. Source: TradingViewDifficulty due to drop amid grim hash rate dataIn the knee-jerk world of Bitcoin fundamentals, it is business as usual as the year begins.Bitcoin’s upcoming difficulty adjustment due Jan. 3 will wipe out gains made two weeks prior in a sign that miners remain under pressure over BTC price performance.After rising 3.27% on Dec. 19, difficulty will drop by an estimated 3.5% this week, as per data from BTC.com, thus failing to seal new all-time highs.Bitcoin network fundamentals overview (screenshot). Source: BTC.comDifficulty data provides interesting insight into Bitcoin’s health “under-the hood”. Despite concerns over miners financial stability, competition to block subsidies remains conspicuously strong. However, late December data showed a grim picture for average network participant. The hash rate, which is an estimate of the aggregate processing power dedicated for mining, was at its lowest level for the year. Charles Edwards, founder and CEO of Capriole Investments said that this was the “most brutal Bitcoin miner capitulation ever” in 2016. “Hash Ribbons capitulation captured the lowest Bitcoin hashrate reading of 2022 as miners defaulted under the great pressure of squeezed global margins.” Annotated chart. Source: Charles Edwards/ TwitterA chart was attached that showed Bitcoin’s hash-rate indicator entering another “capitulation zone”, in which miners cut off their hash rate en masse. Similar events occurred in July 2022 and another one a year before. Cointelegraph reported that Bitcoin’s public miners are still feeling the strain. Core Scientific received a provisional bankruptcy loan from BlackRock of nearly $40 million. BTC supply goes to sleepBitcoin’s supply has been inactive for five to seven years, according to Glassnode/ Twitter. This chart shows that the supply was last active between 5-7 years ago. Source: Glassnode/ TwitterThis trend has been in place for a long time, as people who bought Bitcoin in the last halving cycle are seeing their prices return. The supply of BTC is now at its lowest level in five years, Glassnode confirms. The supply active between three- and five years ago is now at a one-year low. BTC supply last active 3-6 month ago chart. Source: Glassnode/ Twitter “Supply has become rare again,” Stockmoney Lizards, an analytics resource, responded to similar dormancy data last month. An accompanying chart showed the relationship of dormant supply with macro highs and lows for BTC prices. BTC/USD annotated chart. Source: Stockmoney Lizards/ TweetSentiment in no man’s land. This is a reading of the Crypto Fear & Greed Index. It continues to surf the territory just above “extreme Fear.” This story has been a hallmark of much of the period following the FTX meltdown. It hit a low of 6/100 in 2022, a score that was rarely seen in Bitcoin’s history. It hit a low of 6/100 in 2022, a score that was rarely seen in Bitcoin’s history. Source: Alternative.meThe opinions, thoughts, and views expressed here are those of the authors and do not necessarily reflect the views or opinions of Cointelegraph.