‘Huge bullish signal’ or ‘real crash?’ 5 things to know about bitcoin this week

Bitcoin (BTC) is rebounding this week as a sudden increase challenges the weekly highs.

In what should provide some much-needed confidence to the bulls, BTC/USD returned to its weekly highs on May 30th, gaining several percent overnight.

Contrary to the recent weekly closes, the May 29th candle was able to cap the downtrend and reverse immediately upon the start of the new week.

However, Bitcoin is now closed Nine weekly red candles in a rowSomething unprecedented in its history.

Just how low Biggest Cryptocurrency Going to June? The macro environment remains turbulent, while interest in retail is nowhere to be seen, and calls for a deeper capitulation remain.

However, if Bitcoin continues its latest strength, it still has a chance to break out of the current trading corridor.

Cointelegraph takes a look at the factors likely to move the market in the coming days.

Can Bitcoin Avoid 10 Weeks of the Red?

Thanks to an unexpected but welcome turn overnight on May 30, Bitcoin broke with tradition this week.

Asian trade provided the backdrop for some solid gains, with Japan’s Nikkei and Hong Kong’s Hang Seng both up over 2% at the time of writing. The stimulus came from news that China plans to ease some of its recent coronavirus-related restrictions and open up the economy.

However, Bitcoin outperformed stocks before the start of European trading.

After an initial red hourly candle after the weekly close, BTC/USD suddenly surged from $29,300 to the current levels near $30,700, according to data from Cointelegraph Markets Pro And the TradingView offers.

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

Despite continued caution thanks to the weekly close which remains in the red, Bitcoin could end its nine-week losing streak this week as long as next week’s closing price does not fall below $29,500.

For some, the night movement alone was enough to become significantly more positive in the near-term outlook.

“Bitcoin is on the cusp of a huge bullish signal,” Jordan Lindsay, founder of JCL Capital,Tell Twitter followers:

“IMO is not the time to look for greed for ticks.”

Trader Crypto Tony points out that Bitcoin is still in a familiar trading range and should clear some key levels before it can be considered to have a flat track. For him, that’s $31,000, now not so long ago.

Others focused on the idea that the current gains are just another relief bounce and that bitcoin should come back lower after that.

The popular TMV Crypto trading account, meanwhile, Putting a mark Evening lows as key support to continue moving forward.

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“Not sure if we should be too optimistic here about BTC+ETH,” Fellow Crypto Trader and Analyst Ed added In a Twitter thread posted on May 30th.

He pointed to weak weekend trading volumes supporting the rebound, indicating that the higher levels did not have the supply interest needed to consolidate themselves as new support yet.

He continued, “I saw some in my feed cut short, and that was understandable when seeing the weakness in the graphs”:

“Once again a great example of being careful over the weekend. Oftentimes it is played in poorly ranked books and therefore I prefer not to open new positions over the weekend.”

Meanwhile, the CME futures gap as of May 27 at $29,000 provides an additional bearish target.

1-hour candlestick chart for CME Bitcoin futures. Source: TradingView

Analyst: Stocks rebound is a ‘bear market rally’

With US markets closed for a public holiday on May 30, it will be up to Europe and Asia to set the mood for the day.

With the World Economic Forum behind them, crypto traders may be able to breathe a sigh of relief as the new month approaches, ahead of another meeting of the US Federal Reserve in mid-June.

The resurgence of Asian stocks after eight weeks of losses was the main overall focus today.

after, after to fail Taking advantage of a similar rally in the US last week, Bitcoin now appears to be benefiting from the mood, which commentators continue to warn is not indicative of a general trend reversal.

Monetary tightening from the Federal Reserve and other central banks has not only sent stock traders down, but also sparked talk of a major recession as economies drive prices.

“We are in the middle of a bear market,” Mahjabin Zaman, chief investment specialist at Citigroup Australia, said. Tell Bloomberg:

“I think the market is going to trade in a range to try to see when this recession will come or how quickly inflation will go down.”

The tightening is set to become real this week. June 1 is believed to be the time when the Federal Reserve will begin cutting its balance sheet, which is currently at a record high of $8.9 trillion.

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The European Central Bank (ECB) said it will halt its asset purchases later in the year, it revealed last week.

May 31 will also see Consumer Price Index (CPI) data released from the Eurozone, ahead of similar data for the US on June 10.

“Equity investors are watching for signs of stability,” said market commentator Holger Schaebitz Wrote On May 28 next to the CBOE Volatility Index:

“A gauge of fear on Wall Street, investor sentiment and bond spreads are being tracked for clues as to where the market might be headed next. But only one of the five sentiment indicators is that the worst is over in the markets.”

CBOE Volatility Index. Source: Holger Zschaepitz / Twitter

Dollar strength points to one-month lows

The strength of the US dollar was on its way to test support levels over the past week.

After rising to levels not seen since December 2002, the US Dollar Index (DXY) has finally arrived back to earth And even challenging the upside trend of the year.

This may remain a silver lining for risk assets if the trend continues, as the reversal correlation has worked in particular favor for Bitcoin in the past.

“This could just be the start of the 2022 bull run!” Audacity Crypto Rover argueDownload a comparative chart showing the inverse correlation of Bitcoin-DXY and how it has played out in the past years.

Bitcoin vs DXY Annotated Chart. Source: Crypto Rover / Twitter

However, Crypto Ed is not convinced that the good times will return, thanks to the persistent weakness of the dollar.

“DXY is printing a reversal pattern, a falling wedge. Another reason not to get too excited about Bitcoin,” another tweet added.

However, at 101.49, DXY was at its lowest since April 25th.

US Dollar Index (DXY) 1-day candlestick chart. Source: TradingView

Bitcoin nearing the ‘cyclical bottom’

Not every Bitcoin analyst is bearish, and one of them, CryptoQuant CEO Ki Young Ju, has the data to prove why.

Download In the recent reading of the realized Bitcoin cap distribution, Key argued that in fact, BTC/USD is in a similar phase to March 2020.

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The maximum achieved reflects the price at which the last bitcoin moved, and can be divided into age ranges.

This, in turn, shows the percentage of Bitcoin supply that makes up its realized cap and that last moved a certain period of time.

Currently, 62% of the maximum achieved includes unspent transaction outputs (UTXOs) six months or more ago.

For Ki, this refers to the ground territory of the BTC price, as has been the case historically – and most importantly during the COVID-19 crash in March 2020.

He summed up “$BTC nearing the cyclical bottom”:

“UTXOs older than 6 months now take 62% of the maximum achieved. In the massive sell-off that occurred in March 2020, this indicator also reached 62%.”

Bitcoin Realized UTXO Bands Vs BTC/USD Chart. Source: Ki Young Joo / Twitter

CryptoQuant previously reported UTXO data as it relates to Bitcoin investor holdingsbut drew more conservative conclusions.

Last week, it appeared that the largest Bitcoin whales were still distributing their holdings on the chain, while the smaller whales are likely to support the market and prevent a March 2020-style chain from happening.

Sentiment Hints at a ‘Long-Term Buying Opportunity’

It takes a lot of bullish price action to turn sentiment into the green in the current environment.

Related: Top 5 Cryptocurrencies to Watch This Week: BTC, ETH, XTZ, KCS, and AAVE

This applies to both Bitcoin and crypto more broadly, where investors have endured more than six months of what has been virtually unchecked.

This is still the case this week – despite the overnight rally, sentiment remains firm in “extreme fear” territory across Bitcoin and altcoins.

The Cryptographic Fear and Greed Index It only reached 10/100 as of May 30, a result that has accompanied the lower prices of generations in previous years.

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

May 2022 was a particularly harsh period for sentiment, with fear and greed reaching just 8/100 earlier in the month – a level rarely seen and last seen in March 2020.

“The Fear & Greed Index has fallen to 10 today,” said Philip Swift, creator of the LookIntoBitcoin-chain analytics platform, replied:

“We’ve spent three weeks getting really scared now with only sideways price action. Possible bottom formation?”

Commentator and analyst Scott Melker, better known as the Wolf of All Streets, added that whatever might happen next, sentiment revealed a “long-term buying opportunity”.

“People are still more afraid,” part of a Twitter post read.

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