Bitcoin started a new week’s trading by edging closer to $12,000—but there’s plenty of pressure to sink prices lower.
Modern Consensus’ weekly markets outlook considers what factors are at play for traders looking to profit from Bitcoin price action in the coming days.
We also produce a weekly markets recap every Friday, the latest installment of which can be found here.
Futures gaps spark $9,600 dip target
After a fairly stable weekend, Bitcoin did not add to its list of futures trading gaps to provide an immediate reliable short-term price target.
Futures “gaps” refer to the empty space between the end of one trading session on futures markets and the start of another, with the weekend in between.
The difference between Friday and Monday has been as large as $1,000 in the past, with BTC/USD subsequently returning to trade within the void days later.
This weekend did not produce any difference beyond a small schism on the one-hour chart, leaving no direction for the market based on futures.
However, older gaps remain, and the chances of Bitcoin filling them are decidedly high, analysts suggest.
In his latest commentary on the market, popular analyst Michaël van de Poppe was eyeing the bottom end of a futures gap at $9,700 as a possible floor for a BTC price plunge.
“Most likely, we’ll get something like this, in which we drop down and immediately bounce back up,” he said alongside a chart showing potential market trajectory.
Such a dip would mark a retracement of 18.6% from current levels of $11,800—an altogether modest drop in terms of Bitcoin’s even recent history.
To the upside, meanwhile, a gap at close to $17,000 remains a present but distant bull target.
Others were content with daily performance. For fellow trader Josh Rager, Bitcoin’s weekly close preserved bullish tendencies, and the mid-$11,000 area could still allow it to continue growth.
“Happy with this weekly close – prior resistance that held for multiple years,” he told Twitter followers on Monday.
“Now holding as support so far. If the daily can stay above $10,500 and weekly about $11,500 – should be a continuation to upside if so.”
Continuing, meanwhile, Van de Poppe highlighted $11,200 as a key level for Bitcoin to maintain.
“So what we want to see in this case, if we want to sustain the bullish momentum, is that we keep holding this $11,200 – $11,400 area,” he said.
“And then the next step, if we do hold $11,200 – $11,400—that’s the area I’m looking for longs — the next step is that we break the high [of $12,500].”
He pointed to previous cycles of higher lows on the daily chart as evidence that the current uptick may continue to produce profits.
Fed inflation policy and safe havens
Beyond Bitcoin technicals, macro factors may return to sway Bitcoin price action as a knock-on effect this week.
On Thursday, the United States Federal Reserve will issue a statement which many suspect will contain plans for raising inflation to levels considerably higher than at present.
Should this occur, analysts have previously said, then safe havens should benefit considerably, against a backdrop of huge quantitative easing and a phenomenon known as “stagflation.”
Despite showing signs of a comeback, the US dollar remains at two-year lows against the basket of trading partner currencies which make up the USD currency index.
“They want to try to give the guidance that they really want inflation to get up and be sustained above 2% to make up for it being below 2% for so long. But they don’t want to go so far to get people to think: ‘Oh my goodness, the Fed has forgotten about being tough on inflation and we can see inflation going to 3% or 4%,’” ex-Fed governor Randall Kroszenor told CNBC last week.
“That’s I think the major challenge for down the line. … In the short run, it is more a threat of deflation or very low inflation rather than high inflation.”
Gold bugs will also be watching for signs of profit potential, given the precious metal’s double run to $2,000 this month which sparked volatility taking XAU/USD to $1,945 at press time.
The correlation between Bitcoin and gold has decreased markedly over the same period, data from on-chain monitoring resource Skew reveals. However, the past week’s price activity has focused on $12,000 and $2,000 respectively as tandem targets.
For gold heavyweight Peter Schiff, however, the winner was clear.
“Stocks always go up until they don’t, and only because of the Fed. To a lesser extent the same is true for #Bitcoin, which is a bigger bubble than stocks,” he tweeted over the weekend.
