Bitcoin seems to be forming a new range around its current levels as the cryptocurrency moves between the $18,600 and $21,000 area. BTC’s price has seen some recovery during today’s trading session and might experience some volatility due to the U.S. Independence Day, July 4th.
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At the time of writing, Bitcoin trades at $19,500 with a 4% profit in the last 24 hours.
BTC trends to the downside on the 4-hour chart. Source: BTCUSD Tradingview
Data from analyst Ali Martinez indicates an increase in Bitcoin holdings from addresses with 100 to 10,000 BTC. These whales have been adding over 30,000 BTC to their holdings.
In addition, Martinez records over 40,000 BTC leaving crypto exchange platforms. The less Bitcoin supply there is available on these venues, the less it can be sold on the market.
These market dynamics translated into this weekend’s price action. In addition, Material Indicators records an increase in buying pressure from investors with a large bid (purple in the chart below) which coincides with short-term whale accumulation.
These whales have been the “most influential” over the BTC’s price action and could be hinting at more gains. Material Indicators also recorded bullish momentum on the weekend’s price action.
In fact, every investor class except retail and massive whales with over $1 million in bid orders seems to be buying into BTC’s price action, as seen in the chart below.
Bitcoin whales (purple) buying into BTC’s price action. Source: Material Indicators
Additional data provided by Santiment records a huge uptick in the number of long positions across exchange platforms. This coincides with the U.S. holiday, but it’s not necessarily good news for these operators:
In the early hours of 4th of July 2022 in the US, there has been a massive uptick in #longs on exchanges in the previous hour. Trader optimism often correlates with holidays, which means there needs to be a greater degree of cautiousness of whales punishing the overly eager.
What Is Causing Pain Across The Bitcoin Market
There are some indicators of possible bullish price action in the short term, but the uptick in long positions merits cautions. The macro-economic outlook seems less optimistic and could spell more pain for Bitcoin and other cryptocurrencies.
Trading desk QCP Capital claims its bullish outlook is “waning” on the back of the U.S. Federal Reserve’s (Fed) intentions of slowing down inflation in the country. The financial institution has been increasing interest rates for that purpose wreaking havoc across global markets.
Initially, some experts believed the Fed was going to attempt to conduct a “soft landing”, and bring down inflation without harming the economy. This possibility might have been ruled out as the Fed finds itself between a rock and a hard place. QCP wrote:
Fed Governor Williams stated the “need to get real rates above zero”. This means that the Fed is likely to ignore recession risks and will keep raising rates aggressively to reach their target of 3.5%-4% by year-end.
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On top of the above, the financial institutions have been reducing liquidity off global markets while shrinking their balance sheet. This only signals more downside for the crypto market.
8/ Remember that the crypto bull cycle was fueled by balance sheet expansion. A contraction of this scale will surely have a dampening effect on prices.
— QCP Capital (@QCPCapital) July 4, 2022
