U.S. interest rate hike rate control theory rises by 10, Bitcoin about to exceed $30,000 Koala

This article was published in ‘Koala’, a cryptocurrency investment newsletter of the Korea Economic Daily on July 29th. Get the Koala, published 3 times a week in the morning!
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Large-scale liquidation of ‘short forces’ on good news of FOMC

At the end of the Federal Open Market Committee (FOMC) in the United States on the morning of the 28th, Bitcoin rebounded nearly 10%. A 75bp rate hike was announced, but investors’ focus was on the remarks of Federal Reserve Chairman Jerome Powell shortly after the FOMC. This is because Chairman Powell hinted at the theory of pace control, saying that it could slow the pace of rate hikes. Some view 75bp as a bad news that has already been reflected in advance, and another is that a ‘relief rally’ has unfolded in that it is not the 100bp that has been recently feared.

When Bitcoin soared, many people expected a decline, so there was a ‘short squeeze’ in which the short supply was liquidated on a large scale. After recovering from $20,000 at the end of last month, it is clear that it is making a gradual uptrend by steadily raising the support level while repeating sharp surges and sharp declines. However, the problem is that it is not a chart movement accompanied by a large trading volume. As a result, investors have not been convinced of the uptrend, and it has not led to an influx of new buyers. Therefore, we need to pay attention to how much of the uptrend it will return in the upcoming lull. As this weekend is an important time to close both the last weekly and monthly peaks of July, there is a high possibility of large volatility.

It is difficult to say that the market uncertainty is completely resolved for ant investors to re-enter because the rise is not due to the good news of the cryptocurrency market. We need to look forward to the movement of whales accompanied by trading volume, or whether altcoins will rise in line with Ethereum’s ‘merge upgrade’ scheduled for September.

▲Bitcoin Daily Chart (Source: Bybit Exchange)

On a daily basis, the US FOMC has rebounded sharply from the beginning of the week, stably maintaining the sky blue uptrend line. After a sudden rebound, there may be a lull followed by a return to the uptrend. However, as long as it stays above $22,000 over the weekend, there is a possibility that a rally towards $30,000 can begin. As the resistance value in the yellow section is not large, it is expected that a stable rebound will be possible only if it moves quickly to $30,000 based on a large buying trend.

▲Bitcoin monthly salary chart (Source: Bybit Exchange)

Based on the monthly salary, it is not outside the downward trend line that has continued since last year. Switching to a beekeeper after three months can avoid the risk of a large decline and create momentum for buying. However, if it fails to break through the downtrend line as in April and is hit by a sell-off, it can renew a new low. Whether the $30,000 is settled is an important point to watch.

▲Bitcoin long-term realized price and 200-week moving average (source: glassnode)

As Bitcoin maintained its rebounding trend and remained strongly above $20,000, the three long-term analysis indicators of Bitcoin’s realized price, long-term holder realized price, and 200-week moving average all approached the point close to the Bitcoin price. These three indicators are one of the popular models used to measure the market bottom of Bitcoin. Historically, when the three lines meet and then cross, they rebounded from a bear market.

▲Bitcoin Hodler Trend Indicator (Source: glassnode)

The total amount of short-term coin holders of less than 3 months (in USD) has entered a structural downtrend. This indicates that the coins held by short-term holders are likely to be redistributed to whales. Since then, it is suggesting the possibility of gradually leaking out of the exchange. This trend can be interpreted as a signal that confidence in HODL (hodling, long-term holding) is growing in whales that did not move after falling from the peak.

▲Bitcoin mining difficulty indicator (source: glassnode)

Mining difficulty fell by about 5% in the third consecutive decline in a row. This correction is the biggest decline since July 2021. The decline in mining difficulty at the time was due to difficulties in mining in the aftermath of China’s announcement of a mining ban. The recent decline appears to be due to a decrease in demand for mining due to the shutdown of mining farms.

▶ This article is an externally written column that was introduced to provide various perspectives to subscribers of the cryptocurrency investment newsletter and is not the position of the Korea Economic Daily.