The price of Bitcoin has just dropped back below $20K.
Slightly of course, as the price is at $19.9K as I write this. Nothing alarming, as Bitcoin continues to move sideways in a range between $19K and $22K.
The mild euphoria of last weekend with a local high of $22.4K was short-lived. This was to be expected, as the entire market is waiting for the big dates to come in July in America.
These big dates are three in number as I announced recently:
https://inbitcoinwetrust.substack.com/p/cpi-fed-gdp-here-are-the-3-key-dates
Everything will start on July 13, 2022, with the release of the CPI in America for June 2022 by the U.S. Bureau of Labor Statistics. Analysts expect inflation to be 8.7% in June 2022. If the official data released by the U.S. Bureau of Labor Statistics is lower, even by a small amount, expect a positive response from the markets. If the official data is worse than expected, then the markets could overreact and the price of Bitcoin could fall again and possibly break out of its current range.
The fact that the price of Bitcoin closed below $21K on July 10, 2022, does not necessarily encourage optimism in the short term, as this represents the formation of a new Lower High:
All this, with trading volumes stagnating at rather low levels.
It can also be seen that the price of Bitcoin has finished for the fourth consecutive week below the 200-week moving average:
The coming days could therefore see further significant drops. The long-postponed capitulation of Bitcoin miners seems to have begun:
If the CPI is worse than expected in America, the next wave of capitulations could be even stronger, as more and more Bitcoin miners face significant financial worries. Many have to pay back loans for their equipment, and with the price of Bitcoin falling and the cost of electricity rising, the equation is unsolvable. Selling Bitcoin is becoming vital to maintaining their business:
https://inbitcoinwetrust.substack.com/p/some-bitcoin-miners-may-have-trouble
Despite this negative outlook, there is also a reason for hope, according to Glassnode's Bitcoin Reserve Risk Indicator:
This metric measures the level of confidence of Bitcoin holders over the long term relative to the current price. The metric is positively correlated to the price of Bitcoin and has currently reached its all-time low. For many, this could be a sign that the Bitcoin price is currently in a bottoming zone. A zone that will be seen as a tipping point on a higher time scale.
The bottom could have been reached in June 2022 with the brief fall of the Bitcoin price below $18K. We can have no guarantee of this, and the fall in the price of Bitcoin could be even more pronounced.
In any case, you should expect a volatile week in the markets, as the announcement of the CPI in America for June 2022 will have a strong impact on the stock market. Looking at the current trading volumes, everyone is waiting for these numbers from the U.S. Bureau of Labor Statistics.
When volatility increases, when uncertainty becomes king, you know what you have to do: keep a cool head and think long-term. That's what's at stake in the coming weeks in the Bitcoin market, but also all financial markets. Foresight will win out in the long run. As always.
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