'The bond market bubble has burst' - 5 things to know about Bitcoin this week

Bitcoin started the new week amid a tough macro environment after posting its lowest weekly close in nearly two years.

Bitcoin is on the brink of weakness as risk assets in the global economy take a beating and the U.S. dollar soars.

September has now aptly earned its unofficial nickname in the crypto market - "September Bear Market" - with BTC/USD down 6.2% since the start of the month.

For holders, the bad news keeps coming. While the U.S. dollar soars and mainstream investors’ willingness to diversify into riskier assets continues to fade, a growing number of hodlers continue to hold dormant Bitcoin .

This week, the macro situation will still be the focus of everyone's attention. Cointelegraph has analyzed the possible situation of BTC price trend.

With current economic conditions comparable to any period of major historical turmoil in the past century-plus, here are a few factors to consider when assessing where Bitcoin is headed next.

Weekly close puts BTC/USD back in November 2020

Despite not matching the previous week's losses (3.1% vs. 11%), over the past seven days Bitcoin has registered its lowest weekly close since November 2020, according to Cointelegraph Markets Pro and TradingView.

As the downtrend continues, Bitcoin turns back the clock to break out of the all-time highs of the last halving cycle.

BTC/USD weekly candle chart (Bitstamp) Source: TradingView

For ordinary holders, this déjà vu feeling is unwelcome — the vast majority of bitcoin bought and stored in cold storage over the past two years is now shrinking.

Popular Twitter analyst SB Investments concluded after the close: “BTC just posted its lowest weekly close in the range.”

"It looks bearish and stocks are also looking to break support levels. But on the other hand, that's what everybody expects."

Whether the market will experience an unexpected "maximum pain" uptrend is another key argument for bitcoin holders. For well-known trader Omz, a weekly close of $18,800 even represented a convincing bottom .

Trader JACKIS pointed out the divergence in the relative strength index last week.

"We've only hit oversold twice in the past, and they've always accurately marked bottoms," he tweeted at the time.

Another trading account, IncomeSharks, also insisted that there may be a reversal in the US midterm elections in early November, but did not say that the bottom has been reached.

"Continue to build double bottoms and new support levels, mid-term rally remains. Break this structure, remove these targets, find new bottoms."

BTC/USD 4-hour candle chart (Bitstamp) Source: TradingView

Dollar hits stocks, fiat losses

Monday is just getting started, and the turmoil that accompanied last week is already making a comeback in macro markets.

The unstoppable U.S. dollar is undermining the currencies of major trading partners, with the pound plunging 5% against the dollar at one point, nearing par with the greenback, its lowest level against the dollar on record.

Sterling is set to follow in the euro's footsteps by falling below $1, a predicament that forced Japanese authorities to artificially boost the yen last week.

GBP/USD 1-day candlestick source: TradingView

EUR/USD briefly fell below $0.96 before recovering slightly, while USD/JPY remained near its highest since the 1990s despite Japan's intervention.

Meanwhile, global bonds have also sounded the alarm, with prices falling back to 2020 levels. Market commentator Holger Zschaepitz warned alongside the Bloomberg data:

“It looks like the bubble in the bond market has burst. Global bond values plunged another $1.2 trillion this week, bringing the total loss from record highs to $12.2 trillion.”

Things weren't much better for stocks, either, with futures down a day before Wall Street opened. Brent crude fell below $85 a barrel for the first time since early 2022.

Saifedean Ammous, author of the best-selling books "The Bitcoin Standard" and "The Fiat Currency Standard", responded : "Global bonds denominated in fiat currencies are collapsing, and the exchange rate of fiat currencies against the US dollar is also collapsing. The dollar is rapidly losing purchasing power."

“It will take months, if not years, for the average fiat currency user to realize how much their financial losses are. The ‘new normal’ is poverty.”

With the cryptocurrency still highly correlated with the stock market and negatively correlated with the dollar, the outlook for Bitcoin is less positive as the status quo seems set to remain.

The Eurozone consumer price index (CPI), due this week, is expected to show that inflation is still on the rise, while the U.S. personal consumption expenditures price index (PCE) should extend the downward trend in the U.S. that began in July.

Meanwhile, the U.S. dollar index (DXY) is showing no signs of inversion and is trading at its highest level since May 2002.

US Dollar Index (DXY) 1-month candlestick source: TradingView

Holders are in typical bear market mode

With Bitcoin holders growing more confident amid such chaos, it's no surprise that long-term investors are refusing to sell.

Stubborn holding is a hallmark of a bitcoin bear market, and new data shows that mentality is firmly back this year.

Bitcoin’s so-called CDD (Coin Days Destroyed) metric is hitting new lows, according to on-chain analytics firm Glassnode. When CDD is high, it means more long-term stored bitcoins are moving.

Glassnode commented : “Over the past 90 days, the number of days to burn coins has actually reached an all-time low.”

“This suggests that bitcoins held for months to years are the longest they have ever been dormant.”

Bitcoin 90-day CDD Annotated Chart Source: Glassnode/Twitter

Glassnode also noted that it is increasingly common for bitcoins to be held for at least three months as part of the dollar value of the bitcoin supply.

It agrees, “Long-term Bitcoin holders appear to be steadfast in their convictions.”

The accompanying chart shows Bitcoin’s HODL Waves metric — depicting Bitcoin’s supply broken down by periods of dormancy.

Bitcoin HODL Waves Annotated Chart Source: Glassnode/Twitter

Whales still dictate support and resistance levels

While seasoned investors will shy away from the “sell” button, the most heavily traded investors are on analysts’ radar when it comes to bitcoin spot price action.

The current trading range represents an area of interest due to the level of trading activity involving whale funds in the past.

Heavy buying brings additional weight to specific support prices, as do resistance levels, with BTC/USD currently sitting in between, according to on-chain monitoring resource Whalemap.

"Holding 19k-18k is the key for BTC," the Whalemap team concluded last weekend.

An accompanying chart shows that whale resistance puts a cap on Bitcoin’s relief, limiting it to the $20,000 region.

Bitcoin Whale Resistance Annotated Chart Source: Whalemap/Twitter

Still, data from research firm Santiment confirms that whales’ BTC exposure in general has fallen to a two-year low.

Annotated chart of Bitcoin whale holdings Source: Santiment/Twitter

'Extreme Fear' enters second week

The familiar normalcy of 2022 is back, and the sentiment in the crypto market has been in "extreme fear" mode for more than a week.

Ordinary investors are uneasy about the outlook, according to the Crypto Fear and Greed Index , which measures general sentiment in the crypto market.

As of September 26, the Fear and Greed Index scored 21/100, with 25/100 being the cutoff for "extreme fear."

Chilling is nothing new for markets this year, with the longest period of "extreme fear" on record at more than two months.

Cryptocurrency Fear and Greed Index (screenshot) Source: Alternative.me

Santiment noted that social media interest rebounded over the weekend as a possible silver lining.

“Among the top 100 crypto assets, Bitcoin is the topic with more than 26% discussion volume for the first time since mid-July,” it revealed in some Twitter comments this week.

“Our backtests show that 20%+ discussion focused on Bitcoin is a positive for the industry.”

Bitcoin social dominance annotated chart Source: Santiment/Twitter