Riots and rising fundamentals: Five things to watch for Bitcoin this week

Strange macro uptrends coincide with middling price action for Bitcoin, but eyes are on $8,000, not $10,000 so far.

Bitcoin (BTC) began a new week less than $500 away from $10,000, but sudden volatility remains — what should you look out for in the coming days?

Cointelegraph presents a weekly roundup of the major factors set to influence BTC/USD price action this week. 

Stocks rise but suspicions remain

Macro markets look set to continue an optimistic uptrend despite the chaos encircling the United States. 

The S&P 500 was solid pre-trading on Monday, buoyed by the curious combination of the U.S. economy reopening but mass protests continuing throughout the country. 

Bitcoin appeared to gain as the protests took hold late last month, but its overall relationship to traditional markets has been weakening since both crashed in mid-March.

Oil was also following the enthusiasm after OPEC+ members agreed to extend a production cut. 

Bitcoin proponents have sounded the alarm over stock markets’ seeming “recovery” from coronavirus measures. In particular, Max Keiser has repeatedly warned that central banks buying up junk bonds was creating fake competition and undermining the integrity of markets.

Difficulty, hash rate lead BTC strengthening

Bitcoin fundamentals continue their upward trajectory after last week’s second consecutive negative difficulty adjustment. 

Both difficulty and hash rate have improved on their position last week, with the latter circling 111 EH/s — up 4% since Friday.

As Cointelegraph reported, difficulty was on course to book a third downward adjustment in a week’s time, but on Monday, this had reduced to a forecast -0.7%.

That reduction is just another sign that Bitcoin is “taking care of itself” as intended through difficulty adjustments, which incentivize miner participation and stabilize average block times. 

Along with difficulty, other data relating to mining has shown similarities to the bottom of Bitcoin’s bear market in December 2018. 

Bitcoin hash rate 1-month 7-day average chart. Source: Blockchain

Futures gaps stay away

As with last week, little price change over the weekend means that a sudden shift in order to fill gaps in Bitcoin futures markets remains off the table.

As noted, if Bitcoin futures markets begin a new week in a different place to where they left off the previous one, BTC/USD tends to “fill” the resulting gap.

May saw the biggest such gap in history get filled within days, but this weekend has not seen significant volatility.

CME Bitcoin futures chart showing a major gap. Source: TradingView

Little hope of a $10K breakout

Despite seesawing in the mid $9,000 range, Cointelegraph analysts believe that Bitcoin will not be in a hurry to reclaim $10,000 support. 

In a market review on Friday, filbfilb warned that short-term timeframes are not yet bullish, while CME futures volumes “clearly favor” bearish sentiment. 

Expectations, he added, were not in place on the market regarding a decisive push above $10,000 this year. 

Going forward, it was likely that lower levels — $8,100 in particular — would be key areas to watch in the coming months. 

Trader emotions go “neutral”

Market sentiment is further calming according to a dedicated indicator measuring conditions.

On Monday, the Crypto Fear & Greed Index continued in “neutral” territory, smoothing out its previously more volatile readings. 

Fear & Greed refers to how overly bullish or bearish the market is, implying buying opportunities or whether a correction is due. 

At 53/100, the index is currently in the middle of its scale, having previously spent a record amount of time in its bearish “fear” zone. 

Crypto Fear & Greed Index 3-month chart. Source: Alternative.me