Academy Trading Ideas Article

BTC Continues to Struggle Near $10K but Bulls Aren’t Giving Up: Market Watch Weekly

2020.06.08 Hunain Naseer
Crypto Market Weekly

Despite starting last week with $10,000 in the cards, Bitcoin (BTC) prices remained indecisive as Monday’s surge was completely undone on Tuesday, followed by rangebound trading till the end of the week.

However, Sunday’s close of $9,746, as per OKEx Spot price, was the highest weekly close since mid-February, marking a 3.3 percent gain for the leading digital currency, despite the strong selling pressure indicated by the long wick on the top.

Meanwhile, Cardano (ADA) was the biggest gainer among the top 10 altcoins by capitalization, posting returns of 17.39 percent. At $0.086 ADA is near its 52-week high of $0.098, in anticipation of a positive Shelley Testnet Development update.

Ethereum (ETH), the second-largest digital currency, finished the week with a 5.48 percent increase in price. The ETH/BTC pair has gained 17 percent over the last three weeks, showing bullish momentum leading up to its proof-of-stake switch, expected in Q3. EOS rose more than 3.4 percent on Friday due to the news that EOSIO powered social network VOICE will be officially launched on July 4. VOICE has received at least $150 million in investments from, the company behind EOS.

weekly crypto returns June 7
Weekly returns of major cryptocurrencies 6/1 – 6/7. Source: Tradingview

Bitcoin Hashrate surges after difficulty adjustment

The Bitcoin (BTC) network underwent another difficulty adjustment at block 633,025 last week. The difficulty has now come down to 13.73T — a drop of 9.29 percent as per Bitinfocharts data. As we noted in Friday’s Market Daily update, past difficulty adjustments and price movements indicate that drops of nine percent or more usually signal bottoms.

Bitcoin hashrate and difficulty
Bitcoin mean hash rate and difficulty. Source: Coinmetrics

However, after the difficulty adjustment, the hashrate has spiked to near all-time highs, resulting in Bitcoin blocks being produced at 7-minute intervals, compared to the 10-minute target time. If this trend continues, we will see a jump in difficulty by the next adjustment timestamp, nine days later. 

Right now, it is not clear whether this surge in hash rate is directly related to the coming of flood season in Southwest China, but the cost of electricity during flood season is expected to fall 40 percent from 0.25 Yuan ($0.035) per KWH to 0.15 Yuan ($0.021) as per BeatleNews data.

Bitcoin Outlook

We noted in our last week’s Market Watch Weekly that sentiment turned bullish on the options market since calls are more expensive than puts, and the risk of volatility is more towards the upside — that trend is continuing until now. 

The bulls went all-in and successfully defended the $9,300 to $9,400 critical support level on Sunday evening (UTC). The weekly close at $9,746 has been above the previous higher high of the weekly close on May 17, which is a good indicator that the bullish momentum could continue.

However, if we can see a daily close above the yearly high of $10,502, that will give Bitcoin much room on the upper side. But in the short term, the strong resistance at $10,200 has repeatedly played an important role in suppressing any upward action.

OKEx BTC Spot Price. 1H chart. Source: OKEx

Looking ahead this week 

The Nasdaq hit an all-time high on Friday, breaking the previous record high of 9,838 points, successfully achieving a v-shaped reversal. S&P 500 futures also jumped higher on Monday’s opening. 

The Federal Reserve will announce the results of its FOMC meeting on Wednesday. Despite widespread expectations that interest rates will remain unchanged, the Fed’s decision can impact the market. 

In crypto, Tron (TRX) has a project announcement on Monday, alongside Maker(MKR) being listed on Coinbase Pro. The Coinbase listing effect could push MKR price higher this week. Meanwhile, Zilliqa (ZIL) will complete staking support this month. 

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary

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