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First 7-week losing streak in history – 5 things to know about Bitcoin this week

Bitcoin (BTC) starts a new week below $30,000 as fight to save the market from new lows continues.

After hitting its highest since the Terra LUNA crash last week, the largest cryptocurrency still fails to reclaim $30,000 in support.

What could be in store this week? The potential for major upheaval from macro players, particularly the Federal Reserve, is changing ahead of the World Economic Forum this week.

At the same time, the internal pressures of the crypto market remain as the fallout from LUNA’s collapse continues to play out.

Cointelegraph takes a look at five potential BTC price movers for the coming days.

Record weekly downside hails bulls

Cautiousness among traders is palpable this week after market expectations have been turned on their head over the past seven days.

When the blockchain protocol Terra’s LUNA and TerraUSD (UST) tokens imploded, their demise rebounded throughout the crypto markets, and Bitcoin, of course, was no exception.

After falling close to its realized price just below $24,000, BTC/USD staged a sort of V-shaped recovery to jump above $31,000 in the following days. However, that strength seems limited now as $30,000 is proving to be a stubborn level to hold forever.

While the picture looks decidedly more reassuring than some altcoins, traders are staying away from firmly bullish price assumptions.

A key narrative gaining traction revolves around the current levels, which are laying the groundwork for a bounce of relief that will ultimately result not just in denial, but in an attack on lower lows than last week’s lows.

“Just as we bulls have been fighting the trend for the past few weeks, I think bears are poised to deny or dismiss further upside,” according to popular Twitter account IncomeSharks called in part of two recent posts on the BTC/USD outlook.

It added however, those who are only now declining are “getting too stuck in their bias.”

Meanwhile fellow trader Crypto Tony called that the pair needs to reclaim $31,000 not just $30,000 to continue higher as the former marks the highs of the weekly range.

When zoomed out, the picture looks no less precarious than with hourly or daily time slots.

Despite the modest recovery, the weekly BTC/USD chart closed its seventh straight red candle on May 15 – the first time in history that such an event has occurred. The week closed around $31,300, data from Cointelegraph Markets Pro and TradingView shows.

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BTC/USD 1-week candlestick chart (Bitstamp). Source: TradingView

Twitter account Nunya Bizniz pondered whether the protracted downtrend could stretch much longer — even beyond 2022 — noting that Bitcoin was historically well below all-time highs prior to the block subsidy halving.

As such, it would fit historical precedent for BTC/USD to trade well below $69,000 at the time of its next halving in two years.

DXY just won’t give up when Davos shows up

For the past week, the Fed has struggled with inflation, rate hikes, and geopolitical turmoil, all factors that, ironically, Terra almost immediately eclipsed.

In contrast, no announcements of this magnitude are expected this week, but the underlying tensions have not yet dissipated.

Therefore, the Russia-Ukraine war, inflation and measures to contain it remain the hot topic for central banks around the world. This will no doubt be a key topic at the World Economic Forum as the 2022 event kicks off on May 22nd.

The forum and the potential for bitcoin-related soundbites from both positive and negative attendees follow another gathering this week in El Salvador, where representatives from 44 countries will discuss bitcoin.

“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, unbanked banking, bitcoin adoption and its benefits in our country,” President Nayib said Bukele Approved on May 15th.

At the same time, the US dollar refuses to back down when it comes to strength against the currencies of its major trading partners.

Despite local consolidation bouts, the US Dollar Index (DXY) remains in a firm uptrend that has prevented the bears from a macro top for months.

DXY hit 105 on May 9, its highest level since the week of December 9, 2002.

“At the same time, the euro is testing its 5-year lows against the US dollar,” analyst Blockchain Backer tweeted during a thread about the macro environment related to crypto.

“The Euro is a key component of the US Dollar Currency Index (DXY) and has historically behaved inversely to the DXY.”

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US Dollar Index (DXY) 1-day candlestick chart. Source: TradingView

DXY has also traditionally put pressure on stock and crypto markets, with the latter nonetheless showing corrective structures already seen in bear markets, Blockchain Backer argues.

“Well, we have a lot of things to do here. Dow Jones below last week’s break of support. DXY at 20-year highs. EURUSD on support. Altcoin Market and Ethereum with similar correction structures as before. But no coins are flying as if a reversal is imminent,” the thread continued.

Tether is creeping back from 5% depegging

Regardless of upcoming events, it’s the spirit of last week’s mayhem haunting the market on Monday.

The aftermath of the collapse of Terra’s UST and LUNA tokens is not yet fully understood as data continues to trickle in on the collapse and the company’s plans to mitigate the fallout.

Some facts seem clear but have not been officially confirmed, such as: B. the bulk sale of the Luna Foundation Guard (LFG) BTC reserves. Others remain rumors, notably mass bankruptcies of organizations with LUNA and UST exposure.

What happens next is also unclear, and as Blockchain Backer notes, no one knows for sure if the selloff is complete.

“Last week there was a devastating hit on LUNA and UST. We don’t yet know the complications and who has suffered collateral damage from them.” summarized.

“Were other treasuries exposed to this? Has LFG sold all of their bitcoin reserves or are there more left? We do not know it.”

Attention isn’t just focused on UST, however, but also on the industry’s largest stablecoin by market cap. Tether (USDT) saw its dollar peg slide last week and while there are no signs of renewed UST performance, 1USDT is still not fully equal to 1USD on May 16th.

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USDT/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView

“When things for TerraUSD (UST) started hitting the fan, it started with a small blip and then spiraled out of control,” Blockchain Backer added.

As Cointelegraph reported, the creators of Tether have been vocal in defending USDT’s ability to weather the storm, as its structure is inherently different from UST and algorithmic stablecoins in general.

“Over the next few weeks, we will see the full extent of the damage as reports of significant losses and drops surface,” crypto trading firm QCP Capital told Telegram channel subscribers in its latest May 13 update.

“Despite the carnage, however, we’re heartened by the resilience we’ve seen in certain segments of crypto.”

LUNA continues to see uncontrolled volatility making it nearly impossible to plot on any time frame and was trading at 0.00023 on Bitfinex at the time of writing on May 16th.

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LUNA/USD 1 hour candlestick chart (Bitfinex). Source: TradingView

Analyst: Institutions are stepping up buying

Anyone buying bitcoin? Data says the answer to that is a resounding “yes” from certain market segments.

In analysis Ki Young Ju, CEO of analytics platform CryptoQuant, published on May 16, highlighted institutional investor interest as a key Bitcoin phenomenon between $25,000 and $30,000.

Ki explained that while the LUNA debacle pushed bids down to $25,000, total bids stayed the same for a year. Not only that, these bids could now mitigate Terra-related sell-offs.

“If you look at the BTC-USD order book heatmap for Coinbase, it’s pretty thick bid walls since the last bear market in May 2021,” he noted.

“I think institutions tried to stack BTC from $30,000 but had to rebuild the bid walls at $25,000 due to the unexpected LFG sell.”

An accompanying chart shows how events unfolded on Coinbase, the exchange that Ki says received the bulk of Terra-related funds for sale.

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Coinbase order book vs. BTC/USD annotated chart. Source: Ki Young Ju/ Twitter

As Cointelegraph reported, the world’s first spot exchange-traded bitcoin fund (ETF) added a record amount of BTC to its assets under management last week as two Australian ETFs went live.

Bitcoin address growth contrasts with sentiment issues

It’s probably not surprising that crypto market sentiment remains rock-bottom.

Related: $1.9 Trillion Erasure in Crypto Risks Spilling Over to Stocks and Bonds – Stablecoin Tether in Focus

Reflecting nervousness about price stability, the Crypto Fear & Greed Index is firmly in the “extreme fear” zone at 14/100 this week.

After hitting historic lows last week, the recovery has been significantly less robust than the initial decline that took the index from 27/100 to 10/100 in five days.

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Crypto Fear & Greed Index (Screenshot). Source: Alternative.me

However, behind the scenes, not everything is as bleak as it seems.

Data by on-chain surveillance firm Santiment last week shows that amidst the chaos, unique bitcoin addresses continue to grow.

“The silver lining of this -33% drop over the past 3 weeks is that $BTC address activity has remained steady,” it wrote in Twitter comments.

“The divergence between addresses and price is at a 16-month high.”

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Unique Bitcoin Addresses vs BTC/USD Annotated Chart. Source: Santiment/Twitter

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.