Elon Musk tweets BTC price bottom? 5 things to watch in Bitcoin this week

Bitcoin (BTC) is nearing $40,000 this week as “Dogefather” Elon Musk offers out pure ache to hodlers — what’s subsequent?

After a traumatic weekend for a lot of crypto traders, Monday is setting the stage for the following chapter in the wild 2021 bull market.

Cointlegraph takes a have a look at 5 elements which may form what Bitcoin and altcoins do subsequent.

Musk tweet hits key Bitcoin technical degree

It’s all about one man but once more this week: Elon Musk. In attribute vogue, the Tesla and SpaceX CEO brought about uproar on Twitter when he got here out bearish on Bitcoin.

BTC/USD bought off immediately on information that Tesla was halting BTC funds for its merchandise, however for Musk, this was not sufficient.

Further tweets over the weekend, together with criticism of Bitcoin’s decentralization and the way he “believes in crypto,” added gas to the fireplace.

It was a touch that Tesla might already be planning to promote its holdings, nevertheless, that brought about probably the most distress. Bitcoin fell to close to $42,000, retesting this earlier all-time excessive degree earlier than steadying as Musk pressured that no sale had occurred.

“To clarify speculation, Tesla has not sold any Bitcoin,” he wrote on Monday.

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BTC/USD chart with Twitter occasions highlighted. Source: Twitter

With Musk versus the cryptocurrency neighborhood starting to seem like a full on war, Bitcoin is thus unsurprisingly unstable as all eyes stay on the Twitter battlefield.

At the time of writing, Bitcoin was buying and selling at round $44,800, nonetheless down 8.7% over the previous 24 hours.

As analyst Alex Krueger famous, nevertheless, the clarifitication tweet could also be unwittingly appearing as a local bottom signal, as Musk posted it simply as BTC/USD hit a key 61.8 Fibonacci retracement degree.

“Elon Musk must be an outstanding technical analyst,” he commented.

“His ‘Tesla has not sold any Bitcoin’ tweet was posted exactly at Bitcoin’s key technical level, the 61.8 fib ($42,845).”

BTC dominance falls beneath 40%

Musk’s actions have had a detrimental affect on Bitcoin and altcoins alike.

Despite continuing to praise Dogecoin (DOGE), even the meme-based token failed to keep away from losses over the weekend, with nearly all of large-cap altcoins following Bitcoin down.

There had been some much less important losses, resembling these of Cardano (ADA), which on Saturday was nonetheless bucking the general downtrend to even submit (*5*).

In phrases of bearishness, nevertheless, nothing exhibits how a lot the common Bitcoin holder is struggling like market dominance.

On Monday, Bitcoin’s total market cap share dipped below 40% for the primary time since June 2018.

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Bitcoin market cap dominance chart. Source: CoinMarketCap

Already on the best way out, dominance was dealt a big blow thanks to the current Bitcoin price strain, whereas alts resembling Ether (ETH) benefitted.

“The Bitcoin dominance is still falling,” standard Twitter dealer The Moon summarized over the weekend.

“The alt season is not over yet. But my gut feeling is that the end is near!”

Bitcoin fundamentals present calm

For all of the nerveracking price motion, in the meantime, nothing supplies a bullish counterpoint to the present Bitcoin narrative than its community fundamentals.

Even after its $42,000 dip, Bitcoin is extra enticing than ever for miners, and its community safety is subsequently additionally extra stable than ever earlier than.

As Cointelegraph reported, each hash price and problem have staged a miraculous restoration in current weeks, reclaiming all-time highs after a miner washout brought about its personal temporary price crash.

The weekend proved to be no completely different, with weekly common hash price topping 180 exahashes per second (EH/s) for the primary time.

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Bitcoin 7-day common hash price chart. Source: Blockchain

Difficulty remains to be on observe to improve by over 10% on the subsequent automated readjustment in 11 days’ time. The earlier readjustment on May 14, at 21.5%, was the most important constructive shift since June 2014.

“Bitcoin’s mining difficulty hitting an all-time high just after tesla’s announcement is a chef’s kiss,” Alex Thorn, head of firmwide analysis at crypto service provider financial institution Galaxy Digital, said final week.

Dollar bounces at assist

Taking a break for crypto-specific triggers, the broader macro image might but present some inspiration for price trajectory.

After plunging late final week, the power of the U.S. greenback is returning. The U.S. greenback forex index (DXY) is bouncing off acquainted assist — surges in its power tends to present teething problems for BTC/USD.

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U.S. greenback forex index (DXY) 1-day candle chart. Source: Tradingview

At the identical time, shares are bullish in China however performing averagely in Europe and the U.S. Coronavirus, with localized peaks in some jurisdictions however fewer circumstances in others, joins the melting pot.

Among merchants, nevertheless, it’s inflation that may be a key subject. A broad international rebound from the time of lockdowns and different restrictions creates issues for these making an attempt to engineer it — particularly, the U.S. Federal Reserve and different central banks.

“The global economic recovery is well under way; that’s what’s fueling the inflation fears,” Olivier d’Assier, Qontigo head of APAC utilized analysis, told Bloomberg.

After inventory markets’ rip roaring yr, he added, urge for food for revenue taking can be understandably rising.

Bitcoin nonetheless beats its final bull market

Is it 2013 or 2017 in phrases of the Bitcoin bull market?

Among the trade’s best-known names, there is no such thing as a trace of bearishness — all that is still to do is analyze the character of the present retracement and examine it to years previous.

This week, stock-to-flow creator PlanB notes that for all of the Musk drama, Bitcoin remains to be performing higher than throughout its 2017 run to $20,000. This regardless of the $42,000 dip formally being Bitcoin’s largest this bull cycle and for the reason that cross-asset crash of March 2020.

“Today feels like 2017 bull market (esp. during the fork war),” he tweeted on Monday, invoking reminiscences of the delivery of Bitcoin Cash (BCH).

“It’s not a straight line to the next ATH, but a lot of volatility (multiple -30% dips). HODL.”

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BTC/USD stock-to-flow chart as of May 17, 2021. Source: Digitalik

Calling for calm and zooming out is a key function amongst seasoned Bitcoiners. As Cointelegraph reported final week, stock-to-flow stays unviolated by Musk or some other episode of downward volatility.

An accompanying survey in the meantime revealed {that a} majority of 35,000 respondents consider that BTC/USD will nonetheless hit $100,000 this yr.