5 things on this week for BTC

Key points: 

• Indicators point out that miners are about to capitulate, and the hash rate is now falling from record levels as miners shut down operations.
• Traders see opportunities for low-time frame trades while expecting further downside on the high-time frame.
• Bitcoin "shrimps" and "crabs" are increasing their holdings, according to Glassnode. Nonetheless, such activity could be due to FTX collapse. 
• Willy Woo, the analyst behind the popular statistical resource Woobull, states that on-chain indicators suggest Bitcoin’s next macro bottom is imminent.
• China is in the midst of a wave of protests against the government's COVID-19 policies, risky assets could struggle if things get out of hand.

Bitcoin prepares to exit gloomy November just above $16,000 – What's on the BTC Price Menu This Week?

Bitcoin is far from bottoming out after falling more than 20 percent this month in what analyst Willy Woo described as an "unprecedented deleveraging."

The impact of FTX’s implosion is still unknown, and warning signs are still pouring in even after the first wave of crypto bankruptcies.

This week, in particular, all eyes are on miners, whose profits have been squeezed by falling spot prices and rising hash rates.

Turbulence is in the air, and if there is another "capitulation" among miners, the entire ecosystem may experience another shock.

As "maximum pain" looms for ordinary holders, we examine some of the critical factors affecting BTC/USD in the near term.

Bitcoin Miners Capitulating - Analyst

Bitcoin miners, like everyone else, are seeing a lot of pressure as they sell their accumulated BTC for a profit.

Exactly what kind of financial trouble the average miner is in remains to be seen, but a classic indicator is preparing to shout “capitulation” again.

Just a few months after the last such period, Hash Ribbons warned that the situation had once again become unsustainable.

Hash Ribbons uses two hash rate moving averages to infer miner participation in the Bitcoin network. The crossing of trendlines indicates the capitulation and recovery phases.

For Kripto Mevismi, a contributor to the on-chain analytics platform CryptoQuant, the time for the former to resurface is getting closer.

“So right now miners have a very high Bitcoin difficulty, i.e.; costs are getting higher and higher, and it’s getting harder and harder to do business in such an environment,” he wrote in a blog post:

“That’s why miners do not work in full force. If they have efficient- new generation mining machines, they put them into work but that's all. Inflation is high and people feels effect of living costs, bitcoin price is declining, mining cost and difficulty is getting higher. Tough environment for miners.”

A significant change in mining difficulty could improve the situation, Kripto Mevismi added.

BTC.com estimates that the next adjustment on December 6 will bring the difficulty down to 6.4% at the time of writing. If successful, it would be the biggest drop since July 2021.

BTC.com and others also estimate that the hash rate is now falling from record levels as miners shut down operations.

BTC/USD has been watching volatility heading into the monthly closing

BTC/USD shrugged off a sharp weekly decline at the close of November 27.

The weekly close was slightly higher than the previous week at around $16,400, with the pair still hovering near two-year lows, according to TradingView data.

Given the lack of volatility in intraday price action, traders and analysts remained cautious about their next move.

“It’s a long holiday weekend, so things will get interesting as we get closer to weekly and monthly shutdowns,” on-chain analytics resource Material Indicators wrote in part of a tweet last week.

Subsequent posts reiterated that a close on Nov. 30 could spark renewed instability, with BTC/USD currently down 21.25% from the start of the month.

Data from Coinglass confirms this makes November 2022 the worst November for Bitcoin since the 2018 bear market.

Meanwhile, on shorter time frames, popular trader Crypto Tony is highlighting $16,000 as the next key area to move into higher levels, while keeping an eye on the long-term trend.

"Lower highs and consolidation below major resistance areas. If you want to get in safely, wait for a bottom," he concluded over the weekend.

Bitcoin’s next bear market bottom is the talking point right now, with some targets more popular than others.

As such, an outspoken commentator from Crypto’s Il Capo, calling for more downside, reiterated his view that $12,000 could be the next target for BTC/USD.

He highlighted the relationship between perpetual contract volume and spot prices, warning that the current market structure is not conducive to further gains.

“12,000-14,000 is likely. Altcoins down 40-50%,” he noted.

All around the Bitcoin sea hodlers are piling up

Populations of the Bitcoin ecosystem, large and small, have been “aggressively” increasing their BTC exposure this month.

In a positive sign of tighter supply ahead, accumulation appears to be gaining momentum - demand satisfies much illiquid supply.

According to on-chain analytics firm Glassnode, retail investors are largely to blame for the current trend.

Smaller investors are increasing in number and are variously called "crabs" and "shrimps" depending on their balance.

“Since the FTX crash, Bitcoin Shrimp (< $1 BTC) have increased their BTC holdings by $96,200 to an all-time high. This group now holds over $1.21M in Bitcoin, or 1% of the circulating supply 6.3 percent," Glassnode revealed in a Twitter thread.

Another post states:

“Crabs (up to 10 $BTC) have also seen aggressive balance increase of 191.6k $BTC over the last 30-days. This is a convincing all-time-high, eclipsing the July 2022 peak of 126k $BTC/month.”

Part of the increase in the number of small wallets may be due to exchange users withdrawing funds to private storage.

Woo flags pass in "Maximum Pain"

For Willy Woo, the analyst behind popular statistical resource Woobull, on-chain indicators suggest Bitcoin’s next macro bottom is imminent.

Woo highlighted three of them this weekend, showing that Bitcoin is performing in every way exactly as it has in previous bear markets.

For example, the BTC supply portion of unrealized losses is approaching macro lows, a phenomenon covered by the Max Pain model.

“Bitcoin bottom is looming under maximum pain model. Historically, BTC price hits macro cycle lows when 58% to 61% of tokens are underwater (orange). Shades of green correlate with locked-in GBTC Trust Alignment of tokens in,” Woo explained alongside the chart.

He further pointed out that the value of the BTC/USD MVRV ratio is also targeting the “buy” zone, which has historically offered investors the greatest profit potential.

MVRV is bitcoin's market cap divided by realized market cap — the total price each bitcoin last moved. The resulting numbers provide buying and selling areas that correspond to price extremes.

"MVRV ratio is deep in value territory," Woo's commentary read:

“Under this signal we were in already bottoming (1) until the latest FTX white swan debacle brought us back into a buy zone (2).”

"Use these charts at your discretion, we are in a period of unprecedented deleveraging," he added, warning that "past cycles are not necessarily indicative of future cycles."

China protests shake the macro sentiment

Some major U.S. economic data is due out this week, but crypto analysts are more focused on China.

Some warned that turmoil in factories around the world could hurt market performance as an already fragile status quo hinges on inflation trends.

China is in the midst of a wave of protests against the government's COVID-19 policies, with several cities ignoring lockdown calls to end "COVID-19".

With that in mind, risky assets could struggle if things get out of hand.

“Bitcoin’s key area failed to break, so we’re still consolidating in that area. Support now,” explained Michael van de Poppe, founder, and CEO of trading firm Eight:

“If this is lost, I’d expect new lows to be seen on the markets, probably depending on China & FTX contagion this week.”

Even the mainstream media warned of the potential fallout on the day, with John Toro, head of trading at the exchange Independent Reserve, telling Bloomberg that "the risk of contagion will increase through the cryptocurrency complex."

Asian stock markets were down slightly on the day, with Hong Kong's Hang Seng and Shanghai Composite down 1.6% and 0.75%, respectively, by press time.

Bonus: Bitcoin vs Crude Oil bottom

In a related macro report, Bitcoin is currently on hold for its “outperformance” in dollar terms, according to a prominent analyst.

Regarding WTI Crude Oil, BTC price action is already at macro lows - history calls for a rebound, which includes a clear appreciation trend against the USD.

"We've finally reached the bottom of the channel," TechDev confirmed over the weekend:

“Bitcoin’s crude oil (energy) purchasing power topped in April 2021. Now looks poised for another leg of outperformance (and rise in USD value).”

The accompanying chart draws concrete parallels to Bitcoin’s performance at the end of the last bear market in late 2018.

Meanwhile, TechDev is far from the only voice calling for a bullish new year price action for Bitcoin, as Cointelegraph reported.