The Bitcoin community continues to ignore macro data

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Written by

Kevin Lopez
Published on

November 4, 2022

Key points:

  • With interest rates rising by 75 basis points four times in a row, the largest cryptocurrency by market capitalization has formed a base that has fluctuated by more than $19,000 or $20,000.
  • Glassnode’s UTXO Realized Price Distribution (URPD) chart shows an increase in BTC buying near $20,000.
  • The Volume Profile Visible Range (VPVR) tool shows high-capacity nodes at $19,200 and $20,300, respectively. High-capacity nodes refer to areas where price agreements are important and can usually be used as asset support.

Tight monetary policy and macroeconomic uncertainty continue to rage.

But crypto investors end up with little thought beyond the cost basis. In a quiet session with Bitcoin and Ether edging down and the Bank of England releasing the latest global rate hike -- the highest in 33 years -- investors continue to focus almost exclusively on the fees they pay for their assets.

Of course, macro data still matters, as cryptocurrencies increasingly respond to the same stimuli that have affected other assets for decades. For example, employment and productivity reports, energy prices and Russia's unprovoked invasion of Ukraine have rocked markets over the past year.

However, cryptocurrency investors are increasingly adept at such pricing events and are less likely to be caught off guard, which is why Bitcoin has lacked major moves in recent months.

On Thursday, bitcoin traded almost unchanged from mid-June, shrugging off a fourth straight rate hike by the Federal Reserve, a weeks-long strike by central bankers, falling GDP, and hawkish remarks from Chairman Jerome Powell, and the impact of socio-political unrest.

With interest rates rising by 75 basis points four times in a row, the largest cryptocurrency by market capitalization has formed a base that has fluctuated by more than $19,000 or $20,000 in a week since mid-June. This broad cusp could serve as support going forward.

The world is turning, but the asset, often criticized for its volatility, is not -- or certainly not as strong as this year's leading stock index.

Relative Strength of Bitcoin

Bitcoin’s Relative Strength Index (RSI) is currently at 56, just above neutral, and Bitcoin’s price is within 2% of its 20-day moving average.

Much of the pain from the price drop in 2022 appears to have engulfed the market.

Glassnode’s UTXO Realized Price Distribution (URPD) chart shows an increase in BTC buying near $20,000.

Bitcoin UTXO Realized Price Distribution (Glassnode)

Bitcoin UTXO Realized Price Distribution (Glassnode)

The trend highlights a repricing of the cost base as bitcoin holders who bought at higher levels have exited positions to ease financial hardship.

By contrast, newer investors were long between $19,000 and $21,000, but were not hit to the same extent.

This trend also aligns well with the Volume Profile Visible Range (VPVR) tool, which shows high-capacity nodes at $19,200 and $20,300, respectively. High-capacity nodes refer to areas where price agreements are important and can usually be used as asset support.

(TradingView)


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