Bitcoin is getting a dose of reality this week as the World Economic Forum convenes, and analysts still favor a fresh BTC price drop.
Bitcoin (BTC) is off to a better start than most this week as bulls avoid serious losses into the weekly close.
Still heavily tied to declining stock markets, the largest cryptocurrency is nonetheless defending $30,000 on May 23 and eyeing the top of its post-Terra (LUNA) trading range.
While there are no signs of an impending miracle price recovery, some are hoping that upside will feature before any form of reversion to a downtrend.
Macro conditions remain tenuous, and the week of the World Economic Forum’s (WEF) Annual Meeting is due to add fuel to the fire surrounding the tolerance of Bitcoin.
Add to that the largest downward difficulty adjustment since last July and it becomes clearer that Bitcoin is battling for strength on multiple fronts.
What could happen in the coming days? Cointelegraph presents several factors to keep in mind when it comes to BTC price action.
BTC price “nuke” still on the table
In a refreshing contrast to recent weeks, Bitcoin managed to show strength following the weekly close into May 23.
Despite still sealing a record eighth weekly red candle in a row, the lack of breakdown allowed BTC/USD to instead retain $30,000.
For Cointelegraph contributor Michaël van de Poppe, the trend was already in evidence ove the weekend.
Still good on #Bitcoin.
Great breakout at the $29.3K area, resulting in a run towards $30.2K, which became resistance (as disclosed in the previous tweet).
Consolidation now.
Break would mean $31.1K and potentially $32.8K + #altcoin momentum. pic.twitter.com/Ia9svBR3Lf
— Michaël van de Poppe (@CryptoMichNL) May 22, 2022
Given the overall picture with stocks correlation and monetary tightening forcing them down, not everyone was confident in the upside continuation of Bitcoin.
BTC weekly:
Alot of resistance above.
Not so much support below.
This is not a prediction. pic.twitter.com/L34fV2sA7M
— Nunya Bizniz (@Pladizow) May 23, 2022
“My preferred Bitcoin scenario is a nuke straight to $22k before big bounce close to $40k,” popular Twitter trader Nebraskan Gooner told followers on May 23:
#Bitcoin – You can call it a dead cat bounce, relief rally, bearish re-test, or the bottom being in, whatever you want to say…. Bulls or bears should at least agree on us getting some upside first. pic.twitter.com/o04UwAgDPn
— IncomeSharks (@IncomeSharks) May 23, 2022
At the time of writing, BTC/USD circled $30,500, data from Cointelegraph Markets Pro and TradingView show.
Showdown as WEF plans to “change” Bitcoin
The first in-person annual meeting of the World Economic Forum since the start of the COVID-19 pandemic is the macro trigger of the week.
As the economic elite gathers in Davos, Switzerland, from May 22 through May 26, markets are gearing up for potential volatility on the back of their forthcoming remarks.
For Bitcoiners, the event tends to be a stressful one as the industry attempts to gauge sentiment among traditional finance heavyweights.
This year is likely no different. Just one month ago, the WEF released a video arguing that Bitcoin should change its proof-of-work (PoW) algorithm to proof-of-stake (PoS) for environmental purposes.
An accompanying campaign, Change the Code, by Ripple co-founder and executive chairman Chris Larsen and Greenpeace USA, is attempting to gain mainstream support for the swap.
Moreover: “Experts” have found a way to move #Bitcoin from a decentralised network to a centralised, so they can control it.
This “change the code not the climate” campaign introduced by the WEF and financed by the wealthy has only one goal: Take over the control of #Bitcoin. pic.twitter.com/kMkXDLjLWc
— Carl ₿ MENGER ⚡️. (@CarlBMenger) May 8, 2022
The implosion of stablecoin TerraUSD (UST) this month further dragged crypto into the crosshairs of the financial establishment. Christine Lagarde, president of the European Central Bank, claimed that all cryptocurrencies are “worth nothing” and, perhaps paradoxically, require regulation.
“It is based on nothing, there is no underlying assets to act as an anchor of safety,” she told Dutch television show College Tour in an interview released May 22.
Both the WEF and Lagarde have come under fire from Bitcoin sources, with even firms such as Swiss native Bitcoin Suisse showing little public tolerance for their criticism.
How much do the attendees of the #WorldEconomicForum really know about #Bitcoin, #crypto and the potential of #blockchain ⁉️ #WEF22
To help them (& Christine @Lagarde) out – we offer a short primer! 😀 👇🏻
(Help us spread the word @thecryptovalley @TheBlock__ @crypto @wef @FT)
— Bitcoin Suisse (@BitcoinSuisseAG) May 22, 2022
Just like El Salvador President Nayib Bukele’s Bitcoin-focused summit attended by 44 countries last week, meanwhile, this week’s Davos event will see a conspicuous competitor champion Bitcoin over fiat currency.
The Oslo Freedom Forum, to be held from May 23 through May 25 in Oslo, Norway, describes itself as “a global gathering of activists united in standing up to tyranny.”
Speaking at the event are a host of Bitcoin’s best-known names including economist Lyn Alden, Strike CEO Jack Mallers and co-founder and CEO of Lightning Labs Elizabeth Stark,.
“Two international forums starting tomorrow are on the surface similar, but diametrically opposed. The World Economic Forum and the Oslo Freedom Forum. A necessity of manipulated money is coercion, and the loss of individual rights and freedoms. See you in Oslo,” entrepreneur Jeff Booth, also due to attend, tweeted over the weekend.
Difficulty reflects conditions catching up with miners
Major Bitcoin price drawdowns are not without their consequences.
According to the latest estimates, Bitcoin’s network fundamentals are now due to adjust for the trip to $30,000.
Difficulty, which reflects changing dynamics among miners, will reduce by around 3.3% at its next automated readjustment this week. While modest compared to some adjustments, the change will nonetheless be the largest downward shift since July 2021.
The reason is simple — Bitcoin price action has not only headed south, but is challenging miners’ profitability.
Miner production cost is key in determining their ongoing activity. A decline below the number, currently at around $26,000, would cause larger shifts in network fundamentals in order to maintain profitable participation.
According to monitoring resource MacroMicro, as of May 21, it cost an average of $26,250 to mine one Bitcoin.
Despite possible profitability pressure based on estimated data, miners are not showing signs of capitulation, still keeping BTC sales to a minimum, according to the latest figures from on-chain analytics platform Glassnode.
Miner outflows — coins leaving miner wallets — hit a one-month low on May 23.
Bitcoin’s mining hash rate, meanwhile, has come off its all-time highs to circle an estimated 233 exahashes per second (EH/s) as of May 23.
For Ki Young Ju, CEO of fellow analytics platform CryptoQuant, the overall trend remains similarly clear.
“While BTC price drops -56% since Nov 2021, hashrate increased +75%,” he noted:
Two observations on sentiment in equities.
Absolute extreme bearish sentiment likely means a sharp counter trend rally is very close.
Consistent bearish sentiment confirms this is a cyclical bear market of duration, not a buy the dip just yet. pic.twitter.com/Jpfo9GUSMr
— Bob Loukas (@BobLoukas) May 22, 2022
Last week, meanwhile, popular trader and analyst Rekt Capital argued that a more substantial price change would be necessary to change sentiment in a way that matters.
“It’s easy to become bullish on BTC on a green day & bearish on a red day. But BTC is still just ranging between $28K-$32K,” he tweeted:
“This will continue until either of these levels is broken. Intra-range moves aren’t substantial enough to dictate changes in sentiment.”
Crypto Fear & Greed Index vs. BTC/USD chart (screenshot). Source: LookIntoBitcoin
The views and opinions expressed here 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 conduct your own research when making a decision.
