The victory of Macron in France has not affected Bitcoin, but the Hang Seng index and the Shanghai Composite have dropped. As short-term price action on Bitcoin makes it an uninspiring trade, most HODLers choose to keep their coins.
The price of Bitcoin (BTC) started an uncertain week and now seems to be holding resistance at around USD 40,000. The pioneering cryptocurrency closed four weekly red candles in a row, something unseen since June 2020.
Doubts about the macro outlook for the market are still the norm, as there seems to be little to comfort the bulls as the week winds down. After losing USD 4,000 over the last few days, the price now focuses on retesting liquidity levels toward USD 30,000.
However, long-term holding companies and key players like miners take a more optimistic position on Bitcoin investment. For that reason, it is relevant to look at the forces at play that might shape the price action of BTC in the coming days.
The Problems in Asia Overtake the French Election Relief
An external event crucial for risk assets earlier in the week is the French election, won by incumbent Emmanuel Macron. People expect the second term of Macron, a sigh of relief for market players, to lift French stocks and the embattled euro.
The European Union and the United States are undergoing inflation and a bond market crash. In addition, the European Central Bank (ECB) has not yet raised interest rates or reduced its nearly USD 10 trillion balance sheet.
The victory of Macron has not affected Bitcoin, but risk assets struggle with an Asian downturn as COVID-19 arouses sentiment in China. The Hang Seng index in Hong Kong has gone down by 3.5%, while the Shanghai Composite has lost 4.2%.
The Strength of the US Dollar Is Back
After stumbling in the two-year highs last week, the US dollar currency index (DXY) seems to continue its bullish trend. At 101.61, DXY is challenging its performance from March 2020, when the coronavirus crash caused assets worldwide to drop.
The strength of the US dollar has seldom been a boon to Bitcoin, but the inverse correlation seems to be in control. Well-known trader Crypto Ed jokingly said that the DXY developer announced a token burn in response to the latest move.
Preston Pysh, who hosts Investor’s Podcast Network, believes that something does not seem to be going right. He said that the Bank of Japan implements Yield Curve Control while the yen collapses. He added that the US Fed might hike 50 basis points while the US dollar hits new highs.
Long-Term Holders (HODLers) Establish a New Record
Short-term price action on Bitcoin makes it an uninspiring trade for anyone other than the most experienced players. For that reason, it is not surprising that most HODLers choose to stay on the sidelines and do what they do best.
That is evident in on-chain data, which shows that the proportion of the Bitcoin supply dormant for at least a year is at all-time highs. Citing figures from Glassnode, economist Jan Wuestenfeld pointed out that those accumulated coins are becoming older.
Data from Glassnode indicates that the supply that has been dormant for a year or more has exceeded 64% for the first time. The HODL Waves indicator showing HODLed coins of all ages confirms the trend.
By Alexander Salazar
