Bitcoin (BTC) starts another week under $ 40,000 – but with two major new milestones under its belt.
After bitcoin rollout fell over sustained FUDs from China over the weekend, there was also an unexpected premiere – from El Salvador and Paraguay.
As the world may be on the verge of welcoming its first two “Bitcoin nations” in history, there is a lot to be noticed, but can BTC price developments catch up?
Cointelegraph takes a look at five things that could change the status quo of BTC / USD in the days ahead.
Higher interest rates “good,” says Yellen
A cursory look at the general macroclimate provides an interesting mix for Bitcoin traders and traders.
Inflation is still on everyone’s lips in the United States, and Treasury Secretary Janet Yellen said she would be in favor of higher interest rates.
Speaking to Bloomberg over the weekend, Yellen expressed support for President Joe Biden’s latest huge spending package, arguing that even if it leads to inflation, it should be believed.
“If we had a slightly higher interest rate environment in the end, that would actually be a plus for the view of society and the Fed,” she told the publication.
Higher interest rates tend to improve Bitcoin’s appeal as a deflationary investment, but hand in hand with that comes a rising US dollar this month – something that has traditionally put pressure on BTC / USD.
After the US dollar currency index (DXY) bounced off 90, it is now busy making up lost ground and resisting a downtrend that began in mid-March.
El Salvador, Paraguay fail because of Bitcoin bullis
When it comes to Bitcoin, the word on everyone’s lips is “El Salvador”.
After the payment gateway Strike made serious forays into the country, President Nayib Bukele officially announced that he would submit a bill to parliament to establish Bitcoin as legal tender.
Should this succeed, El Salvador would be the first nation on earth that would do this and would practically adopt something like a “Bitcoin standard”.
Bukele confirmed his plans during a video address at the Bitcoin 2021 conference in Miami last week where Strike CEO Jack Mallers outlined the plans.
Markets remained virtually untouched by the reveal, however – something that continued when a member of Congress from Paraguay took to social media to hint at plans to integrate Bitcoin into a second world economy.
“As I said a long time ago, our country must go hand in hand with the new generation. The moment has come – our moment, ”Carlitos Rejala tweeted on Monday.
“This week we are starting an important project to innovate Paraguay in front of the world! The real one to the moon. “
Rejala also thanked Bukele for his “example”.
However, as Cointelegraph reported, El Salvador’s adoption of Bitcoin could come at a price. In response, commentators brought up the authoritarian leadership of Bukele, along with possible teething troubles arising from an economy that uses the US dollar.
For Caitlin Long, founder and CEO of Avanti Bank, bigger forces could be at play.
“Bitcoin hacks dictatorships just like Big Tech hacks,” she wrote in one of many tweets about the move.
“Bitcoin doesn’t care WHY the President of El Salvador wants to make BTC legal tender – it doesn’t matter.”
Braces in classic bear signal
Check out the immediate price action and anyone would be forgiven for having cold feet on Bitcoin on Monday.
For all the excitement of the conference, BTC / USD is firmly in range and minus a series of higher highs and higher lows that could signal a breakout.
Recent attempts to do this – by escaping a narrowing “compression” wedge that has nearly zero volatility – have all stalled.
At the time of writing, Bitcoin was trading at just over $ 36,000.
With declining subsidy rates, positive signals were just visible in some areas of the market, while others are already sounding the alarm.
Short trades on the major Bitfinex exchange are a cause for concern. As popular Twitter account Fomocap noted on Monday, past increases in short positions coincided with great volatility – usually on the downside.
“The sudden switch from Bitfinex to shorts always means something. Rise from November 25th to May 19th, ”he warned.
“Things are looking up again.”
This would cement existing fears that Bitcoin is not yet finished with its bearish retreat. Opinions are divided, as Cointelegraph reported – some are waiting for a return of $ 20,000 while others believe such levels are forever out of reach.
Aether eyes “parabolic” move towards BTC
The pain of bitcoin could still be the gain of altcoins.
Since some cryptocurrencies are recording a sustained upward trend despite falling crypto market capitalization, hopes remain that an opportunistic “old season” can develop.
Of particular interest this week is Ether (ETH), which is nearing its most recent local highs of 0.081 from last month against Bitcoin.
Currently, ETH / BTC could be prepared for another breakout at 0.076. Kyle Davies, CEO of Three Arrows Capital, went so far as to describe the upcoming move as “parabolic”.
“If we hit 0.2 without hitting an all-time high of usd in both assets, I’ll just stop bothering with crypto,” says Blockfolio Only up Chat show host Cobie responded, capturing general frustration with the current price movement among traders.
ETH / BTC reached its all-time high of 0.123 in early 2018 and has not approached that level since then.
On Monday, the majority of the top 50 cryptocurrencies by market cap posted modest gains, while Bitcoin fluctuated while some outperformed, including Solana (SOL) with a 10% return and Tezos (XTZ) with 12%.
“Could see a little more upside potential here, especially if Eth / BTC holds,” predicted trader Josh Rager on Sunday about the prospects for SOL.
Miners stage the highest discharge of 2021
Bitcoin’s hash rate is showing signs of recovery, with a modest increase from 125 exahashes per second (EH / s) to 134 EH / s in the past few days.
Difficulty is expected to drop about 8% with the next automated readjustment in five days to offset a miners restructuring that came with the recent volatility.
Nonetheless, once confident miners who weathered the collapse reduced their holdings en masse over the past week, data shows.
As analyst William Clemente III noted, miners’ balances are down 5,000 BTC from a week ago – a major turnaround.
On June 3, 3,012 BTC left the largest mining pool Poolin during the largest single outflow of 2021. Another 2,501 BTC moved one day later.
However, analyst Lex Moskovski admitted the funds may not have been sold.
“This is not a sign of a sale, even if three times the drains like this one were recorded that day,” he tweeted.