Bitcoin (BTC<\/a>) starts the second week of May 2022 by bringing up bearish ghosts from its past \u2014 how much worse could the picture get for hodlers?<\/p>\n After falling to nearly $33,000, the largest cryptocurrency is giving market participants, new and old, a run for their money, and the fear is palpable.<\/p>\n A brutal combination of macro cues, which are set to continue this week and beyond, forms the backdrop for some historical chart retests that no one wanted to see again.<\/p>\n As calls for capitulation continue, there is still a lack of agreement about just how far BTC\/USD could or should fall to put in a convincing long-term bottom. <\/p>\n Cointelegraph takes a look at factors poised to contribute to market movements in the coming days, as Bitcoin closes in on its 2022 lows.<\/p>\n Whichever way you dice it, there is little to be bullish about when it comes to Bitcoin price charts this week. <\/p>\n The weekly close on May 8 at $34,000 meant that BTC\/USD delivered its sixth weekly red candle in a row<\/a>.<\/p>\n That chart feature has not been seen in nearly eight years \u2014 the last occurrence began in August 2014 \u2014 data from Cointelegraph Markets Pro<\/a> and TradingView<\/a>\u00a0shows. <\/p>\n Then, as now, Bitcoin was in the second year of its four-year halving cycle, having seen its first blow-off top at just over $1,000 in November 2013. This cycle, however, has been different, as that blow-off top either did not arrive or was a lot more muted than previous cycles.<\/p>\n Meanwhile, macro conditions have taken care of any hope of a late surge among the majority of analysts, who now expect financial tightening by central banks worldwide to keep risk assets such as crypto firmly in check.<\/p>\n Back to the chart, BTC\/USD has lost over $4,000, or 11.1%, in May already. <\/p>\n Historically, the worst month of May on record was, in fact, last year, in which the pair lost 35.3%, data from on-chain monitoring resource Coinglass shows<\/a>.<\/p>\n After April\u2019s performance, however, the odds of a comeback feel slim. For four years in a row prior to 2022, Bitcoin conversely saw gains of at least 32% in April, but this year printed a 17.3% loss \u2014 its worst on record<\/a>.<\/p>\n As such, the advice from analysts when it comes to short-term Bitcoin price action is practically unanimous as the week begins: be careful.<\/p>\n After the weekly close, BTC\/USD continued dropping down toward $30,000 at the time of writing, looking to test $33,000 and January\u2019s lows of $31,800 next.<\/p>\n \u201cDon\u2019t try to catch this knife,\u201d on-chain analytics resource Material Indicators told<\/a>\u00a0its Twitter followers alongside a chart showing bid support disappearing from the Binance order book.<\/p>\n The order book of May 8 shows a major bid wall in place at $33,000. It was put there as another wall of buy interest at around $33,800 was dealt with swiftly by the market, showing the veracity of sell-side pressure in the current environment.<\/p>\n \u201cHistorically $69.5M in BTC bid liquidity would serve as support, but historically it also had a significant amount of liquidity below it. That does not seem to be the case here,\u201d Material Indicators added<\/a> about that first line of defense.<\/p>\n Last week\u2019s weekly candle also saw Bitcoin dive below its 100-week moving average (WMA) for the first time since March 2020.<\/p>\n Then, as with some previous piercings of the 100 WMA, BTC\/USD then went on to test the 200 WMA as support. For popular Twitter account Bitcoin Back, the implications this time around are thus obvious.<\/p>\n \u201cBoth previous times led to capitulation to 200-week moving average in 2014 and 2018,\u201d he wrote<\/a> in part of his latest update. <\/p>\n \u201cToday\u2019s chart has many differences from those two times, and those two times were very similar to each other.\u201d<\/p><\/blockquote>\n Blockchain Backer nonetheless added that he expected a \u201cbig dive in\u201d on May 8 following the latest display of weakness.<\/p>\n As Cointelegraph recently reported, meanwhile, expectations even long before the weekly close were for Bitcoin to fall to or below $30,000<\/a> in the coming weeks.<\/p>\n Bitcoin\u2019s rundown in the first week of May was overwhelmingly thanks to the broader macro weakness now firmly in place across global markets.<\/p>\n Stocks are particularly problematic in this respect, as crypto\u2019s ongoing correlation to those indexes makes for a grim ride for investors.<\/p>\n Things came to a head last week after tightening confirmations from the United States Federal Reserve, as the S&P 500 capped its first five straight weekly drop since 2011.<\/p>\n Now, amid the ongoing Russia-Ukraine conflict and associated financial pressures, another force is due to return.<\/p>\n Inflation, already at its highest in the U.S. since the early 1980s, is tipped only to get worse thanks to the fallout from trade disruption and sanctions on Russia.<\/p>\n This week will see consumer price index (CPI) data for April released, and the odds are that the numbers will reflect the extent of the geopolitical turmoil like no others before it.<\/p>\n U.S. President Joe Biden will speak on the inflation issue on May 10 prior to the CPI print on May 11.<\/p>\n March CPI was 8.5%, while noises are already coming from analytics circles that inflation may be peaking now or in the near future.<\/p>\n \u201cWe expect inflation to peak this summer between 6%-7% and to recede to 3%-4% next year with no recession. \u2026 We may have spotted the first signs of peaking inflation already, in lower three-month than y\/y rises of several price and wage measures.\u201d – @yardeni<\/a> pic.twitter.com\/4mXXxFvmIN<\/a><\/p>\n \u2014 Carl Quintanilla (@carlquintanilla) May 8, 2022<\/a><\/p><\/blockquote>\n \u201cThe best scenario for a bottom for me would be capitulation somewhere in the next few days followed by a lower than expected CPI print on wednesday,\u201d popular trading account Daan Crypto Trades argued<\/a>:<\/p>\n \u201cThat would be my cue to bet big.\u201d<\/p><\/blockquote>\n Big or small, CPI events have tended to spark short-term BTC price volatility<\/a> in recent months.<\/p>\n On the topic of \u201ccapitulation\u201d \u2014 a mass sell-off as investors panic sell their Bitcoin \u2014 data shows that the temptation to initiate may be strong.<\/p>\n Currently, over 40% of the Bitcoin supply is being held at a loss, and this is the highest proportion since April 2020, just after the COVID-19 crash.<\/p>\n 7.7 million #Bitcoin<\/a> are currently sitting in loss. This is the highest amount since April 15th, 2020. <\/p>\n That’s almost 41% of the total circulating supply. pic.twitter.com\/uXPR9PiJHT<\/a><\/p>\n \u2014 On-Chain College (@OnChainCollege) May 7, 2022<\/a><\/p><\/blockquote>\n At that time, a genuine capitulation event did take place, as evidenced first and foremost by price. <\/p>\n Analyzing unrealized profits and losses across hodlers at the time, as defined by on-chain analytics firm Glassnode, likewise confirmed capitulation on March 16, 2020.<\/p>\n Just nine days later, the firm\u2019s net unrealized profit\/loss metric exited the \u201ccapitulation\u201d zone and reached \u201chope – fear\u201d \u2014 one shade toward a recovery.<\/p>\n Currently, the metric measures \u201coptimism – anxiety,\u201d and is traveling downwards toward \u201chope – fear\u201d territory.<\/p>\n It\u2019s no surprise that overall crypto market sentiment has not benefited from the events of May so far.<\/p>\n Related:\u00a0Top 5 cryptocurrencies to watch this week: BTC, ALGO, XMR, XTZ, THETA<\/a><\/em><\/strong><\/p>\n According to the Crypto Fear & Greed Index<\/a>, however, it is only this week that the reality of the situation has hit home for the majority.<\/p>\n As of May 9, the classic sentiment gauge measures 11\/100, firmly in its \u201cextreme fear\u201d bracket and also at levels that have historically formed bottoms.<\/p>\n Crypto Fear & Greed has halved in value in just two days.<\/p>\n The traditional financial market equivalent, the Fear & Greed Index<\/a>,\u00a0has begun to diverge from crypto, steady at 30\/100, or \u201cfear,\u201d on May 9, even after last week\u2019s mayhem.<\/p>\n \u201cWith Bitcoin now having retraced all the way down to $33.9k, trader sentiment has fallen to six week lows,\u201d research firm Santiment commented<\/a> on the situation:<\/p>\n \u201cWe typically prefer to see capitulation signs like this, as weak hands leaving the space is generally what is needed for a truly notable bounce.\u201d<\/p><\/blockquote>\n 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.\n<\/p>\n<\/div>\nSix weekly closes in the red<\/h2>\n
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BTC 100-week moving average falls<\/h2>\n
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US CPI primed to continue inflation narrative<\/h2>\n
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Calculating capitulation\u00a0<\/h2>\n
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Sentiment collapses to macro bottom zone<\/h2>\n
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