Bitcoin (BTC) is nearing $40,000 this week as “Dogefather” Elon Musk offers out pure ache to hodlers — what’s subsequent?

After a traumatic weekend for a lot of crypto traders, Monday is setting the stage for the following chapter within the wild 2021 bull market.

Cointlegraph takes a have a look at 5 components that would form what Bitcoin and altcoins do subsequent.

Musk tweet hits key Bitcoin technical degree

It’s all about one man but once more this week: Elon Musk. In attribute vogue, the Tesla and SpaceX CEO brought on uproar on Twitter when he got here out bearish on Bitcoin.

BTC/USD offered off immediately on information that Tesla was halting BTC funds for its merchandise, however for Musk, this was not sufficient.

Additional tweets over the weekend, together with criticism of Bitcoin’s decentralization and the way he “believes in crypto,” added gas to the fireplace.

It was a touch that Tesla could already be planning to promote its holdings, nonetheless, that brought on probably the most distress. Bitcoin fell to close $42,000, retesting this earlier all-time excessive degree earlier than steadying as Musk harassed that no sale had occurred.

“To make clear hypothesis, Tesla has not offered any Bitcoin,” he wrote on Monday.

BTC/USD chart with Twitter occasions highlighted. Supply: Twitter

With Musk versus the cryptocurrency group starting to appear to be a full-on war, Bitcoin is thus unsurprisingly unstable as all eyes stay on the Twitter battlefield.

On the time of writing, Bitcoin was buying and selling at round $44,800, nonetheless down 8.7% over the previous 24 hours.

As analyst Alex Krueger famous, nonetheless, the clarification tweet could also be unwittingly appearing as a local bottom signal, as Musk posted it simply as BTC/USD hit a key 61.8 Fibonacci retracement degree.

“Elon Musk should be an excellent technical analyst,” he commented.

“His ‘Tesla has not offered any Bitcoin’ tweet was posted precisely at Bitcoin’s key technical degree, the 61.8 fib ($42,845).”

BTC dominance falls beneath 40%

Musk’s actions have had a detrimental affect on Bitcoin and altcoins alike.

Regardless of continuing to praise Dogecoin (DOGE), even the meme-based token did not keep away from losses over the weekend, with the vast majority of large-cap altcoins following Bitcoin down.

There have been some much less important losses, corresponding to these of Cardano (ADA), which on Saturday was nonetheless bucking the general downtrend to even publish new all-time highs.

By way of bearishness, nonetheless, nothing exhibits how a lot the common Bitcoin holder is struggling like market dominance.

On Monday, Bitcoin’s total market capitalizatio share dipped below 40% for the primary time since June 2018.

Bitcoin market cap dominance chart. Supply: CoinMarketCap

Already on the best way out, dominance was dealt a major blow because of the current Bitcoin value strain, whereas altcoins, corresponding to Ether (ETH), benefitted.

“The Bitcoin dominance remains to be falling,” well-liked Twitter dealer The Moon summarized over the weekend.

“The alt season will not be over but. However my intestine feeling is that the tip is close to!”

Bitcoin fundamentals present calm

For all of the nerveracking value motion, in the meantime, nothing gives a bullish counterpoint to the present Bitcoin narrative than its community fundamentals.

Even after its dip to $42,000, Bitcoin is extra engaging than ever for miners, and its community safety is, subsequently, additionally extra stable than ever earlier than.

As Cointelegraph reported, each the hash fee and issue have staged a miraculous restoration in current weeks, reclaiming all-time highs after a miner washout brought on its personal transient value crash.

The weekend proved to be no totally different, with the weekly common hash fee topping 180 exahashes per second for the primary time.

Bitcoin 7-day common hash fee chart. Supply:

The problem remains to be on observe to extend by over 10% on the subsequent automated readjustment in 11 days’ time. The earlier readjustment on Friday, at 21.5%, was the biggest optimistic shift since June 2014.

“Bitcoin’s mining issue hitting an all-time excessive simply after tesla’s announcement is a chef’s kiss,” Alex Thorn, head of firmwide analysis at crypto service provider financial institution Galaxy Digital, said final week.

Greenback bounces at assist

Taking a break for crypto-specific triggers, the broader macro image could but present some inspiration for value trajectory.

After plunging late final week, the energy of the US greenback is returning. The U.S. greenback forex index (DXY) is bouncing off acquainted assist — surges in its energy have a tendency to supply teething problems for BTC/USD.

U.S. greenback forex index (DXY) 1-day candle chart. Supply: TradingView

On the identical time, shares are bullish in China however performing averagely in Europe and the US. The coronavirus, with localized peaks in some jurisdictions however fewer circumstances in others, joins the melting pot.

Amongst merchants, nonetheless, it’s inflation that may be a key challenge. A broad international rebound from the time of lockdowns and different restrictions creates issues for these trying to engineer it — particularly, the U.S. Federal Reserve and different central banks.

“The worldwide financial restoration is properly underneath method; that’s what’s fueling the inflation fears,” Olivier d’Assier, Qontigo head of APAC utilized analysis, told Bloomberg.

After inventory markets’ rip roaring yr, he added, urge for food for revenue taking shall be understandably rising.

Bitcoin nonetheless beats its final bull market

Is it 2013 or 2017 by way of the Bitcoin bull market?

Among the many business’s best-known names, there is no such thing as a trace of bearishness — all that continues to be to do is analyze the character of the present retracement and evaluate it to years previous.

This week, stock-to-flow creator PlanB notes that for all of the Musk drama, Bitcoin remains to be performing higher than throughout its 2017 run to $20,000. This regardless of the $42,000 dip formally being Bitcoin’s greatest this bull cycle and for the reason that cross-asset crash of March 2020.

“Right this moment appears like 2017 bull market (esp. in the course of the fork struggle),” he tweeted on Monday, invoking reminiscences of the beginning of Bitcoin Money (BCH).

“It’s not a straight line to the following ATH, however loads of volatility (a number of -30% dips). HODL.”

BTC/USD stock-to-flow chart as of Might 17, 2021. Supply: Digitalik

Calling for calm and zooming out is a key characteristic amongst seasoned Bitcoiners. As Cointelegraph reported final week, stock-to-flow stays unviolated by Musk or another episode of downward volatility.

An accompanying survey, in the meantime, revealed {that a} majority of 35,000 respondents imagine that BTC/USD will nonetheless hit $100,000 this yr.