Bitcoin factors to watch: How will this affect the market in short and long term?

Bitcoin has been stuck in a tight trading range for the past few weeks, but there are several factors that could trigger a significant price movement soon. Here are some of them:

1. Major announcement this week: 8 Fed speakers accompany major macro data week. This week is packed with important economic data from the U.S., especially the Consumer Price Index (CPI) report for November, which will reveal the latest inflation rate. The CPI is closely watched by the Federal Reserve, which is expected to announce its policy decision later this month. In addition, eight Fed officials will speak this week, potentially offering clues about the Fed’s stance on tapering and interest rates. These events could have a major impact on the market sentiment and the value of the dollar, which in turn could affect Bitcoin’s price.

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2. Bitcoin mining difficulty following hash rate to fresh record high. In a positive sign for the Bitcoin network, the hash rate, which measures the computing power securing the network, has recovered to its pre-China ban levels and reached a new all-time high. This indicates that miners have relocated and resumed their operations after the crackdown in China earlier this year. As a result, the network difficulty, which adjusts to the hash rate every two weeks, is set to increase by more than 5% in the next adjustment — its largest single upward adjustment since late March. This shows that the network is more secure and efficient than ever, which could boost Bitcoin’s attractiveness and demand.

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3. BTC supply shock inevitable - The recent filings for Bitcoin spot price exchange-traded funds (ETFs) in the U.S. has kickstarted a buying spree. The implications for the dwindling supply become clear over longer periods, analysis argues, with just 7.5% of Bitcoin’s immutable 21 million coins left to mine. Alessandro Ottaviani uploaded a chart known as the “HODL Model” — a popular tool mapping supply availability versus price performance into the future.

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1. Big fish step up exposure - It is not just miners showing confidence when it comes to future Bitcoin profitability. As noted by research firm Santiment this weekend, the largest-volume Bitcoin investor cohorts are keenly buying, even amid stagnant BTC price conditions. Since mid-June, so-called sharks and whales — entities with between 10 and 10,000 BTC — have increased their exposure by over 70,000 BTC.

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All these four factors, along with the historical tendency of Bitcoin to perform well in December, could have an influence on the price direction soon. What are your thoughts? What do you think will be the most important factor driving Bitcoin’s price? How do you expect Bitcoin to behave? What other factors do you think could affect Bitcoin’s price?

Share your opinions!