After several spikes to two-month lows, Bitcoin (BTC) started the week on a positive note as the weekly candle close brought an upward move. The largest cryptocurrency, which has been stuck in a narrow range, is finally showing signs of life, but with volatility back in play, traders are still unsure if short-timeframe strength can lead to an overall trend breakout.

May brought a macroeconomic showdown that is already making itself felt: the United States debt ceiling deal. With an agreement to raise the ceiling and avoid a U.S. government default almost here, risk assets may see relief across the board. However, since stock markets were closed until May 30, Bitcoin traders had to wait and see to start the week.

Although the debt ceiling deal represents little in terms of macroeconomic policy trends, it provided an impetus for optimism within the crypto community. With that, the conversation within crypto is all about what happens next.

Some other important factors to consider when it comes to BTC price action in the coming days include the following:

  • The U.S. debt ceiling deal: After several weeks of negotiations between Republican and Democrat lawmakers, the Biden administration has formed and presented a solution to the U.S. debt ceiling debacle and presented it to Congress. While it remains unknown whether it will pass, bets are already front-running the outcome. An actual doom scenario, others have pointed out, is unlikely, as the deal stalling at this point does not immediately open the U.S. to a default scenario.
  • Bitcoin’s trend: Bitcoin is providing fuel for debate as bulls inch closer to testing the top of what has been a stubborn multimonth trading range. Those betting on downside continuing this week have already been caught short. Short traders saw $44 million of positions liquidated on May 28 alone, which according to monitoring resource CoinGlass represents a one-month high.
  • Bitcoin network fundamentals: The trend is as decisively bullish as at any time this year, with new all-time highs imminent. Mining difficulty is due to add 2.5% on May 31, taking it over 50 trillion for the first time ever, according to data resource BTC.com. Add hash rate into the equation and the picture becomes clear regarding miner conviction and competition. As noted by analytics firm Glassnode last week, miners have returned to holding, increasing their overall BTC balances by retaining more BTC earnings than they sell.
  • Hodlers: Ongoing monitoring of Bitcoin hodlers produces few surprises, as long-term investors refuse to sell, ferreting away more of the supply on a daily basis. Less and less BTC is available for purchases as dedicated buyers send Glassnode’s “Hodled and Lost Coins” metric to multiyear highs. At 7,725,079 BTC, these “Hodled and Lost Coins” now account for more BTC than at any time since May 2018. This month, Cointelegraph reported on short-term price trends depending increasingly on the actions of short-term holders, typically correlated with speculative trading activity. These investors, who have held BTC for 155 days or less, currently have a cost basis of $26,500, making that level a key support zone.
  • Bitcoin wallets: Additional findings reveal that there are now more Bitcoin wallets with a non-zero address than ever before, climbing to over 47 million.
  • Moving average convergence divergence (MACD): The return of a 2023 bull signal is giving some pause for thought this week. MACD, a bullish crossover, which was followed by at least a 40% upside on two occasions this year, has just seen another such event.

While the debt ceiling agreement is a significant event, it remains to be seen how it will affect Bitcoin in the long term. Analysts and traders have different opinions on the matter, with some betting on downside and others expecting Bitcoin to continue its upward trend.

In any case, Bitcoin’s network fundamentals are strong, and hodlers are holding onto their coins, which may contribute to a positive long-term outlook. While short-term price trends may depend on the actions of short-term holders, Bitcoin’s overall trend is bullish, with new all-time highs on the horizon. As always, the crypto community will be watching closely to see what happens next.

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