As someone who has been closely following the cryptocurrency market for several years now, I find myself intrigued by the current state of Bitcoin and its investors. The recent surge in CPI inflation and the Fed’s decision to cut interest rates could potentially be a double-edged sword for Bitcoin. On one hand, lower interest rates may encourage more investment in riskier assets like Bitcoin due to the reduced opportunity cost. On the other hand, economic uncertainty can sometimes lead to market volatility, which could negatively impact Bitcoin prices.
This week, Bitcoin (BTC) could face a significant test at a key resistance level as its price recaptures the green trend from October.
- Last week’s sub-$60,000 dip looks increasingly like a deviation as traders eye the prize $65,000 resistance flip.
- Slowly but surely, Bitcoin is progressing within its lengthy consolidation period, and analysis is confident of increasing buyer strength.
- Earnings season kicks off this week as markets dial down bets over interest rate cuts and the Presidential Election looms.
- Retail interest is still barely perceptible in this cycle, setting it apart from historical trends.
- ETF investors are also cautious, with mixed flows last week pointing to broader market indecision.
BTC price sets the stage for a $65K showdown
During the October 14 Asian trading hours, Bitcoin made a strong comeback, reaching $64,800 and setting new record highs for the month.
According to data from both CryptoMoon Markets Pro and TradingView, the Bitcoin price has increased by approximately 2.8% in a single day, resulting in a 1.2% rise in its value against the US dollar for the past month.
Although it’s not yet reaching the typical growth rates seen in October, Bitcoin provided some encouraging signs for investors.
Independent of our future path, I foresee reaching all-time highs either by the end of this year or within the first quarter of the coming year,” stated trader Crypto Tony to his audience on platform X.
Multiple analysts are advocating for another test at the $65,000 resistance level on smaller timeframes. This area serves as a crucial battleground in Bitcoin’s current consolidation phase.
According to Crypto Ed, who uses the Elliott Wave theory and runs the trading platform CryptoTA, he believes that the recent drop in price below $59,000 has already been disregarded.
He pointed out that the latest surge in price, just slightly beyond point B, contradicts the previous week’s prediction of a drop down to $57k.
“It came close but that move in C truncated and is completed. Expecting a retest of $65k soon.”
According to CryptoMoon’s report, a series of actions occurred following the weekly closure, which resulted in approximately $100 million worth of cross-crypto short positions being liquidated.
At the moment, the current total liquidated amount, as indicated by recent data from CoinGlass, surpasses $180 million.
Slowly but surely, Bitcoin resistance weakening
As Bitcoin has been going through an approximately eight-month consolidation period, reaching new record highs is best approached as a gradual process, one step at a time.
Looking ahead at the long-term outlook, well-known trader and analyst Rekt Capital highlighted the significant level of approximately $64,300 as the crucial milestone that bulls must overcome in the days ahead.
That level, he noted, has been weakening as resistance ever since.
“In the past, the August highs prompted a -18% retrace,” he wrote in a dedicated X post on Oct. 14.
“Whereas two weeks ago, they prompted only an -8.5% pullback.”
Rekt Capital stated that it’s likely the price movement will break through the August resistance permanently and head towards the next significant level at approximately $66,000.
This currently marks the top end of a downward-sloping channel in place since March.
Bitcoin is attempting to surpass its August peak levels once more, and it appears quite likely that it will succeed in doing so. If this happens, it could lead to a rise towards the upper boundary of the Downtrend Channel (indicated by the red box),” he noted while providing an explanatory diagram.
In a recent post, it was pointed out that the 21-week exponential moving average (EMA) has been serving as a form of underlying stability for the second consecutive week.
In simpler terms, as the discussion revolves around bears potentially losing ground, the CEO of CryptoQuant, Ki Young Ju, perceives an opportunity for buyers to take charge of the market and overcome any obstacles that might be in their way (resistance).
“Bitcoin buy walls on all exchanges are now strong enough to neutralize sell walls,” he announced.
Fed rate cut bets cool into earnings season
Following the recent release of several major U.S. economic indicators, the spotlight has shifted towards jobless claims and the upcoming earnings season, as we approach the week of the election.
The data on employment statistics presents a challenging predicament for the Federal Reserve, as they currently grapple with simultaneously increasing joblessness and indicators pointing towards escalating inflation rates.
In a portion of its latest analysis, The Kobeissi Letter highlights that attention is currently focused on the Federal Reserve, upcoming elections, international political conflicts, and corporate earnings.
Around 10% of S&P 500 firms are due to report earnings this week.
According to CME Group’s FedWatch Tool, the most recent forecasts suggest a change in the market’s anticipated approach by the Federal Reserve regarding the interest rate decision scheduled for November 7.
Following the recent U.S. Presidential Election, what was initially expected to result in a further 0.5% interest rate reduction may now not see any cuts at all.
“We are beginning to see some signs of inflation reaccelerating again,” Kobeissi continued.
“Last week, Core CPI inflation jumped for the first time since March 2023. The Fed is playing a dangerous game with 50 bps rate cuts.”
Despite this, US equities moved higher last week, with both the S&P and Dow Jones hitting new all-time highs and gold trading within 1% of its own record peak.
Bitcoin regained momentum during the Asian trading hours, bouncing back following an initial drop that took it to $58,860 – a level not seen since mid-September.
Bitcoin retail interest “more uneven” this cycle
Despite minimal retail involvement since Bitcoin reached its peak in March, recent data indicates a more subtle or complex resurgence.
Recently, in a post dated October 14th on their Quicktake blog, CryptoQuant zeroed in on a specific group of Bitcoin investors – they referred to them as “the plankton.
In the beginning of 2024, Bitcoin (BTC) started to increase significantly, leading to a lot of discussion about whether ordinary investors and newcomers have returned to the market. However, Binh Dang explained that the situation is more complex. By examining certain statistics, we can get a better understanding of the situation.
By examining Bitcoin wallet activity over the past year, Binh displayed a striking difference compared to prior bull markets. Prior to the peak in March, these investors tended to buy small amounts, typically no more than 0.1 BTC, reflecting their behavior.
After that point, sales became dominant, and the pattern persists even as Bitcoin approaches its past prices again.
The increase in these group addresses during this cycle indicates that retail involvement is definitely active, as the post noted.
“However, the growth is weaker and more uneven than in previous cycles, especially during market rallies. This is understandable, given that global monetary flows have generally declined over the past three years. So, the data suggests that future FOMO waves are still possible in this cycle.”
Despite this, Binh predicted that there would be another surge or peak in Bitcoin’s (BTC) ongoing price trend, which they referred to as the “closing wave.
Over the past week, CryptoMoon shared insights about conflicting indications from major Bitcoin holders, known as “whales.” While the biggest group was observed amassing Bitcoin, a few other whales opted to decrease their Bitcoin holdings, choosing instead to align with smaller retail investors.
ETF flows underscore market nerves
A comparable scenario arises when examining inflows and outflows from U.S. spot Bitcoin exchange-traded funds (ETFs), putting it in simpler terms.
According to CryptoMoon’s report, the United States exchange-traded products experienced outflows on three out of every five trading days last week.
On October 10th, the largest amount was approximately $80 million; however, the next day saw a reversal with over $250 million in net inflows, as confirmed by data from sources like UK-investment firm Farside Investors.
The mixed results correspond to the equally uncertain trading landscape coming as a result of the US macro data dilemma.
Similarly to what Bitcoindata21 observed, there’s a clear absence of retail involvement in this sector as well.
“Retail flows into U.S Bitcoin ETFs still very low,” it told X followers on Oct. 13.
“Do they return at 74k or higher, is yet to be seen.”
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2024-10-14 13:19