As someone who has been closely following the crypto market since its early days, I must admit that the recent surge in Bitcoin dominance to over 60% is a sight to behold. It reminds me of the time when Bitcoin was still the only game in town and altcoins were merely whispers on the internet.
As the United States Presidential Election approaches, Bitcoin (BTC) finds itself engaged in a struggle to reach the significant milestone of $69,000 and set fresh record highs.
- A wide order book and heightening liquidity characterize the start of what will likely be a surprising week for Bitcoin traders.
- Election day is almost here, and so are warnings of a “sell the news” event once the result is in.
- The Federal Reserve interest rate decision will come just two days later, providing another crypto volatility catalyst.
- Bitcoin market cap dominance is at its highest levels in three-and-a-half years after a key monthly close.
- Bitcoin network fundamentals are due to hit new all-time highs all around this week.
BTC price struggles with old resistance
Over the weekend, Bitcoin left its supporters feeling disappointed as it continued a downtrend following its peak at $73,500 last week, resulting in many long positions being liquidated.
According to information from CryptoMoon Markets Pro and TradingView, there was a significant drop in Bitcoin price (BTC/USD) over the weekend, falling below $67,500. Despite a small recovery attempt, the momentum didn’t last long.
Now, with the US Presidential Election due, volatility is all but guaranteed.
At present, it appears that the market for asset X is divided into two distinct regions with significant trading activity and deep order books, according to a recent analysis by trader Skew.
“$67K – $65K : bid liquidity & bid depth $73K + : ask liquidity & ask depth.”
Skew predicted that rapid moves between the past week’s low and high could come at short notice.
In the approaching days, the way this market behaves, particularly near spots with high trading activity, will be crucial.
“Quite easy to influence price & volatility between $66K & $73K given the wide orderbook.”
Others anticipated potential future developments, as renowned trader and analyst Credible Crypto proposed the possibility of Bitcoin reaching new record highs before a more significant price drop might occur.
He shared with his X followers that the lower timeframes appear strong, suggesting that Bitcoin might be creating a base for another run towards its All-Time High (ATH).
According to data from CoinGlass, there’s a growing accumulation of bids on the order book, with prices above $67,000, as we move into the new week.
Familiar resistance levels in play since 2021, headlined by $69,000, thus remain in play.
Election sparks Bitcoin “sell the news” warning
As a financial analyst, I find myself bracing for an exciting spectacle come the 2024 U.S. Presidential Election. Regardless of its outcome, the anticipation among crypto and risk-asset traders is palpable – they’re expecting quite the show.
In the upcoming days, it’s likely that market fluctuations will be significant, featuring potential increases as well as decreases.
Over the weekend, Bitcoin seemed to offer a glimpse into potential future occurrences, and according to Skew, this atmosphere resembled the lead-up to significant macro events that have transpired in the past.
He informed his X followers that a significant decrease in position strength is happening now, and he’s adjusting with short-term protective measures in anticipation of the upcoming U.S. election, as he scrutinized perpetual swap contracts.
“Underweight positioning & over hedged market is something to look out for in terms of the next predatory move. Market seeks out liquidity into big events.”
Previously, Skew noted that the Bitcoin market appeared “more robust” compared to the previous week, as it neared record-breaking highs.
“Likely to be a taker dominated market till post US election results,” he continued.
“Slight improvement in market quoting ahead of early week trading, would need to see sustained spot premiums & spot bid to maintain price.”
Meanwhile, trading firm QCP Capital delivered disappointing news for short-term Bitcoin speculators in their recent update to their Telegram channel followers. They forecasted a potential sell-off following the November 5th election.
Over the weekend, it was pointed out that while Trump is currently seen as the likely next U.S. President, there has been a notable decrease in bets on him winning from a peak of 66%, down to 57% for Trump and 43% for Harris on Polymarket regarding election odds.
“Regardless of the outcome, we believe the Elections will be another sell-the-news action, replicating the Nashville Bitcoin conference.”
FOMC meeting comes at a key moment for DXY
Apart from the election, this week also features a significant macroeconomic event for crypto traders – the announcement of the Federal Reserve’s interest rates decision.
At the upcoming FOMC meeting scheduled for November 7th, it will be made clear what strategies the Federal Reserve plans to use in navigating the tension between opposing inflation pressures.
According to CryptoMoon’s report, we’ve seen surplus inflation readings accompanied by moderate job growth. Last week, the nonfarm payroll figures fell significantly short of predictions, and even the previous two months’ data were adjusted downwards.
In my recent analysis for our newsletter, “The Market Mosaic,” published on November 3rd, I highlighted that according to the Fed’s recent statements, prioritizing labor market strength appears to be more immediate than combating inflation at this time.
According to data from CME Group’s FedWatch Tool, it appears that financial markets anticipate a reduction of 0.25% in interest rates following the Federal Open Market Committee (FOMC) meeting.
Looking ahead to a potentially turbulent week for risky investments, Mosaic will be monitoring the VIX Volatility Index and the U.S. Dollar Index (DXY) for signs of market movement.
“The reaction to elections could drive a breakout or breakdown in DXY,” it summarized.
“If the dollar turns back lower at resistance, I believe that’s supportive of risk assets in the near-term.”
At the moment of this writing, the DXY index was holding steady at 103.82, battling to maintain a resurgence that started sincerely around early October.
Bitcoin dominance hits classic reversal zone
The proportion of Bitcoin within the overall value of all cryptocurrencies has touched a significant milestone – and it’s managing to maintain this level.
On Oct. 29, Bitcoin market dominance broke through 60% for the first time since April 2021.
People have certainly taken notice of its performance, since it’s often observed that when Bitcoin is performing well, other cryptocurrencies, or altcoins, may experience a decrease in value – but this pattern can shift once the trend does.
According to analyst Cryptorphic, posted on November 4, Bitcoin’s dominance is approximately 60.51%, which keeps Bitcoin within the $68,000 – $70,000 range while alternative cryptocurrencies are seeing a decrease of about 20-40% from their recent peaks.
“This pattern is common in bull runs, as rising BTC dominance typically pulls altcoins down. In my experience, a rejection zone between 64% and 65.81% could trigger an altcoin rally while BTC hits new all-time highs and moves sideways.”
According to well-known analyst MartyParty, it’s expected that the dominance of Bitcoin may experience a substantial decrease, following a pattern similar to past halving periods. A graph posted on X shows this trend starting approximately 224 days following each halving event.
Counterarguments during a subsequent debate included the presence of the spot Bitcoin exchange-traded funds (ETFs) propping up BTC demand and the overall lack of interest in crypto among retail investors.
According to well-known trader and analyst Rekt Capital, the dominant market trend closed unusually bullish for the month, indicating a positive outlook from a broader price point of view.
“That’s a historic Monthly Close for Bitcoin Dominance,” he summarized on Nov. 1.
“The last time BTC Dominance closed like this in a macro uptrend was back in early 2019. That’s over 5 years ago now.”
Difficulty and hashrate beat records
The difficulty level of Bitcoin has increased significantly this week, reaching new record highs, reflecting strong underlying network dynamics as indicated by recent headlines.
According to recent predictions by CloverPool, previously known as BTC.com, the mining difficulty is projected to increase by approximately 5.1% during its automatic adjustment on November 5. For the first time, this will push it above 100 trillion.
The mining difficulty thus joins the hashrate in exploring new territory as the Bitcoin mining sector emerges from the latest halving.
Meanwhile, a mining-related BTC price metric is busy setting all-time highs of its own.
According to Charles Edwards, the creator of Capriole Investments’ quantitative Bitcoin and digital asset fund, it appears that the Bitcoin Energy Value graph could potentially reach a six-digit figure.
Last week, it was disclosed that the monetary worth of a single unit of Bitcoin, expressed as raw energy in Joules, has almost reached $100,000 for the very first time.
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2024-11-04 13:39