Will Bitcoin Break Higher? 5 Factors Impacting Bitcoin This Week
This week, Bitcoin is gearing up for a potential breakout, but bullish traders aiming for a sustained BTC price rally face several challenges. As market volatility increases, the possibility of a leverage-driven pump looms large, raising questions about the strength of Bitcoin’s upward momentum. In the rest of this article, we’ll explore five key factors influencing Bitcoin’s price action this week and what traders need to watch for in the days ahead.
Bitcoin Surges to $63.9K, But Is a Leverage-Fueled Pullback Imminent?
According to data, Bitcoin gained momentum towards the weekly close and reached highs of $63,975 on Bitstamp. Even if the BTC price action seemed good technically, traders were more skeptical than supportive of it. They agreed that leverage was the cause, with rising market bets creating an inorganic price surge that was likely to end quickly. Recent performance can be defined as a leverage-driven pump, according to analyst J. A. Maartunn. Popular trader CrypNuevo identified $63,800 as a possible short-term turnaround point after analyzing the market structure.
I think I see this probability because there could be a few possible catalysts here such as bad economic data or war escalation news,
CrypNuevo
CrypNuevo issued a warning, citing several possible volatility curveballs that would make trading difficult during the upcoming week. Nevertheless, Keith Alan, one of the founders of the trading resource Material Indicators, thought it was already positive that the 21-week simple moving average (SMA) had returned to $62,800.
Unexpected Jobs Surge Shakes Fed Rate Cut Expectations for November
The September readings of the Producer Price Index (PPI) and Consumer Price Index (CPI), together with jobless claims, are part of a packed week of US macroeconomic data. Analysis predicts that markets will pay close attention to CPI in light of the unexpected increase in employment last week. The Federal Reserve will make another decision on interest rate changes in a month.
FedWatch Tool data from CME Group indicates that the rates will be dropped by 0.25% on November 7, which is a significant departure from market expectations from just one week prior. A bigger 0.5% decrease was a real possibility prior to the employment report, but the market had no idea this would happen. Kobeissi resumed her analysis of US financial circumstances, noting that two years of rate increases had already been offset by one metric.
Financial conditions posted their largest year-over-year decline in 3 years and are back down to pre-interest rate hike levels. Since October 2023, the Financial Conditions Index has loosened at its fastest pace since March 2020, when the Fed cut rates to near zero. Effectively, restrictive Fed policy and interest rate hikes since March 2022 have been undone. This comes as markets price-in another 75+ basis points of rate cuts in 2024 alone.
Kobeissi
Bitcoin Long-Term Holders Under Pressure as Realized Cap Drops by $6 Billion
Based on the net position change in their realized cap, it appears that the diamond hands of Bitcoin are under pressure this month. This adds up to the total worth of all coins held by long-term holders, or organizations that have held a specific quantity of Bitcoin for at least 155 days. Research from the onchain analytics platform CryptoQuant indicates that the realized cap decreased by $6 billion as of last week.
There has been a recent sharp decrease of $6 billion (from $19 billion to $12 billion) in the LTH realized cap (blue), suggesting that long-term holders are likely taking profits or closing buying positions,
Amr Taha
Simultaneously, there was an equal increase in the equivalent metric that covered coins owned by short-term holders (STHs), who are Bitcoin speculators. This implies that these entities are probably increasing their buying positions or taking on more risk, according to Taha’s argument.
Bitcoin Short-Term Holders Enter Key Impulse Zone Amid Rising Open Interest
STHs are currently being watched for a second reason: their profit margin is becoming a precursor to degrees of leverage in the cryptocurrency market. Contributor Percival mentioned in another Quicktake post on October 5 that STH transaction profitability recovers when leverage hits an impulse zone or a time when open interest (OI) rises quickly across exchanges.
Impulse zones are necessary so that the investor can capitalize on maximum profits with long positions and minimize losses. See Open Interest oscillate between -10% and -8%. On September 24th, there was a drop of -8%. Compared to past movements, the ‘impulse zones’ happens when the STH SOPR begins the recovery process to see the average profit of these cohorts increase.
Percival
Bitcoin Inches Toward $64K, Optimism Rises for a Classic Uptober Rally
At a minimum, the overnight surge in Bitcoin prices toward $64,000 has made October’s monthly candle green once more. The trading and analytics community continues to express optimism in BTC/USD despite its current state of stagnation. Popular trader Jelle is one of them; he hopes to execute a classic Uptober and shift the market in time for the monthly closing.
Bitcoin is still following the same playbook as last year. Months of chop, coming to an end in October. Low for the month would be in, and the real fun about to start.
Jelle
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