Bitcoin is starting a week in which the main attention of the markets will be on Wednesday's Fed decision, and is still hovering in a price range between $34,500 and $35,000 but with the exception of Ripple, which is gaining 3%, most altcoins are trading flat or under the bar today with AAVE losing 4%. The current week will be a key one for the cryptocurrency market due to a number of important macro data releases from the U.S. (including NFP) and the Federal Reserve's decision, which will be announced on 1 November on Wednesday at 7 PM BST. The Fed is likely to keep rates unchanged and if Jerome Powell at the Fed conference does not signal a rate hike in December, Wall Street may price the end of the Fed cycle and sell the dollar more intensely even if Powell (probably) maintains his hawkish posturing and 'higher for longer' narrative. If risk aversion fueled by, among other things, escalation in the Middle East does not increase and support dollar demand, we could see a positive environment from Bitcoin's point of view for at least a short-term continuation of gains.
News
- Cryptocurrencies have recently pulled away from the indices, and the correlation of BTC with the Nasdaq 100 has declined. This indicates that crypto market sentiment is currently governed by slightly different 'forces' than those that determine stock market sentiment.
- Despite the declines in the Nasdaq 100, bitcoin has managed to rise nearly 30% in the past several days from $27 to $35,000 - despite the gloomy sentiment in the stock markets. This puts a question mark over whether the largest cryptocurrency is still seen as a risky asset
- During BTC's rally on October 17 and 23, a total of $170 million in short positions were liquidated, which is more than the $155 million liquidated in January and slightly less than the $220 million in long positions that were wiped out in August, this year;
- At the same time, data from FalconX, cited in Bloomberg, shows that the depth of the BTC market remains at its lowest level in a year and has helped the BTC price rise. Spot market volumes remain low, while derivatives are definitely on the rise;
- The main factor improving sentiment is still the hope for ETF acceptance, which, with BTC supply on exchanges at a record low since 2018, could support a 'supply shock' and potentially another Bitcoin bull market
- According to AllianceBernstein analysts, the acceptance of an ETF fund for BTC in January 2024 is almost a 'foregone conclusion'. In their view, this will pave and ease the way for institutions that choose to hold and purchase digital assets. At the same time, both Bloomberg and Glassnode suggest that a potential correction is possible from current price levels, and a 'crypto ETF' could prove to be a 'fact-selling' opportunity.
- According to Lookonchain's analysis, Mike Novogratz's Galaxy Digital fund gained exposure to the rise of Bitcoin and Ethereum on the AAVE protocol on October 28. Galaxy estimates that BTC will rise by more than 70% in the year of the launch of the spot Bitcoin ETF for investors in the US.
Traders are betting that 10-year U.S. Treasury bond yields will return to the vicinity of 5%, the focus of their new auction on Wednesday. Traders expect officials to unveil plans for more bond sales by which the demand for insurance against a possible rise in yields increases. Some positions will bring speculators substantial profits if 10-year yields rise above 5.05. Meanwhile, US dollar index futures are trading down today, giving the major cryptocurrency a bit more room.
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Looking at the BITCOIN chart, we can see that the 23.6 Fibonacci elimination of the upward wave from the fall of 2022 near $30,000 per BTC could potentially prove to be the main support level. Source: xStation5
The chart indicates that bitcoin has behaved virtually inversely to the US100 in recent days (yellow color). What's more - the initial drop in the dollar index took place at the time of the dynamic rally, but its rather quick rebound did not result in a correction. Now the USDIDX (purple chart) is again recording weakness, which could potentially support the rise of BTC. Source: xStation5
AAVE charts (D1, M30)
On the D1 interval, the AAVE cryptocurrency is losing nearly 4% today, but has potentially reversed its downward trend by beating the SMA200 and SMA100 averages (several times respecting support near $40). At the same time, on the M30 interval, it is approaching a potential correction if the SMA200 is not held. Lending Protocol's gains were fueled by news of activity from Galaxy Digital and Mike Novogratz's fund, which used AAVE to gain exposure to Bitcoin and Ethereum. Source: xStation5
On-chain data
The balance of Bitcoin available on crypto exchanges is now at its lowest in nearly 5 years, showing the widespread reluctance of long-term investors to sell even at current price levels. Nearly 15 million BTC, nearly 75% of all mined Bitcoin, is currently in their hands. Some analysts point out that limited supply could especially support BTC's rise if ETFs are approved by the SEC, bolstering institutional demand and opening the door to a new group of retail investors. Source: Glassnode
Glassnode took the 30-day sum of liquidated long and short positions and pointed out that most of 2023 as well as the entire history of BTC has been dominated by higher volumes of liquidated buy positions compared to sell positions. Meanwhile, this time, of course, there were more short positions closed in the last 30 days. The chart shows zones when such a phenomenon occurred against the price, which in the past coincided with local speculative peaks in the price. Source: Glassnode
The average purchase price of BTC by a short-term holder (STH) is $28,000, which means that the average recent investor made a profit of about 20%. The chart shows the MVRV ratio, where the red color indicates the period in which the market quotes below the average BTC price at STHc, and the green color above. Glassnode suggests that the $28,000 level will likely prove to be strong on-chain support for the ongoing uptrend, in the event of a correction. Source: Glassnode
The Bitcoin options market suggests that $40,000 per BTC is priced as likely from being reached, later this year. Source: Bloomberg Finance LP, Deribit
At the same time, the weekly RSI index reached levels above 70 points for the first time since the 2021 bull market and approached overbought conditions. Source: Bloomberg Finance LP
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