Bitcoin (BTC) has started the last week of October with a 3% price gain, pushing cryptocurrency markets higher. This has sparked hopes of a potential “Uptober” for Bitcoin and altcoins, with BTC/USD nearing its 2023 highs and a resistance battle looming. Traders and market observers are now focused on whether the bulls can win this battle, as Asia sets the tone for a potential crypto comeback.
While traders are optimistic, they are also playing it safe due to the significant resistance that Bitcoin needs to overcome. Many are not making lofty BTC price predictions and believe that breaking $32,000 will not be an easy or quick task. Furthermore, Bitcoin must also navigate potential headwinds from macroeconomic data prints, as inflation continues to beat expectations. This week’s macroeconomic data, including the United States Federal Reserve’s interest rate decision and geopolitical events, add an additional layer of unpredictability to the market.
Technical indicators also raise some concerns for traders. The relative strength index (RSI) readings suggest that an impending price correction may be on the horizon, unless BTC manages to close above $31,560. The RSI, at 77 on October 23, is at levels that have historically triggered sharp corrections since March this year. However, some traders remain optimistic about a Bitcoin breakout, with one popular trader suggesting that Bitcoin is “almost there” and $30,000 is the key level to break for a trend change.
In terms of macroeconomic data, the focus this week is on the Personal Consumption Expenditures (PCE) Index data, as it is one of the United States Federal Reserve’s preferred inflation metrics. This data is being closely watched for cues by the markets ahead of the November 1st interest rate decision. Despite consistently higher-than-expected data prints and sticky inflation, the chances of further rate hikes remain slim, with some even speculating a 1.6% chance of a rate cut by the Federal Open Market Committee (FOMC) next week.
Traders are also keeping an eye on the strength of the U.S. dollar, as the U.S. dollar index (DXY) is showing signs of cooling its uptrend. A major move in the U.S. dollar is expected soon, which could have implications for Bitcoin and the wider market.
Another trend worth noting is the declining BTC balances on exchanges. According to on-chain analytics platform CryptoQuant, major trading platforms now have a combined BTC balance of 2.024 million BTC, the lowest since 2018. This trend of declining balances has continued despite the BTC price recovery this year, indicating that coins are steadily leaving exchanges.
However, despite the positive price action and declining exchange balances, there are some concerns about the overall market sentiment. The Sum Coin Age Distribution metric, used to separate newer and older unspent transaction output (UTXO) data, reveals low numbers of new market entrants over the past month. This raises concerns about the “artificial” characteristics of BTC price action and the lack of new participants in the market.
In terms of sentiment, the Crypto Fear & Greed Index has experienced some volatility recently. Over the weekend, it spiked into “greed” territory, reaching its highest reading since July 12. This coincided with Bitcoin’s attempts to break through $30,000, signifying the significance of this price level for traders. However, popular trader Altcoin Sherpa describes the $30,000 level as a “scary area” and believes that the next high for Bitcoin will determine whether it moves towards $20,000 or $40,000 in the midterm.
Overall, the last week of October is shaping up to be a rollercoaster for Bitcoin and the wider cryptocurrency market. Traders are cautiously optimistic about a potential breakout, but also aware of the challenges and resistance that lie ahead. The market will be closely watching key macroeconomic data and geopolitical events for further cues on Bitcoin’s price direction.