Bitcoin (BTC) has begun the second week of November on a strong note, with prices near 18-month highs. Despite sell pressure, Bitcoin and other cryptocurrencies are showing resilience and refusing to retrace the gains made over the past month. The positive sentiment in the crypto market contrasts with the pressure felt in traditional assets like stocks, and many bullish investors believe there is still room for the upside to continue.
The coming week holds potential triggers for volatility in the market. The United States Federal Reserve will deliver a series of remarks, including one from Chair Jerome Powell, addressing inflation concerns. Additionally, a short trading week on Wall Street will result in extended periods of out-of-hours trading for cryptocurrencies, potentially leading to more volatile movements.
Bitcoin’s technical indicators align with its upward price action. The hash rate and difficulty, which are already at all-time highs, are expected to reach new records in the coming days. These indicators reflect the strength and resilience of the Bitcoin network, supporting the positive outlook for the cryptocurrency.
Bitcoin closed the previous week with a new 18-month high at over $35,000. However, there was a brief dip below the $36,000 mark, indicating a tug-of-war between buyers and sellers. Resistance levels are proving challenging to overcome, and liquidations have increased at the close. The hourly chart shows that both sides of the market were swept on exchanges, as indicated by popular trader Skew. The increasing open interest on Binance further suggests potential volatility in the coming week.
Various speaking engagements by Federal Reserve officials will be a key focus this week. The Fed’s decision to pause interest rate hikes despite higher-than-expected inflation has been a topic of interest for market participants. While there are no macroeconomic data releases this week, the Fed’s remarks and its stance on interest rates will likely impact market volatility. Market commentators suggest that turbulence on bond markets and a rare contraction in US consumer credit could contribute to major economic volatility.
Bitcoin network fundamentals continue to strengthen, with hash rate and mining difficulty reaching new highs. The upcoming difficulty adjustment on November 12 will see the difficulty increase by 2.4%, taking it to nearly 64 trillion for the first time in Bitcoin’s history. The hash rate, which measures the combined processing power of miners on the network, has also reached record levels. This upward trend is expected to continue into next year’s block subsidy halving, according to some analysts.
A shift in investor sentiment is evident in Bitcoin exchange flows. Withdrawals are increasing, nearing year-to-date highs, while inflows are decreasing. This trend suggests a preference for holding Bitcoin assets off-exchange, indicating stronger long-term belief in the value of Bitcoin. The gap between exchange deposit and withdrawal volumes has reached its second-highest level ever, reflecting a shift in investor sentiment towards long-term holdings rather than seeking immediate liquidity.
Overall, Bitcoin’s strong performance and resilience indicate a positive outlook for the cryptocurrency market. Despite potential volatility triggers in the coming week, market participants remain optimistic about Bitcoin’s future price movements. The technical indicators, along with changing investor sentiment and increasing demand for Bitcoin assets, support the belief that the upside is not yet over for BTC.