Bitcoin (BTC) is starting the second week of November with strong momentum, holding near 18-month highs. Despite sell pressure, Bitcoin and altcoins are refusing to retrace their gains from over a month ago, signaling a change in sentiment. While traditional assets like stocks are feeling the pressure, crypto is forging its own path. The coming week holds potential volatility triggers, including remarks from the United States Federal Reserve and extended out-of-hours trading due to a short trading week on Wall Street. Behind the scenes, Bitcoin’s fundamentals remain strong, with hash rate and difficulty reaching all-time highs.
Bitcoin bulls continue to hold their ground, with resistance levels proving difficult to overcome. The recent weekly candle close showed a fierce tug-of-war between buyers and sellers, leading to liquidations at the close. Funding rate data indicates that longs are paying shorts, suggesting further volatility ahead. However, more conservative approaches are recommended for now.
The focus this week is on the Federal Reserve as a source of market volatility. Various speaking engagements by Fed officials will take place leading up to the Veterans Day holiday. The Fed’s decision to pause interest rate hikes despite higher-than-expected inflation has redirected market expectations for a rates policy pivot until next year. Volatility may also be influenced by turbulence in bond markets and changes in stocks after an abrupt about-turn by the S&P 500.
Bitcoin’s network fundamentals continue to march higher as hash rate and mining difficulty reach new all-time highs. The upcoming adjustment will cement these levels, with difficulty expected to increase by 2.4% on November 12. Hash rate has also seen significant growth recently, indicating miners’ confidence in Bitcoin’s future value.
Changes are visible on exchanges as profitability conditions among Bitcoin holders shift. Withdrawals are nearing year-to-date highs while inflows take a back seat, suggesting an increasing preference for holding Bitcoin assets off-exchange and a stronger long-term belief in the value of Bitcoin. This shift is reflected in the gap between exchange deposit and withdrawal volume, which has reached its second-largest value ever.
Investor sentiment is improving, with strong investor confidence and capital inflows reaching year-to-date highs. However, this increasing focus on profit may lead to a higher level of fear in the market, as evidenced by the Crypto Fear & Greed Index. It’s important for investors to approach the market with caution and consider long-term strategies rather than seeking immediate liquidity on exchanges.
In conclusion, Bitcoin’s strong performance and resilience indicate a change in sentiment and a positive outlook for the cryptocurrency. The upcoming week holds potential volatility triggers, particularly from the Federal Reserve’s remarks and turbulence in bond markets. Bitcoin’s network fundamentals continue to reach new heights, while changes on exchanges suggest a shift towards long-term holding strategies. Investor confidence remains strong but should be tempered with caution to avoid succumbing to fear-driven market behaviors.
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