Bitcoin Price Consolidates in Ascending Channel
The price of Bitcoin (BTC) is currently trading within an ascending channel, with resistance at $28,000 and support around $26,750. This consolidation phase is accompanied by decreasing volumes and volatility, indicating a conflict in market sentiment among traders.
Decline in Bitcoin Network Activity
During this consolidation period, there has been a significant drop in Bitcoin deposits, withdrawals, and overall transaction count. These metrics had increased in May due to the hype around Bitcoin Ordinals but have since decreased in September. The decrease in network activity suggests a decline in new investments entering the crypto market, resulting in less liquidity and price volatility.
Conflicting Market Catalysts: Bitcoin ETF Hopes vs. Higher Interest Rates
The consolidation period of Bitcoin coincides with two conflicting market catalysts. There are hopes for the approval of a Bitcoin ETF in the U.S., which could bring significant demand to the market. However, there are also concerns about the Federal Reserve’s strategy of keeping interest rates higher for a longer duration. Higher rates could potentially impact riskier assets like BTC.
Predictions of Bitcoin ETF Approval
A former BlackRock director predicts that the U.S. Securities and Exchange Commission will approve a Bitcoin ETF by Q1/2024.
Bitcoin Accumulation Continues
The supply of Bitcoin held by whale and institutional addresses has been increasing in October. This suggests that wealthy investors are accumulating BTC off-market through over-the-counter desks. The supply held by addresses with a 10,000-100,000 BTC balance has increased by over 1%, while the supply held by addresses with a 1,000-10,000 BTC balance has decreased.
Bitcoin Technical Analysis
From a technical perspective, Bitcoin is showing signs of stabilizing around $26,750 and could potentially rebound towards $28,000. In the longer term, there is a broader ascending channel pattern, which could lead to a price climb towards $36,000 in late 2023 or early 2024. However, this ascending channel resembles a rising wedge pattern, indicating a bearish reversal. If Bitcoin breaks below the lower trendline of the channel, it could see a decline of up to 40% to around $15,650.
Hot Take: Bitcoin’s Price Faces Uncertainty
The consolidation phase and conflicting market catalysts have left Bitcoin’s price in a state of uncertainty. While there are hopes for a Bitcoin ETF approval and continued accumulation by wealthy investors, concerns about higher interest rates pose potential risks. Traders should closely monitor the price movements and be prepared for possible volatility in the coming months.
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