Bitcoin (BTC) started a new week, month and quarter with a resounding upward move, breaking the $28,000 mark. This strong start to October marked the largest cryptocurrency’s best weekly close since mid-August, leaving market participants eager to see what lies ahead. After a mixed performance in September that saw its share of price fluctuations, BTC’s recent rise has favored the bulls. Despite a relatively calm period in US macroeconomic data and a government shutdown averted, Bitcoin’s fundamentals are not yet reflecting the rise in its spot price. The fact that mining difficulty will automatically reset on October 2 adds an additional layer of uncertainty. Here are five developments that investors will pay attention to…
Bitcoin bulls are experiencing a comeback
Bitcoin experienced little volatility overall until the weekly close on October 1. However, as the week came to an end, there was a sudden spike, pushing BTC’s price to just over $28,000. Within hours, new local highs of $28,451 emerged on Bitstamp, indicating a shift in sentiment. Bitcoin’s price action has increased by over 5 percent since the beginning of October 1, marking its highest weekly close since mid-August. Despite the possibility of a price pullback, market analysts remain optimistic about the overall trend and suggest that Bitcoin consolidations will pave the way for altcoins to follow suit.
“Bitcoin is back to $28,000,” MNTrading CEO and founder Michaël van de Poppe told X (formerly Twitter) subscribers during the day. “It may pull back completely, but the trend is clearly upwards. Every consolidation of Bitcoin will be a period when altcoins begin to follow Bitcoin’s path. This quarter will be fun!” Popular trader Skew likewise pointed out a bearish potential, using exchange order book trends as evidence. “There is a pretty large order book in terms of available/pending liquidity,” he explained. Keith Alan, co-founder of tracking resource Material Indicators, posted a snapshot of the Binance order book and pointed to $28,000 as the main hurdle to overcome immediately following the move.
$BTC Binance Spot
Pretty wide orderbook here in terms of available / resting liquidityBigger price reaction comes out of this imo
Increasing ask liquidity on spot orderbooks; implies greater volume needed by spot takers to clear $28K – $29K (Market structure shift) pic.twitter.com/Rd0vcCIeds
— Skew Δ (@52kskew) October 2, 2023
Uptober optimism is expected
Bitcoin’s strong start to October contradicts the previous year’s narrative, where a 0.7% decline signaled the start of a generally flat month. However, Bitcoin’s performance this year is closer to the historical “October” trend as the cryptocurrency community anticipates potential gains. Market commentators are enthusiastic about this trend, with some suggesting that Bitcoin could surpass $30,000 for the first time since June. Historically, October has been positive for Bitcoin, with average returns around 22%.
Popular market commentators discussing the topic were happy to channel the spirit of 2021, where Q4 saw not a multi-year low but an all-time high for Bitcoin. Popular trader Jelle went further, suggesting that Bitcoin is in the midst of a more significant trend change. “Bitcoin broke the medium-term downtrend, retested it, and is now starting the next uptrend,” he said, along with an explanatory chart. “With the strong weekly close behind us, most charts suggest we will move higher this week. Welcome to Uptober.” he added.
Bitcoin network foundation and mining competition attract attention
Despite the bullish sentiment in spot markets, there has been no corresponding increase in the fundamentals of the Bitcoin network. The upcoming automatic readjustment is expected to reduce mining difficulty by 0.7%, although it remains at all-time highs. Miner competition remains intense, with sudden increases in hash rate reflecting the ever-changing dynamics of the network. The relationship between hash rate and price continues to be a matter of debate among experts, with some arguing that hash rate follows price, while others argue the opposite.
FED speakers and dollar movement critical
United States macroeconomic data is starting October on a calmer note after lawmakers successfully averted a government shutdown. The focus now shifts to comments from Fed officials ahead of the Federal Open Market Committee (FOMC) meeting on November 1, which will determine interest rate policy. The latest data from CME Group’s FedWatch tool shows mixed feelings about what the FOMC will decide. The market currently evaluates the probability of interest rates remaining at current levels as 62%.
Market watchers are closely monitoring US dollar liquidity trends, considering their potential impact on Bitcoin’s price movement. The relationship between global liquidity and risky assets is under the spotlight, especially in the wake of the COVID-19 pandemic. Experts suggest that the path of least resistance for Bitcoin is flat to high in the coming years, although some short-term volatility may still be on the cards. Analyzing this related macro phenomenon, financial commentator Tedtalksmacro pointed to US liquidity trends and their impact on BTC price movement going forward.
Yes pic.twitter.com/cgzD5OoeKa
— tedtalksmacro (@tedtalksmacro) September 29, 2023
The relationship between global liquidity and risky asset performance is well documented, especially given the fluctuations that have occurred since the outbreak of the COVID-19 pandemic. Late last week, Tedtalksmacro showed a divergence between net US dollar liquidity and BTC/USD. In the accompanying analysis, he argued that measuring delta through “direct liquidity” gives a better idea. He made complimentary statements regarding the outlook of Bitcoin.
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