Bitcoin is getting close to its highest prices of the year, but there are concerns about the support behind these price moves, according to analysts.
As the last week of October begins, Bitcoin’s price has risen by 3%, pushing up the overall cryptocurrency market. Bitcoin is approaching its 2023 highs, creating a resistance battle. The big question is whether the bulls can win this battle.
Traders and market watchers are cautious despite the positive momentum, with fewer bold predictions for Bitcoin’s price above $32,000. Breaking through this level is seen as a challenging task.
Bitcoin faces challenges from macroeconomic data, especially as inflation remains a concern. The upcoming U.S. Federal Reserve’s interest rate decision on November 1 adds to the significance of the month’s final data prints.
Traders are preparing for a potentially turbulent week as Bitcoin bulls aim for a major trend change, hoping for a breakout from a months-long trading range.
Despite reaching three-month highs, some traders are skeptical about surpassing $32,000. The current retreat from highs toward $30,000 indicates cautious trading sentiments.
Trader Ali points out that the Relative Strength Index (RSI) readings suggest a possible price correction unless Bitcoin closes above $31,560. RSI levels above 70 are considered “overbought.”
PCE and GDP Data Ahead of FOMC:
The U.S. macroeconomic calendar for the week highlights the Personal Consumption Expenditures (PCE) Index, a preferred inflation metric for the Federal Reserve. The GDP figure for the third quarter is also awaited. These data points are crucial ahead of the Federal Reserve’s interest rate decision on November 1.
Exchange Balances Trend:
Bitcoin balances on exchanges continue to decline and are at year-to-date lows. The FTX meltdown in November 2022 accelerated this trend. The latest data shows that major trading platforms have a combined BTC balance of 2.024 million BTC, and coins are steadily leaving exchanges.
Absence of Bitcoin “Newbies”:
The Bitcoin price action is seen as displaying “artificial” characteristics due to a low number of new market entrants over the past month. The Sum Coin Age Distribution metric suggests fewer newcomers in the market.
Crypto Fear & Greed Index Volatility:
The Crypto Fear & Greed Index, a sentiment gauge, has shown signs of volatility, reaching “greed” territory. This coincided with Bitcoin’s attempts to break through $30,000. The $30,000 level is considered a “scary area,” and breaking through $32,000 is seen as crucial for a sustained bullish trend.
In summary, Bitcoin is approaching its 2023 highs, but caution prevails among traders due to resistance levels, macroeconomic uncertainties, declining exchange balances, a lack of new market entrants, and increased volatility in sentiment indicators. The week ahead is anticipated to be pivotal for Bitcoin’s price trajectory.