The Technical, Fundamental, & Macro of Bitcoin (BTC) Is ‘Obviously Bullish’
Market activity remains subdued after the initial burst in movement earlier this week.
Bitcoin continues to trade around $10,760, in the red, with just over $1.2 billion in ‘real’ trading volume.
The theme of the market for the last few weeks has been consolidation, which means a “volatile, yet flat” market. “Once the markets make up their mind direction-wise, we usually expect some sort of breakout from the short-term ranges,” noted analyst Mati Greenspan.
For Bitcoin, it has been going on for a long time now, that has us in a “meaningful wedge.”
“This pattern is neither bullish nor bearish. It's more flattish. If anything, there's a slight bias for it to be broken in the direction of the long-term trend, which for bitcoin has been “up” pretty much since inception,” said Greenspan.
The leading digital asset’s uncertainty is not turning out good for altcoins, which are in a risk-off mode. DeFi tokens have been already seeing a decline in their values for the past few days and still haven’t recovered.
Today’s notable winners include Swerve (+20%), Ziliqa (+17%), and Cosmos (+10%) while losers involve Based (-28%), SAKE (-21%), CREAM (-15%), and YFI (-12%).
The Macro of it
Besides market participants likely to be spooked by the “unusual options activity at $9000 strike (put) for 2nd and 9th October expiries,” the chaotic US Presidential election debate kept the markets down.
S&P 500 recorded losses yesterday, and today on the last trading day of the month, with investors rattled by the US politics and rising coronavirus cases, it is expected to be a “risk-off day.”
According to trader and economist Alex Kruger, the playbook before the elections is to reduce risk exposure, load up on panics, and ride bull-market as it resumes post-elections.
“Load up on risk (stocks and crypto) and precious metals. It's all one big risk-on risk-off trade at the moment, across asset classes,” said the economist.
Bitcoin has already been moving in correlation with the equity market this year, and with the odds of the Fed coming to the rescue in its mid-December FOMC, delivering further monetary easing “very high,” it spells bull for bitcoin and cryptos.
Main chart to look at right now, IMO.
Breaking of this triangle may initiate the de-coupling between S&P and gold (early November at latest).
— David Puell (@kenoshaking) September 30, 2020
And the Fundamentals…
When it comes to the fundamentals of the largest network, bitcoin’s hash rate that retraced following a +11.35% difficulty adjustment last week, reached a new all-time high, above 150 exahashes per second.
For the last couple of months, the hash rate has been on a roll due to China's rainy season, but with the wet season coming to an end soon, it will likely slow down the recent rate of increase of the hash rate.
Other factors, the number of active users and transactions, meanwhile, have stalled in the near term. However, the percent of BTC supply held for at least one year has hit its highest level since 2010, at 63.5%.
Interestingly, the number of new entities entering the bitcoin market is not reflected by the price.
We're seeing a spike in activity by new participants coming into BTC not yet reflected in price, it doesn't happen often. This is what traders call a divergence, in this case it's obviously bullish.
— Willy Woo (@woonomic) September 30, 2020
This another impulse of coins changing hands completing could either mean this one drives us upwards after the last one took profit or we go downwards. Still, it seems unlikely given “quiet accumulation” represented by volume movements.
“Bullish the next 3 weeks, also bullish over next 3 months. IMO a good time to build a long term multi-month long position, or deploy new capital if you're thinking to increase BTC exposure,” said on-chain analyst Willy Woo.
Overall, bitcoin has hit the longest period above $10,000 in history, but the market is fearful, and volume is declining the same as the premiums on the December futures.