CoinWorld reported:
After rising to a historical high of $73,777 in March this year, Bitcoin has failed to challenge the $70,000 mark multiple times.
During the Asian session yesterday (21st), Bitcoin briefly rose above $69,000, but fell below $67,000 during the US trading session. As of the time of writing this morning, Bitcoin has returned above $67,000 and is currently trading at $67,320.
The reasons for the Bitcoin decline: pressure from interest rates and the stock market
There are two main reasons for the recent high and subsequent decline of Bitcoin. Firstly, Bitcoin has experienced a continuous rise from $60,000 in the past 11 days, which created technical pressure for a correction. Additionally, interest rates in Western economies have risen significantly, with both the US 10-year Treasury yield and the German 10-year bond yield increasing by 10 basis points, putting pressure on risk assets.
Investors are concerned about the possibility of a chain reaction in traditional financial markets and have therefore reduced their exposure to Bitcoin.
It is worth noting that the 40-day correlation between Bitcoin and the S&P 500 index remains above 80%, indicating that the two markets are still driven by similar factors. This is in stark contrast to the negative or low correlation between the two during the period from mid-July to mid-September.
The US 10-year Treasury yield may challenge 5% in the next six months, mainly due to rising inflation expectations and concerns about government fiscal spending.
With over 90% of investors currently making profits and a significant increase in open positions, caution is warranted as a correction may be imminent.
Where can one find a buying opportunity in the dip?
In the face of market corrections, Bitcoin may form a “higher low” around $66,000, which would present the next investment opportunity.
Bitcoin has performed well recently, but due to the influence of US stock earnings week, this week will be a “safe haven week”. However, it is also expected that after a brief correction, Bitcoin may rebound again and reach a new all-time high as the US election approaches.
Bitcoin derivative markets remain stable
Despite the correction in the spot market, the derivative market has shown resilience.
Even if Bitcoin tests the $67,000 support level, the Bitcoin 2-month futures annualized premium rate remains above 9%, indicating that market sentiment is still stable. Under normal market conditions, the premium rate usually ranges between 5% and 10%.
In the options market, the 25% delta skew is in the range of neutral to bullish, between -7% and +7%, indicating that derivative traders are not panicking about Bitcoin’s decline in the past 24 hours. If the market expects further downside, this value would usually move towards 0% or higher.
BTC ETFs have attracted significant funds, with BTC ETFs attracting $273.7 million, mainly from Ark. BlackRock’s IBIT ETF performed well, attracting over $1.1 billion in funds last week, making it the strongest performance since March. It ranks third in terms of fund inflows since the beginning of the year among ETFs.
Will Bitcoin break $70,000 this week?
The probability of Trump winning the election has recently increased, which has had a positive impact on the price of Bitcoin. It is expected that Bitcoin will break the important psychological threshold of $70,000 by Friday. However, the likelihood of reaching a new all-time high (ATH) this week is still low.
Geopolitical factors, such as the US election, conflicts in the Middle East, and evolving global regulations surrounding stablecoins, could potentially bring significant unexpected market events (black swans) to the cryptocurrency market before the holidays. In November, Bitcoin may surpass its historical high and continue to grow steadily towards the next important milestone of $100,000.
Whale activity continues to increase, with more holdings.
The downtrend line of the current major cycle has been broken and successfully retested, forming a bearish rising wedge in the smaller timeframe. It is expected to weaken in the short term, with a potential decline towards the downtrend line of the major cycle and the 0.236 Fibonacci retracement level from the recent battle, roughly around $66,000 (even better if it reaches $63,000), forming a major bullish wedge.
From a data perspective,
Spot: Aggregate spot remained slightly sell-off on Sunday night, but started to rally with increased volume on Monday morning, with two rally phases.
Futures: Aggregate futures saw continuous small selling on Sunday night to Monday morning, with the first rally phase of spot still being net long and short, but completely turned to net long after breaking through $69,000.
It seems that the shorts first entered based on the idea that $69,000 might be a false breakthrough, but were subsequently stopped out by strong buying pressure in the spot market. It is worth noting that Coinbase, which had been continuously selling before Sunday, has started to buy in small amounts, which is a significant change. However, apart from three instances of significant buying during the rally, Binance Futures has mostly been in small net long/short positions.
Buying pressure in the spot market has started to appear! Although the volume is not significant, if it can absorb the profit-taking supply from the futures market, the price can stabilize above $69,000.
