Bitcoin (BTC), which is now in its second week of trading, has just cracked $50,000 after its first attempt in over a month. Whats next?
BTC/USD is facing a bullish macro environment and an array of expectations from analysts, who are requesting that October brings about a change in the game. This follows an encouraging weekend.
They claim Q4 should be unlike any other time in the current Bitcoin bull market. The latest estimates even suggest that it will take more than six months to prove this.
Cointelegraph looks at the factors that could move the market over the next few days with “Uptober”, which is now in its first week.
Markets are ready for a “tumultuous ride” in October
Although stocks may have been flat in September, the first few days into the new month have shown that Bitcoin can outperform the macro pack with just a little bit of good news.
The S&P 500 dropped 5% in September. However, BTC/USD ended the month at $4,000 less than August.
However, since Oct. 1, the fortunes of the pair have changed and, contrary to expectations that stocks would rally against the U.S. Dollar, there may be positive headwinds for Bitcoin.
CNBC quoted Sam Stovall (chief investment strategist at research firm CFRA) as saying that Q4 2021 would likely see a higher than average return.
Investors will need to be patient during the volatile ride of October. This month saw 36% more volatility than the average over the past 11 months.
The vote on the U.S. Infrastructure bill was the driving force behind last weeks mood, which is now being delayed until Oct. 31.
One reason I am bullish on #BTC is DXY chart from 2 days ago in live streaming: “DXY hitting redbox, should reverse soon, and start a correction.” This correction could take some time and is bullish for crypto-imo. pic.twitter.com/bn5LI8B8Gk
— October 1, 2021, Crypto_Ed_NL (@Crypto_Ed_NL).
The U.S. dollar currency indicator (DXY) currently shows that USD has reached its highest level in more than a year. Traders radar is a recent reversal, which has been a bullish catalyst in Bitcoins favor.
Crypto Ed, a popular Twitter trader, believes that a DXY correction can last for months instead of weeks.
DXY 1-day candle charts. Source: TradingView
$50,000 but not yet
Bitcoin has seen a sharp increase in its price over the weekend. It is now at $49,000, but not yet at $50,000.
Despite bullish impulses Sundays latest breakout to the upside was repelled by a strong rejection and subsequent drop of nearly $2,000.
This was generally dismissed by commentators as a bearish signal. However, they maintain that any BTC price weakness is temporary.
Michael van de Poppe (Cointelegraph contributor) is one of them. He reiterated his theory about a brief consolidation that was followed by a new bullish breakout.
Yes, it is, #Bitcoin. pic.twitter.com/Bhbm0SVYT2
— Michael van de Poppe (@CryptoMichNL) October 4, 2021
Pentoshi, a fellow trader, compared the situation to Q4 activity last year when it was $20,000 and not $64,500 that Bitcoin needed.
“I don’t care about the low time frames. He said that he cares about the macro-market structure in accompanying tweet comments.
BTC/USD also posted a solid weekly close at $48,234 — which, in turn, cancelled its previous two weeks of action.
#BTC has rallied +20% since breaking out from the Ascending Triangle$BTC #Crypto #Bitcoin pic.twitter.com/mNXy48fAqR
— Rekt Capital (@rektcapital) October 3, 2021
Rekt Capital analyst and trader also noted that the Pi Cycle 111 day moving average held as support, which has fueled the recent rally.
All-time highs in hash rates trickle in
Although it is impossible to know the exact value of Bitcoin, some estimates suggest that it has reached new all-time highs.
Data sources show that five months less than Chinas crackdown on regulation triggered a massive migration of miners, equipment and workers.
This is not all. The hash rate may even have reached 200 exahashes per seconds (EH/s), which is 32 EH/s more than its previous peak.
It is hard to measure hash rate — the mining power of Bitcoin is not known exactly so any representation can only be an estimate.
Although different sources can vary, CoinWarz recorded 201 EH/s Oct. 2, while MiningPolStats currently only shows 138 EH/s, the overall trend is not disputable.
Bitcoin network fundamentals remain in “up only”, reflecting the long-term conviction that miners have about profitability.
“China expelled nearly 90% of the bitcoin miners from China earlier this year,” said Anthony Pompliano, co-founder of Morgan Creek Digital. The hash rate dropped approximately 50%, Morgan Creek Digital cofounder Anthony Pompliano said about the data.
“Only a few more months later, we are almost back at an all-time high.” Further network decentralization is driven by economic incentives.
Chart of the 7-day average bitcoin hash rate. Source: Blockchain
Cointelegraph reported last Wednesday that records are also being challenged by difficulty. The next adjustment is likely to be the seventh consecutive increase.
This hasnt happened since 2019, and difficulty is still around 20% lower than its May highs.
Are you half way through?
Bitcoins most prominent analysts know that they expect a remarkable Q4 performance from the BTC price action.
PlanB, the creator of the stock to-flow model family has seen the worst case scenario for Bitcoin two months in a row.
His floor estimates currently call for $63,000 at the end of October and $98,000 at the November close.
He says that the picture for Bitcoin bulls is still brighter if you zoom out. PlanBs latest stock-toflow cross-asset update (S2FX), showed that price behavior was roughly 50% during its bull cycle. This leaves the door open to rapid gains.
“IMO, we are halfway, no sign (red) of weakness (yellow) yet. He commented on the chart, “Note color overlay is not months-to-halving but an off-chain signal.”
“My guess is that this second leg of bull market will take at least six more months.”
Chart of Bitcoin S2FX as of Oct. Source: PlanB/ Twitter
Bitcoin must still catch up with stock-toflows daily estimates. The spot price has fallen by record amounts in the last months.
According to S2F Multiple monitoring resource, Mondays BTC/USD trading volume should be just above $100,000
Pricing in a Bitcoin ETF
Cointelegraph reported that there are good chances for a Bitcoin exchange-traded funds (ETFs) to be approved by the U.S. regulators this month.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC. LUNA. ATOM. XTZ. AXS
The Securities and Exchange Commission (SEC), which “kicked it” about a decision regarding a traditional product, has given the green light to a futures-based ETF. It is expected that this will be the first step.
Although the market has priced in this moment for some time, a decision could still upend sentiment and bring about a change in the state of play in Grayscale Bitcoin Trust (GTBC).
Despite recent price movements, the funds discount relative to spot prices has remained substantial, currently hovering around 14%.
Grayscale premium chart. Source: Bybt
Grayscale stated that it will convert its flagship crypto funds into ETFs as circumstances permit, even though data clearly shows that Grayscale is not in any way suffering.
Eric Balchunas, Bloomberg ETF analyst, noted that “GBTC utterly prevails in volume vs. bitcoin fund peers trading tenx more than any one other in $ terms,” last week.
“If it was an ETF, it would rank in the top 5% most actively traded.”
Comparative turnover of Bitcoin funds. Source: Eric Balchunas/Twitter