Bitcoin (BTC), sees volatile beginnings to a new week, and a new monthly after its first ever monthly close over $60,000 — what’s the next?
Bulls anticipate November’s next phase of “Uptober”, which was highly anticipated. They hope and sometimes promise that it will bring a BTC price explosion like no other.
Predictions and timing can vary, as do the timing. BTC/USD could see a close to $100,000 this month, but also a dip of near $50,000.
Cointelegraph looks at the factors that could influence Bitcoin’s price action over the next week, including solid buyer support and everything to play for in the $50,000-plus holding.
October 2021 is the best month since 2020
Market participants, regardless of what happens next, are celebrating this week’s Bitcoin monthly close which is the highest in its history.
Bitcoin’s new all-time high monthly close
— Will Clemente (@WClementeIII) November 1, 2021
For November, $61,000 is the new target.
Bitcoin is not “up only” in short timeframes. Sunday’s close was met by noticeable downside volatility — a trip up to $59,500, before another surprise brought it over $62,000 hours later.
Fans of PlanB’s worst-case scenario price predictions are perhaps a little nervous. These predict at least $63,000 by October end.
Although the series is still on track, it needs $98,000 by the end this month to maintain its historical accuracy.
However, PlanB’s results were more than satisfactory.
Aug $47K Sep $43K Oct $61K new monthly close ATH! Ok ok, 3% rounding error .. close enough for me Next targets: Nov>$98K, Dec>$135K pic.twitter.com/7LSnQBYJ33
— PlanB (@100trillionUSD November 1, 2021
Cointelegraph contributor Michael van de Poppe added that Bitcoin might not close above $63K in this month.
“However @100trillionUSD, his hitrate in the stock-toflow model is far better than your trading performance. I wouldn’t roast him. Bitcoin at $61K seems just as good and close enough.
BTC/USD traded at $62,000 after a correction from overnight lows. With returns of just under 40%, October was the best month since December 2020.
BTC/USD 1-month candle chart (Bitstamp). Source: TradingView
Eighth consecutive increase in difficulty lines
Bitcoin network fundamentals is the best option for anyone looking to find something in “up only”.
This week, the eighth consecutive positive adjustment will be made by difficulty — something that hasn’t happened since 2018.
The mining industry is becoming more competitive, and the mining difficulties have almost made up the losses that it caused after China forced miners in May to shut down.
This week’s difficulty will rise to 21.89 trillion, which is just 3 trillion less than the all-time highs.
The measure of processing power used for mining is called the hash rate. It tells a similar story.
Although it is impossible to measure in absolute terms, the hash rate continues to trend towards new all time highs, according estimates.
Raw data tends to fluctuate between up and down. Different estimates can lead to drastically different readings. However, the weekly average hash rate now stands at 159 exahashes/second (EH/s), which is closer than ever to April’s 180 EH/s record.
Chart of the 7-day average bitcoin hash rate. Source: Blockchain
Hodlers hodl on
September was a great month to buy Bitcoins, with October offering a brief retracement.
Did you purchase the dip? You were one of the growing number of long-term hodlers, whose convictions have only increased since October.
Research from Kraken found that the recent price rises and $67,100 highs have not tempted hodlers to buy Bitcoin.
Researchers concluded that “Notably, although long-term holders weren’t affected by the retracement last week and used it to continue accumulating,” this trend has not changed despite significant price rebound to new all time highs of $67,000.
“In other words: the supply shock that was bought by long-term investors last month has only grown this month.”
They add that it is these entities and not short-term speculators who drive price performance in Q4 of this year.
This is consistent with Willy Woo’s analysis that showed that investors who are called “hodlers-of-last resort” or “Rick Astley”, remain committed to their investments. Since 2020, miners have been long-term holders.
Woo observed this weekend that “since 2020 miners have been hodlers (and buyers of BTC), this is a seachange in behaviour.”
“Miners have not shown sustained accumulation behavior since 2009-2014.”
Source: Kraken. Source: Kraken
Exchange balances lowest since October 2018
The picture of supply shock from exchanges is bleak — according to a Bitcoin bear.
Glassnode has released new data that shows that exchange BTC reserves have fallen to their lowest level in three years, according to on-chain analytics firm Glassnode.
In late 2018, Bitcoin was headed into the pit of its old bear market. It bottomed in December at $3100.
Although price action has changed in magnitude since then, balances remain dwindling, all of which points to the possibility of a shock if demand increases significantly.
While exchanges control 2.47 billion Bitcoin, at its peak, April 2020, more than 3.1 million BTC were on their orderbooks.
Chart of the Bitcoin exchange balance. Source: Glassnode/ Twitter
There are many factors that can affect balance changes between exchanges. For example, Coinbase Pro saw a decrease of almost 20,000 BTC over the last 24 hours while other players saw small increases in their balance.
Markets anticipate Fed’s tapering announcement
This week could see some familiar trends in traditional markets, and their traditional knock-on effect on crypto markets.
Similar: Top 5 cryptocurrencies you should be watching this week: BTC. ETH. BNB. MATIC. FTM
These comments could be due to the United States Federal Reserve’s Tuesday and Wednesday comments on coronavirus management. Markets expect more cues about asset-buying tapering.
This is happening as inflation rises worldwide. Fed Chair Jerome Powell previously acknowledged that the accompanying narrative — supply-chain crisis — will likely continue “well into next year.”
“I believe the Fed is determined to begin the taper very quickly. We expect them to announce it next Wednesday and then begin it shortly thereafter, so that’s pretty much carved in stone,” Kathy Jones (chief fixed income strategist at Charles Schwab) told Yahoo Finance last Thursday.
“I believe the main issue now is the Fed’s speed in raising rates. Market expectations have changed to expect two rate increases in 2022 and 2023… That’s quite aggressive pace of tightening.
Such conditions serve to increase Bitcoin’s attractiveness as an inherently deflationary asset class with a mathematically-verifiable supply cap.
Inflows from institutions into existing Bitcoin investment products and the newly launched futures exchange-traded fund (ETFs) highlight rising demand.
BTC/USD chart vs. Purpose Bitcoin ETF Assets Under Management Source: Bybt