Bitcoin: All eyes on the next move

Market overview

The crypto market has pulled back by 0.7% over the past 24 hours to $2.74T, returning to the lower boundary of the trading range seen in recent days. Although the market has yet to live up to the ‘Uptober’ moniker, buyers are persistently buying into dips, defending the area around August’s highs. So far, this looks like a classic case of resistance turning into support. If this is the case, the current consolidation will be followed by an upward move above the recent high. However, should support fail, a very sharp decline is likely. Among the most liquid coins, the ratio of gainers to losers stands at roughly 1 to 3. The top gainers were Dash (+7.3%), Polkadot (+4.7%) and Cosmos (+4.2%). That said, the decline suggests caution rather than fear, as the three worst-performing coins (Algorand, Immutable and Aptos) are down between 1.4% and 1.5%.

The sentiment index has pulled back to 50, touching the midpoint of the range for the second time since the second half of August. We interpreted the decisive shift from the lower to the upper half as a change in market sentiment. And now this bull market is being put to the test. In the middle of last month, the dip in sentiment attracted buyers, followed by a 15% rally. However, there is a good chance that this time buyers will prefer to stay on the sidelines, given the weakness in stock and gold markets.

Bitcoin closed trading on Thursday at around $81K and is cautiously rising towards $81.8K as European trading begins. The leading cryptocurrency remains close to its 50-day moving average, consolidating around this medium-term trend indicator. The current support level also coincides with the resistance zone seen in September and May. The convergence of these key levels suggests the significance of the current situation rather than the inviolability of the support. A sharp downward break could be followed by a repeat of the May scenario, while a decisive rebound could trigger a rally, as seen in August.  

News background

Total open interest in Bitcoin, Ethereum and Solana derivatives has risen to $41.6 billion, according to Santiment. Traders have become more active in opening leveraged positions; however, this increase poses a risk of mass liquidations.

Increased liquidity, Fed interest rate cuts and a weaker dollar are the key conditions for a bull cycle to begin in the crypto market, said Real Vision CEO Raoul Pal. The crypto market has faced a shortage of available funds as investments in AI have become more attractive.

Bitcoin’s hash rate is rising again following a decline in the first half of the year, making the network more reliable and strengthening BTC’s position as an asset for long-term wealth preservation. This is a bullish signal for investors, according to CryptoQuant CEO Ki Young Ju.

The Chinese stock market has been falling for a record 11 consecutive weeks amid a slump in AI shares. If the AI bubble starts to burst in the US as well, a fall in the Nasdaq could also hit Bitcoin, warns Barchart.