Welcome to the thrilling world of cryptocurrency as we kick off a new week, a new month, and a new quarter with Bitcoin (BTC) making an impressive bullish move past the $28,000 mark. It’s the start of what the crypto community has affectionately dubbed “Uptober,” and Bitcoin enthusiasts are buzzing with excitement as the most prominent cryptocurrency experiences its most impressive weekly close since mid-August. In this blog post, we’ll delve into five essential developments in the world of Bitcoin for the week ahead.
Bulls Take Center Stage with BTC Price Reversal Risk
As the week came to a close on October 1, Bitcoin had already wrapped up September with minimal volatility. However, the market dynamics took an unexpected turn as Bitcoin surged toward the $28,000 mark. Within hours, it reached new local highs of $28,451 on Bitstamp.
Data from Cointelegraph Markets Pro and TradingView confirm that, since the beginning of October 1, Bitcoin has surged by over 5%. This surge marked Bitcoin’s highest weekly close in almost two months, effectively erasing the relatively lackluster performance seen in previous weeks.
Michaël van de Poppe, CEO and founder of MNTrading expressed his optimism, stating, “Bitcoin back up to $28,000… The trend is clearly upward. This quarter will be fun!”
However, some market analysts have sounded a note of caution, suggesting that a pullback could be on the horizon. Skew, for instance, highlight exchange order book trends, indicating that a more substantial price movement might be a need to clear the resistance between $28,000 and $29,000.
Additionally, Keith Alan, co-founder of monitoring resource Material Indicators, noted that Bitcoin was currently facing resistance at the 200-week moving average, which stood at around $27,970 at the time of writing. He anticipates continued volatility over the next 24 hours.
Uptober Optimism in Contrast to Last Year
This year’s October kickoff stands in stark contrast to the same period last year. In 2022, Bitcoin experienced a 0.7% dip at the beginning of October, which ultimately led to a sideways month. This lack of significant price movement culminated in the FTX meltdown that saw cryptocurrency markets plummet to two-year lows in the fourth quarter.
However, this time around, the market sentiment is different, and it resembles the classic “Uptober” observed in previous years. Data from CoinGlass indicates that BTC/USD has yet to conclude October at a lower price than it started in 2018.
Popular market commentators have expressed their optimism for Bitcoin’s performance in October. Some have even suggested that Bitcoin is in the midst of a more substantial trend change, with the potential to surpass $30,000 for the first time since June.
Bitcoin Network Difficulty Set to Decrease
In a deviation from recent trends, Bitcoin network fundamentals are not aligning with the bullish sentiment in spot markets. The latest data from BTC.com estimates that Bitcoin network difficulty is set to decrease by 0.7% at its subsequent automate adjustment on October 2.
This reduction comes after a period of consistent difficulty increases, including a nearly 6% gain at a time when BTC’s price performance was uncertain. The intense competition among miners, as reported in September, has contributed to fluctuations in the hash rate, highlighting the ever-evolving nature of Bitcoin mining.
The relationship between hash rate and Bitcoin price remains a topic of debate among experts. While some believe that the hash rate follows price, others, including Jameson Lopp, co-founder and CTO at Casa, argue that the reverse is true, with the hash rate tracking speculative future price changes.
Federal Reserve Speakers in the Spotlight
Despite Bitcoin’s excitement in the first week of October, U.S. macro data is expected to have a quieter start to the month. The potential government shutdown has been averted, with Ukraine aid being the main point of contention that was removed from the deal.
As we near the scheduled Federal Open Market Committee (FOMC) meeting on November 1, investors and observers will closely watch for the forthcoming statements from Federal Reserve officials. The language use by these officials will be scrutinize for clues about future interest rate policy.
The Kobeissi Letter, a source of financial commentary, foresees heightened market volatility in response to the presence of 13 Federal Reserve speakers scheduled to offer insights throughout the week. The current market consensus places a 62% probability on interest rates remaining unchanged.
Positive Outlook for Dollar Liquidity and BTC
Lastly, financial commentator Tedtalksmacro highlighted the relationship between U.S. dollar liquidity trends and BTC/USD price action. Global liquidity has been closely tied to the performance of risk assets, particularly since the onset of the COVID-19 pandemic.
Tedtalksmacro pointed out a divergence between net U.S. dollar liquidity and BTC/USD, suggesting that measuring changes in liquidity week-on-week and month-on-month provides better insight into Bitcoin’s future price movements.
Despite acknowledging some lingering risks in the short term, Tedtalksmacro believes that Bitcoin’s path of least resistance is currently sideways to higher, suggesting that Bitcoin may continue to experience positive price trends in the years to come.
In conclusion, Bitcoin’s “Uptober” has kicked off with a bang, and investors and enthusiasts are keeping a close eye on the market’s performance throughout the month. While challenges and uncertainties persist, the prevailing sentiment suggests a bullish trajectory for Bitcoin in the coming weeks.