News Article:
Bitcoin Fails to Break the $70,000 Mark Despite Multiple Attempts
Since reaching a historical high of $73,777 in March this year, Bitcoin has made several unsuccessful attempts to break the $70,000 mark.
During the early Asian trading 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.
Reasons for the Bitcoin downturn: Dual pressure from interest rates and the stock market
There are two main reasons for the recent pullback in Bitcoin’s price. First, after continuously rising from $60,000 over the past 11 days, Bitcoin faced technical pressure for a correction. Additionally, interest rates in Western economies have risen significantly, with both the US and German 10-year bond yields increasing by 10 basis points, putting pressure on risk assets.
Investors are concerned about the possibility of a chain reaction in the traditional financial markets, leading to a reduction in 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 both markets are still driven by similar factors. This is in stark contrast to the negative or low correlation observed between the two during mid-July to mid-September.
The US 10-year bond 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 a profit and a significant increase in open positions, there are warnings that a correction may be imminent.
Where is the bottom for buying the dip?
In the face of a market pullback, Bitcoin may form a “higher low” near $66,000, which could present the next investment opportunity.
While Bitcoin has shown strong performance recently, this week is expected to be a “safe haven week” due to the influence of US corporate earnings reports. However, it is also anticipated that after a brief pullback, Bitcoin may rebound again and reach a new all-time high as the US presidential election approaches.
Bitcoin derivatives market remains stable
Despite the pullback in the spot market, the derivatives market has shown resilience.
Even if Bitcoin tests the support level of $67,000, 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 falls between 5% and 10%.
In the options market, the 25% delta skew is in the range of neutral to slightly bullish, between -7% and +7%. This indicates that derivative traders are not panicking about Bitcoin’s recent 24-hour decline. If the market expects further downside, this value would usually move towards 0% or higher.
BTC ETF sees significant inflows, with a total of $273.7 million flowing into BTC ETFs. Ark and BlackRock’s IBIT ETF have performed particularly well, attracting over $1.1 billion in inflows last week, the strongest since March, ranking third in terms of year-to-date fund inflows into 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 Bitcoin’s price. It is expected that Bitcoin will break the important psychological level of $70,000 by Friday. However, the likelihood of reaching a new all-time high this week is still low.
Geopolitical factors such as the US election, conflicts in the Middle East, and evolving global regulations around stablecoins could potentially bring significant unexpected market events (black swans) to the cryptocurrency market before the holidays. In November, Bitcoin may exceed its previous all-time high and continue to steadily grow towards the next important milestone of $100,000.
Whale activity continues to increase, with more holdings being accumulated.
The downtrend line of the current major cycle has been broken and successfully retested, forming a bearish rising wedge on a smaller timeframe. In the short term, Bitcoin may weaken and fall back to the downtrend line of the major cycle and the 0.236 Fibonacci retracement level of the previous battle, which is roughly around $66,000 (preferably $63,000), forming a major bullish wedge.
From a data perspective:
Spot: Aggregated spot trading showed a slight selling trend on Sunday night, but began to see increased buying volume on Monday morning, with two upward moves.
Futures: Aggregated futures trading saw continuous small-scale selling from Sunday night to Monday morning. During the first upward move in spot trading, futures were still mostly flat or short, but after breaking through $69,000, they turned mostly long.
It appears that the shorts initially entered the market based on the idea that $69,000 was a potential false breakout, but were subsequently stopped out by strong buying volume in spot trading. It is worth noting that Coinbase, starting from Sunday, has changed its previous continuous selling status and has been making continuous small-scale purchases, which is a significant change. However, apart from three notable buying moves, Binance Futures mostly engaged in small-scale flattening or shorting during the rest of the time.
Buying pressure in the spot market has started to emerge! Although the volume is not significant, if it can absorb the supply from futures profit-taking selling, the price can stabilize at $69,000.