Bitcoin's October Boom Subsides as Analysts Debate on Longevity of Current Price Rally
Summary:
Bitcoin's strong surge in October, which resulted in a 27.9% gain, appears to be diminishing, with the cryptocurrency's price dropping by 2% on November 2. This drop has sparked debates among experts regarding the longevity of the current price increase. Despite the decline, both short-term and long-term holdings have realized profit in over 81% of cases. Moreover, the recent pause in interest rate hikes has not immediately impacted Bitcoin's price, yet long-term market expectations predict a recovery, particularly as more financial institutions continue to embrace Bitcoin.
The forceful surge that advanced Bitcoin (BTC) to register a 27.9% profit in October appears to be diminishing on November 2, with a 2% decrease in Bitcoin price witnessed within the day. Despite the cheerful reaction of the market to the Federal Reserve's decision on November 1, to momentarily suspend the rise in interest rates, the Bitcoin price appears to be inflated, raising concerns among BTC derivatives. Nonetheless, the compression in Bitcoin price hasn't alarmed all quarters, with some commentators projecting the commencement of a bull drift by Bitcoin.
October earned accolades, significantly due to the liquidation of short dealers. This activity pushed the Bitcoin price past the year-to-date peak of over $35,000. As November progresses, this liquidation course appears to be reversing. On November 2, within 12 hours, quick spikes of Bitcoin long liquidations amounting to over $21.1 million were recorded. This followed an earlier liquidation of over $28.2 million in the preceding 24 hours. Without purchasing strength from investors, the Bitcoin price is adversely affected when BTC longs are liquidated. Presently, Bitcoin trading volumes are over $7 billion below the year-to-date peak set on October 24 at $14.7 billion.
The lack of consistent trading volumes and liquidity has led to heated debates among some experts on the longevity of the current Bitcoin price drive. Many traders also anticipate a rollback according to futures market data, with over 55% still short Bitcoin. Despite the dip in Bitcoin price on November 2, a record percentage of wallets are currently in profit for the year. Both short-term and long-term holdings have realized profit in more than 81% of cases.
However, investors are still below the realized profit level charted on October 24. The emergence of a higher trading volume in October possibly endorsed profit-taking and served to strengthen Bitcoin's price. The ebb in trading volume, paired with an abundance of investors making profits, may steer the Bitcoin price further downward should more traders opt to realize profits.
Long-term prospects for institutional investors have not seemed disturbed by short-term fluctuations in the crypto market. In spite of stiff U.S. regulatory control, two institution-sized entities, BlackRock and Invesco Galaxy ETF are listed on the Depository Trust and Clearing Corporation’s website. Major financial firms are keen for quick action, yet the SEC appears determined to hold off approvals for Bitcoin ETFs until 2024. Institutional crypto funds registered their highest weekly influx in over 12 months, despite the prevalent dip in Bitcoin price.
Bitcoin's price continues to be swayed by broader economic factors. Developments like the ongoing Israel-Hamas conflict, potential regulatory measures and adjustments in interest rates are expected to maintain their impact on Bitcoin's cost. The Federal Reserve Chairman, Jerome Powell's decision to halt interest rate increments did not immediately have a positive effect on Bitcoin's price. Still, considering the long-term outlook, the market expects Bitcoin to bounce back, especially with more financial establishments apparently espousing BTC. However, every investment and trade entails risk; hence, it is crucial for investors to diligently conduct their individual research before decision-making.
Published At
11/2/2023 7:21:53 PM
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