Following a hyper-bullish run, Bitcoin is facing a near-term pullback. At present, BTC has dropped below the $60,000 psychological level, suggesting a correction could persist for the coming days.
The Fundamental Look
Bitcoin (BTC) prices had a phenomenal run the past week, but over the last 24 hours, BTC dropped back below $60,0000 from its 24-hour high of $63,088.77.
At the time of writing, BTC was trading at approximately $59,000. That said, BTC is still dominating the market cap tables, standing at $1.11 trillion amid $40.6 billion in 24-hour trading volume.
As the extreme bullish sentiment continues to cool, the Bitcoin Fear & Greed Index has also started to decline and has dropped from 82 (Extreme Greed) to 73 (Greed), suggesting that investors are taking profits.
Meanwhile, on-chain data shows that BTC miners are still in the process of accumulation. Per CryptoQuant, miners’ reserves currently stand at the same level as when Bitcoin’s value was under $40,000 in 2020.
At the same time, BTC whales are sending their BTC holdings from spot exchanges to derivatives platforms, indicating that they are building up their positions. A recent report from the National Bureau of Economic Research (NBER) shows that the 1,000 largest investors control roughly 3 million BTC or 15.9% of circulating Bitcoin. The subsequent 9,000-largest investors hold approximately 2 million BTC combined, or 10.6% of circulating Bitcoin.
In other news, the U.S. government is preparing to auction 4.94 BTC worth over $300,000 in the next few days. The auction, organized by GSA Auctions, the federal government’s online clearinghouse for surplus, will auction off the BTC in five different lots of 1.5, 1.25, 1, 0.75, and 0.44 BTC.
Following suit, after obtaining approval from Justice Minister Peter Biesenbach, the German state of North Rhine-Westphalia is auctioning 215 confiscated Bitcoins on the Administration of Justice’s official website.
In adoption news, Mastercard (MA) is joining up with Bakkt to support Bitcoin acceptance at any participating bank or merchant within its vast network.
Finally, the VanEck Bitcoin Strategy ETF (XBTF) became the third regulated exchange-traded fund to join the party. The launch didn’t see the same fanfare as the BITO fund, suggesting that the launch of more ETFs might be top-ticking the market, similar to the CME futures launch in 2018.
Whales Of The Week
- October 21: 34,988.933 Bitcoin moved from multiple addresses to an unknown wallet
- October 21: 15,000.000 Bitcoin moved from multiple addresses to Binance
- October 22: 5,000.000 Bitcoin moved from multiple addresses to Xapo
- October 22: 15,099.883 Bitcoin moved between unknown wallets
- October 22: 7,324.141 Bitcoin moved from multiple addresses to an unknown wallet
- October 22: 20,000.000 Bitcoin moved from multiple addresses to Binance
- October 25: 7,730.204 Bitcoin moved between unknown wallets
- October 25: 8,315.059 Bitcoin moved from multiple addresses to an unknown wallet
- October 26: 6,085.927 Bitcoin moved between unknown wallets
The Technical Take
After reaching overbought levels across many technical momentum indicators and oscillators, Bitcoin prices are on the retreat, with the BTCUSD hovering just around $59,000.
Looking at comparative performance, Bitcoin’s 10.8% loss over the last week was outpaced by ADAUSD’s 14.8% slump, as Ethereum managed to outperform peers with a more modest 4.6% slide.
The ongoing pullback in BTCUSD may soon reverse, though, after falling through the key $60,000 psychological level. While the pair is currently trending lower in an equidistant channel formation on the 4-hour chart and nearing the lower channel line, the Relative Strength Index (RSI) and Stochastic Oscillator are both nearing oversold territory, potentially indicating a trend resumption entry point.
A channel-based breakout to the upside is possible if the RSI and Stochastic Oscillator turn higher, but will involve BTCUSD topping the upper channel line on higher than average trading volume.
In the meantime, a BTCUSD correction as deep as $50,000, which corresponds with the 38.2 Fibonacci level, could materialize and be in line with a technical pullback without nullifying the prevailing upward trend in prices.
The key support levels to monitor include $57,350, the 61.8 Fibonacci level at $56,550, and $55,350. On the upside, the $60,000 psychological level stands out as the main resistance to watch ahead of any BTCUSD reversal higher towards $61,500, $63,700, and all-time highs.
Disclosure: At the time of publication, Reuben Jackson did not have a position in any of the securities mentioned in this article.
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