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Bitcoin Hits 5-Week High Ahead of Q3 Earnings Season; What’s Next?

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There was no major stimulus announcement, but Bitcoin was still able to hit a five-week high on the first day of the week.

The benchmark cryptocurrency established an intraday high of $11,736 before profit-taking sentiment pushed its exchange rate lower. Its price landed around a concrete support level of $11,500. Entering the Tuesday Asian session, BTC/USD was still lurking near the said price floor.

Bitcoin traders envision the price inside an apprehensively convincing Ascending Channel. Source: TradingView.com

The sudden spike in the Bitcoin price came as a part of a five-day winning streak.

Traders increased their exposure in the cryptocurrency on hopes that the US Congress would finalize the second COVID-19 stimulus package. They also long BTC/USD after Square, a multinational payment company, showed $50 million worth of BTC in their balance sheets – almost 1 percent of their total wealth.

But the effect of Square announcement was wearing off as Bitcoin attempted to close above $11,500 throughout this weekend. Simultaneously, the stimulus deal witnessed another delay after House Democratic Speaker Nanci Pelosi rejected the Republicans’ $1.8 trillion relief proposal.

The Square-Stimulus combo reduced Bitcoin’s prospects of moving higher. But the cryptocurrency did, anyway, with catalysts emerging from the US stock market.

Q3 Earnings Season

The upside move above $11,500 in the Bitcoin market coincided with a rally on Wall Street.

All three major indexes climbed higher during the Monday trading session. The S&P 500 ascended by 57.09 points, or 1.6 percent, to 3534.22, logging its second-highest close to this date. Meanwhile, the Dow Jones added 250.62 points, or 0.9 percent, to 28837.52.

The tech-heavy Nasdaq Composite registered its third-highest close with a 2.6 percent rally to 11876.26.

bitcoin, s&p 500, dow jones, nasdaq composite, us dollar index

Bitcoin rose almost in tandem with the Wall Street indexes on Monday. Source: TradingView.com

The synchronous gains in Bitcoin and on Wall Street came right ahead of the third-quarter earnings season. The Wall Street Journal reported that analysts had lifted their estimates throughout the said financial period.

“With the economy continuing to slowly reopen, profits of the large U.S. companies in the flagship stock index are now projected to drop 20 percent from a year earlier in the third quarter,” the paper read. “That is an improvement from the 25 percent decline anticipated at the end of June and the 32 percent drop reported for the second quarter.”

That increased the likelihood of investors holding onto their stock positions. In turn, it reduced selling pressure off Bitcoin, an asset that had in March 2020 became a scapegoat for investors that were looking to offset their stock market losses.

Warning Signs

Furthermore, with US presidential election polls suggesting a clear victory for Joe Biden, investors have started anticipating more monetary support from the government after November 3.

Until then, economists have trimmed their forecasts, which may lead to a period of higher volatility in both the US stock and Bitcoin markets.

FactSet, a firm that polls Wall Street analysts on their predictions for the S&P 500, highlighted risks in the running upside trend. The Connecticut company noted that 184 of the 285 firms listed on the US benchmark index have withdrawn from releasing their financial data and forecasts.

That raises fears of stock overvaluation that would later amount to considerable downside risk. In turn, it would put Bitcoin’s rally in danger of halting or reversing, as well.





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Bitcoin

This Indicator Shows Bitcoin Could Reel to $12,500 Before Rallying Higher

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  • Bitcoin has simply been ranging throughout the past few days, with bulls building a strong base of support within the lower-$13,000 region as bears struggle to gain any momentum
  • This support could help catapult it higher in the near-term, but the slight rejection seen at $13,600 yesterday does indicate that downside could be imminent
  • There is one technical indicator that suggests some downside could be right around the corner
  • One analyst spoke about this in a recent tweet, noting that a decline towards $12,500 might take place before Bitcoin can push higher

Bitcoin has been caught within an unrelenting consolidation phase ever since it lost its momentum after being rejected at $13,800.

This level has historical significance, as it happens to be where the cryptocurrency’s 2019 rally came to a bitter end.

The resistance here, coupled with a sudden surge in the US Dollar’s value, caused it to plunge as low as $12,800 before it found serious support that led it back up to where it is currently trading.

Where it trends in the days and weeks ahead should depend largely on whether or not it can continue trading above $13,000.

One analyst is noting that an indicator suggests that a move to $12,500 may need to occur before it can see any further upside.

Bitcoin Consolidates Following Recent Rejection

At the time of writing, Bitcoin is trading down just over 1% at its current price of $13,250. This is around where it has been trading throughout the past few days.

Earlier this week, BTC rallied as high as $13,800 before it lost its momentum and slid as low as $12,800.

The buying pressure here was intense and nearly instantly sparked a rebound.

It still has a way to go before it is back in firm bull territory, as the overhead resistance it faces is quite intense.

Indicator: Decline Towards $12,500 Could Be Imminent 

While sharing his thoughts on where Bitcoin may trend next, one analyst explained that Bitcoin’s Renko chart suggests a move to $12,500 is in the cards.

“The same BTC structure is present on Renko and we’ve still not had the ‘playout’ for the divergence. Still looking for $12.5k in line with the prior moves to the downside after these strong runs. Traditional markets paving the way,” he explained.

Image Courtesy of Cold Blooded Shiller. Source: BTCUSD on TradingView.

Because altcoins have been bleeding out as Bitcoin consolidates, a potential decline down to $12,500 could spark another bout of capitulation for smaller tokens.

Featured image from Unsplash.
Charts from TradingView.





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Impending pennant breakout sets Bitcoin price back on the path to $14,000

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As the weekend approaches, Bitcoin (BTC) price appears set to close out the month with a remarkably strong performance which has many bulls calling for a new all-time high above $20,000 in the near future. 

Traders attribute these lofty estimates to the fact that BTC appears to have flipped $12,000 to $12,500 to support and barring some unexpected price implosion, Bitcoin is on the path to painting a beautiful monthly candle.

Crypto market weekly price chart. Source: Coin360

Further ‘bullish’ evidence comes from today’s options and futures expiry which saw $450 million of futures open interest expiring as of Oct.28.

According to Cointelegraph contributor Marcel Pechman:

“The most recent options expiry for BTC and Ether really provided nothing surprising. Deribit is back to 137K BTC options versus the 150K open yesterday. Meanwhile, CME has $215 million futures open interest expiring on Oct. 30, but this appears to have had a very minimal impact on price, if any at all. Once again, the phenomenon of the pre and post BTC price drop on the occurrence of CME futures expiries no longer exists. This reaffirms the bull case for the recent run, despite the negative news from Asian exchanges and Tether.”

Currently, BTC is trading above $13.5K, and the 4-hour chart shows the digital asset making higher lows and lower highs as the price pulls into a tighter range.

BTC/USDT 4-hr chart. Source: TradingView

Even as the price holds above the 20-day moving average, it wouldn’t be unexpected to see it range between $13,500 to $12,900 through the weekend and into early next week.

If Bitcoin price is able to push above the pennant trendline at $13,620 and secure a 4-hour close above it, then a renewed push for a new 2020-high above $13,859 is possible.

Currently, as trading volume increases, the moving average convergence divergence indicator shows the MACD has crossed above the signal line (orange) and the histogram shows an increase in momentum. The RSI is also above the midline, just reaching 60, but for the last few days, BTC has met resistance at $13,660.

In the event that BTC loses its current momentum and drops from the pennant below $13,100, there is support at $12,800. Failure to hold at this level opens the door for a retest of the next support at $12,000 and below this $11,500.

Bitcoin daily price chart. Source: Coin360

From a bird’s-eye-view Bitcoin’s current price action is very strong and the digital asset is clearly in a strong uptrend with room to run higher. The same cannot be said for altcoins which have taken an absolute pummeling throughout this week. At the time of writing Ether (ETH) price is down by 5.8% as the top altcoin struggles to reclaim $$400 as support. Chainlink (LINK) has dropped 6.74% and Binance Coin has lost 6.10%.

According to CoinMarketCap, the overall cryptocurrency market cap now stands at $396.6 billion and Bitcoin’s dominance rate is 63.5%.