For the first time in history, we saw Bitcoin closing a weekly candle above $60K. This happened on the back of reports that the first futures-backed BTC ETF would be officially listed, pending no further interference by the SEC.
It’s also important to note that the open interest, the funding rates, as well as the estimated leverage ratio all went up in the interim. This signals that it’s necessary to be cautious, especially given the possibility for the Bitcoin ETF announcement to turn into a “sell-the-news” event.
Near-Term Caution for the Bitcoin Price
Bitcoin rallied upwards of 100% from the lows below $30K a couple of months back – this is a relatively short period of time and a considerable increase. This also increases the leverage and presents a signal for caution, at least in the short term. Coupled with a risk of “sell-the-news” event, it’s important to remain vigilant.
Before the weekly close, BTC saw a 6.6% shake-out and liquidated roughly around $600 million worth of leveraged positions. The price recovered immediately and the open interest went back up again.
Now, it’s important to wait for the launch of the abovementioned futures-backed BTC ETF and see how the cryptocurrency will perform and react to the event. The earning season is also starting this week, turning it into a worthwhile consideration to keep in mind.
Technical Outlook fo BTC’s Price
There are many ways for a technical breakout above the all-time highs, and the mid to long-term charts remain particularly bullish.
One of the options is for the price to form a cup-and-handle pattern with a breakout above $64.8K followed by a bullish backtest of the support, another liquidation event creating a higher low and then a breakout to new all-time highs.
It would be very good to see another weekly candle close above the range between $57.1K to $58.3K previously provided a level of serious technical and on-chain resistance and then follow through higher for validation. In case of a liquidation event, key support is now between $57.1K to $52.9K, a level the bulls must protect.
On-Chain Outlook
The spot reserves on exchanges are trending lower for the past few days. This is a bullish sign, especially given that they were trending higher as bitcoin’s price was testing the resistance between $55K and $57.1K. That’s when we saw light distribution as well.
We can expect long-term holders (LTHs) and miners to start distributing before or slightly after the price creates a new all-time high. It’s very important to monitor their behavior throughout this time.
At the moment, there are no signs of aggressive distribution but the bigger risk would be an elevated open interest and estimated leverage ratio.
Conclusion
It appears that bulls are currently in control of the overall trend. Regardless if there’s a shakeout or not, we can expect the bullish continuation and new all-time highs towards the end of this month or in November.
From a macro perspective, the risk-on trade seems to be resuming, which is a considerable catalyst that could provide an additional tailwind for BTC’s price. This should also cause increased volatility in the next months, as Bitcoin potentially enters price discovery.
Fundamental metrics and those based on valuation still suggest that BTC is undervalued, giving merit to even further upside remaining in the current bull run.
As we enter earnings season, it’s important to keep an eye on big companies announcing BTC purchases. This would be the next major catalyst for the current bull market and it could set off a new wave of capital entering the bitcoin market.
A near-term shakeout is possible, but it should be followed by a bullish continuation.
