5 factors Bitcoin investors should watch this week | 1.11

Bitcoin started the new week with volatility and its first monthly close above $60,000. So what's next?

5 factors Bitcoin investors should watch this week | 1.11

Bitcoin ( BTC ) started the new week with volatility and its first monthly close above $60k. So what’s next?

Theblockchainnew took a look at five factors that could influence Bitcoin price action in the coming days.

Monthly closing over $60k

Whatever awaits Bitcoin this week, market participants are starting to celebrate the highest monthly close in Bitcoin’s history.

For the month of November, the target to be exceeded was not 60 thousand dollars, but 61 thousand dollars.

Bitcoin Price Index:  How Much Is 1 Bitcoin? (BTC USDT)

Although Bitcoin only showed upward movement in short timeframes, there was a slight fluctuation to the downside at the weekly and monthly close on Sunday, and even though Bitcoin slumped to $59,500, it passed $62K a few hours later.

Perhaps the only issue that worried market participants was that PlanB’s worst-case forecast for the October close was a close below $63K.

For the stock-to-flow model to maintain its historical accuracy, Bitcoin needs to close November at $98K.

PlanB itself seems happy with the results.

Source Tradingview
1-month candlestick chart of BTC/USD (Bitstamp). Source: TradingView

The difficulty is about to increase for the eighth time

Those who really want to see something “only rising” can take a look at the fundamentals of the Bitcoin network.

Mining difficulty is on track to increase for the eighth consecutive week this week. Such a situation has not happened since 2018.

The mining difficulty, reflecting the increasingly competitive mining space, fully compensated for the losses incurred by China in May.

The difficulty, which is expected to rise to 21.89 trillion this week, could get as close as 3 trillion to its all-time high.

The hash rate  , which measures the processing power allocated to mining,  tells a similar story.

While it’s not possible to measure it exactly, estimates suggest that the hash rate is also heading towards the record.

The hash rate, which was measured at 159 EH/s this week, is very close to the record hash rate of 180 EH/s seen in April.

Graph of Bitcoin's
Graph of Bitcoin’s 7-day average hash rate. Source: Blockchain

HODLers keep accumulating

September offered Bitcoin investors an excellent “buy from the bottom” opportunity, and October saw short-term corrections.

Did you buy from the bottom? If you do, you’ve joined the growing number of long-term savers, whose faith in cryptocurrencies only increased in October.

As the giant cryptocurrency exchange Kraken noted in its research last week , Bitcoin’s rise to its all-time high of $67,100 failed to persuade investors to sell.

“Long-term savers used this as a savings opportunity, unaffected by the correction in the past month. This trend did not change when Bitcoin crossed $67,000 in October,” he said.

“In other words, the supply shock that long-term savers caused by buying last month only got stronger this month.”

According to the report, the price performance of long-term savers rather than short-term speculators is driving the price performance in the last quarter.

Analyst Willy Woo said, “Miners have been accumulators (and buyers) of BTC since 2020. It’s a huge behavioral change,”  he said .

“The miners have not shown a continuous accumulation behavior since 2009-2014.”

1-hop chart of the supply held by Bitcoin miners. Source: Kraken

BTC reserve on exchanges bottomed out

The stock market situation on the supply shock paints a hopeless picture for Bitcoin bears.

According to the latest data from on- chain analytics resource Glassnode , exchanges’ BTC reserves have hit  the lowest level in the past three years.

Bitcoin was in a bear market at the time, bottoming out at $3,100 in December of that year.

Although the price action has changed drastically since then, the stock market’s reserves continue to decline. All of this points to a potential supply shock if demand increases.

Cryptocurrency exchanges currently hold 2.47 million BTC. This amount was over 3.1 million in April 2020.

Reserve chart of bitcoin exchanges. Source: Glassnode/ Twitter

Markets await Fed announcement

The first week of November could lead to familiar trends appearing in traditional markets and influencing crypto markets in a “traditional way”.

The US Federal Reserve will make statements on coronavirus management on Tuesdays and Wednesdays. Markets are waiting for more clues that the Fed will reduce asset purchases.

With inflation climbing around the world, Fed Chairman Jerome Powell acknowledged in his previous comments that the supply chain crisis will likely continue into the next year.

Kathy Jones, Chief Fixed Income Strategist for Charles Schwab,  told Yahoo Finance last week, “I think the Fed is determined to start reducing asset purchases immediately. “We expect them to make an announcement next week and get started soon,” he said.

“The real debate here is how fast the Fed will move towards raising interest rates. The market expects two rate hikes in 2022 and 2023.”

Such a situation could increase the attractiveness of Bitcoin, which is a deflationary asset with limited supply and is inherently deflationary.

Existing Bitcoin investment products and newly launched futures-based exchange-traded funds (ETFs) are demonstrating increased demand with institutional investment influx.

Managed assets and BTC/USD chart of the Purpose Bitcoin ETF. Source: Bybt

Samuel Hegi

Samuel Hegi , who first became acquainted with blockchain technology in 2014, is highly critical of blockchain technology. Samuel Hegi, a journalism graduate from the University of Brighton he is the editor-in-chief of the news portal. Blockchain is love.

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