Bitcoin’s price continues to show strength, and it’s trading very close to the all-time highs, with an intraday high at around $64,600 (on Bitstamp) at the time of this writing.
The spot volume has been increasing for days, which is a sign of strength. The BTC price action has been impressive on the day the futures-backed BTC ETF started trading. However, it’s important to remain cautious in the near term as the open interest continues to increase – currently sitting at $14.4 billion. The estimated leverage ratio also remains elevated, although the funding rates have gone down to neutral.
Technical Indicators of the Bitcoin Price
Bitcoin accelerated to the upside as soon as the price closed above the range between $57,100 and $58,300, which was previously a heavy technical and on-chain resistance level. The mid- to long-term momentum indicators are decisively bullish and suggest significant upside in the coming weeks and months.
The Wyckoff Accumulation has finally entered its Phase E Mark Up. It’s worth noting that September’s initial breakout above $52.9K turned out to be a fakeout and led to massive liquidations, causing a drop to $39.6K. This formed the “last point of support,” a higher low.
BTC’s price is now attempting to complete a third consecutive weekly close above $52,900 and to head deeper into Phase E. It’s important to keep in mind that this phase will likely have shakeout, but the large operators are more likely to use the dips as opportunities to add to their positions.
With the current hype of the BTC ETF, elevated open interest, and relatively high estimated leverage ratio, the risk of a near-term liquidation event is always something to consider. In case of a pullback, the near-term support levels include $61.7K, $60K, $58.3K, $57.1K, and possibly $55K to $52.9K.
On-Chain Analysis of BTC Price
The impressive spot buying caused reserves to drop by nearly 4,650 BTC, sending spot exchange reserves to an all-time low. They’ve been declining for a week now, which is a bullish signal and means that BTC is being sent away from exchanges.
Stablecoin reserves continue to trend lower, which indicates they are flowing back into the market. The stablecoin supply ratio – measuring the BTC market cap to the total stablecoin market – has been trending higher, which is also a historically bullish signal.
The overall Mean Coin Age (MCA) also continues to trend higher, despite the light distribution. We’re seeing some distribution from the 3- to 5-year and the 12- to 18-month cohort, but, overall, other groups are holding, which causes the MCA to rise. We can also expect the trend of distribution to begin either just before or after a new all-time high.
Back in 2013, during the bull market, we saw this trend begin before BTC pushed above the previous cycle high. Long-term holders will distribute at some point and it’s important to track when it begins, as well as the rate of said distribution.
Macro Perspective
The SPX closed above 4488 and 4500 – two key resistance levels, which further suggests that the risk-on trade is returning. This could give BTC a macro tailwind heading into Q4.
The dollar remains below a key technical level and has been trending lower. Meanwhile, money continues to flow out of long-term bonds, which shows that capital rotates back into stocks and potentially towards BTC.
As we reported previously, the earning season is starting, which might reveal certain big purchases of bitcoins on behalf of big companies – this could act as a major catalyst of the bull market.
In general, the bulls are in control, and a potential shakeout is likely to be bought up.
