Bitcoin (BTC) is at its best, almost literally. It heads into a new week with a drop of less than 15% from its all-time highs.
An iconic mix of factors has provided the basis for the Q4 final, which analysts now compare to the bull runs in 2013 and 2017.
Bitcoin, which is now decoupled from macro-market movements and the United States Dollar, is once more looking like the gold alternative investors desire — while altcoins slide away.
Cointelegraph looks at the future of Bitcoin price action in the coming days, even though “Uptober,” is only in its second week.
ltcoins trail “Bitcoin season”.
The week is starting to look bright for Bitcoin traders. Last week’s four-month highs have been beaten.
A quiet weekend was able to preserve previous gains, with the exception of Bitstamp’s curious anomaly, which saw a momentary drop in value to $51,000.
BTC price action seems to be preparing for an attack on the final resistance below $64,500 highs. Market participants are delighted by this apparent strategy.
This scenario is still valid on #Bitcoin. pic.twitter.com/Xw2GMZEKS2
— Michael van de Poppe (@CryptoMichNL) October 11, 2021
Bitcoin’s strength is not the only thing that matters. It could also help to preserve Bitcoin’s upside in the near future.
Altcoins are performing poorly, which leads to the prediction of a “Bitcoin Season” before alt seasons reemerge later. Cointelegraph reported that this could not happen until 2022.
$BTC dom vs #ALTSEASON Alts bleeding out again as we speak, most down around 10-20% vs the BTC pair since this post Each 1% = roughly a 10% drop vs BTC ratios Volatile week ahead w/etf not conductive to high alt exposure Remember long alts is equivalent to short btc short vol https://t.co/hWQulj6Qo7 pic.twitter.com/nv11k4IUHZ
— Pentoshi Won’t Dm You. Dm’s are a hateful thing. DM’s are frauds (@Pentosh1) October 10, 20,21
This is especially evident in Ether (ETH), which is the largest altcoin market capitalization and now at its lowest level against BTC since August 1.
“ETH/BTC breaking down, while Bitcoin consolidating,” Cointelegraph contributor Michael van de Poppe summarized late Sunday.
“I assume Bitcoin will continue, and altcoins have not yet gotten the game.”
ETH/BTC 1-day candle chart (Bitstamp). Source: TradingView
Van de Poppe nevertheless added a contentious peak price for ETH/USD up to $20,000 with a Q1 2019 timeframe.
“You are here”
When it comes to BTC price action, it takes a lot to please Bitcoiners.
Any long-time Crypto Twitter user will know that even the most surprising moves in BTC/USD are only good for sentiment until investors demand more.
Last week was no exception. Bitcoin gained $3,000 in a matter of minutes and $5,000 in an hour. It reached four-month highs. However, commentators complained that they were “bored” days later.
It is easy to feel the weight of Bitcoin’s expectations in 2021, the year following the third halving and thus the deadline for a halving-cycle price top.
It is not clear how much the BTC price will rise. Some argue that $300,000.000 or $200,000 is “programmed”. Others are losing faith and claiming that this cycle is unlike the previous two.
However, comparing post-halving years seems to give an almost unanimous verdict about Bitcoin’s prospects — the main rise towards a blow-off peak has yet to start.
For example, September’s plunge below $40,000 echoes similar events in 2017 and 2013. These were the “ultimate bear trap” and occurred right before liftoff.
You are here. #Bitcoin pic.twitter.com/syDyfsmlV1
— TechDev (@TechDev_52) October 9, 2021
Uncanny similarities can also be found by overlaying the 2021 price performance on that of 2017.
TechDev’s popular trading account points out that this year’s peak is an order of magnitude higher than the previous. The analyst says that, technical or not, a six-figure peak is almost logically certain.
These similarities are not new. Various sources show that prices will continue to conform to pre-halving years through 2021.
One day, $31 billion settled
During the bull run 2020-2021, a lot of attention was paid to Bitcoin’s network foundations. But there’s more.
New data suggests that Bitcoin’s other aspects are also setting new records, with the difficulty and hash rate both nearing their all-time highs.
This week it’s all about scaling and network capacity — all on-chain before the Lightning Network is even considered.
Kevin Rooke, an analyst, noted that Bitcoin’s value reached $30 billion in a single day last Wednesday.
“$31 billion. He said that this is how much Bitcoin blockchain value was settled in one day this week.
“It’s an all-time Bitcoin high and a 40x increase in settlement value since 2020.”
Chart of Bitcoin daily transaction volume. Source: Kevin Rooke/Twitter
This remarkable transformation was accompanied by a steady increase in cost — Bitcoin transaction costs remain low.
Questions about GBTC
This week, the countdown to a decision regarding a Bitcoin exchange-traded funds (ETFs) is still exhilarating. But, is an approval already “priced” in?
The deadline for deciding fate of spot-based Bitcoin ETFs has been extended by the Securities and Exchange Commission to November. However, futures-backed ETF products will be able to see either a “yes or no” decision in this month.
These have drawn praise and criticism equally, but there is still uncertainty about the fate of existing institutional Bitcoin instruments such as the Grayscale Bitcoin Trust (GBTC), which is a market heavyweight.
GBTC trades at a substantial discount to spot despite a rapidly increasing Bitcoin price. This trend has only intensified in recent weeks.
GBTC Premium chart. Source: Bybt
Analysts argue that ETFs will attract more capital if they are approved by Grayscale, which would be long before Grayscale converts its funds to ETFs.
Lyn Alden, macro analyst, believes that the chances of the “Grayscale premium”, even returning to neutral territory are slim.
She said, “I doubt it,” but she admitted that it was possible if there were a large bitcoin rally and an ETF at the time.”
Bitcoin’s performance was better than the base case I wrote about in 2020. This is partly due to temporary extra demand from the GBTC neutral arbitrage trading which brought forward temporary additional demand. It’s now on a more sustainable track, thanks to HODLer accumulation. Let’s hope it looks good. https://t.co/RlPWBZYtNE pic.twitter.com/B99jQ1eIAt
— Lyn Alden (@LynAldenContact) October 9, 2021
Alden was updating research that she did last year, in which she highlighted the role played by GBTC in Bitcoin’s price action. She said that the relative absence of this phenomenon is a positive sign for the sustainability and performance of BTC prices.
Beware of market instability if you are concerned about the return to four month highs.
Related: Top 5 Cryptocurrencies to Watch This Week: BTC. DOT. UNI. LINK. XMR.
The latest BTC price rise is firmly rooted to sustainable growth, according to the Crypto Fear & Greed Index sentiment gauge.
This is in contrast to the norm: moves to highs and especially near all time highs tend to see the Index reach “extreme gluttony”. This suggests an unsustainable market that’s easy to destabilize and prompts a price correction.
Fear & Greed has a score of 71/100, which is close to $57,000. This is “greed” instead of “extreme greed”, and still far below the 95/100 mark.
As of Oct. 11, the Crypto Fear & Greed Index has been updated. Alternative.me
However, October has seen major shifts in sentiment. Two weeks ago, for instance, the Index was at 20/100, which is “extreme fear”