A “significant” shift in Bitcoin hodler sentiment provides the backdrop to BTC price action clinging to its highest levels in 18 months.
Bitcoin (BTC) begins the second week of November still holding strong near 18-month highs — where might BTC price moves head next?
The largest cryptocurrency has fought off sell pressure to seal another impressive weekly close.
In what analysis is increasingly describing as a change in sentiment, Bitcoin and altcoins alike are refusing to retrace gains which first kicked in over one month ago.
Amid a torrid macroeconomic environment, crypto is striking out on its own where assets such as stocks are feeling the pressure, and bulls are hopeful that the upside is not yet over.
Plenty of potential volatility triggers lie in store in the coming week. With inflation still on everyone’s mind, the United States Federal Reserve will deliver a round of remarks as part of planned engagements, with Chair Jerome Powell among the speakers.
A short trading week on Wall Street will mean an extended period of “out-of-hours” trading next week, allowing crypto to potentially see more volatile moves into the next weekly close.
Behind the scenes, Bitcoin is technically as resilient as BTC price action suggests — hash rate and difficulty, already at all-time highs, are due to add to their record tally in the coming days.
Cointelegraph delves deeper into these issues and more in the weekly overview of what to expect when it comes to Bitcoin market activity in the short term and beyond.
Bitcoin bulls refuse to give an inch
Like last week, Bitcoin did not disappoint with the weekly candle close into Nov. 6.
At just over $35,000, the close in fact set a new 18-month high, and preceded a bout of volatility which saw a brief trip to just below the $36,000 mark, data from Cointelegraph Markets Pro and TradingView shows.
BTC/USD 1-week chart. Source: TradingView
A fierce tug-of-war between buyers and sellers means that current resistance levels are proving hard to overcome, while liquidations mounted at the close.
As noted by popular trader Skew, the hourly chart suggests that “both sides of the book were swept” on exchanges.
On Nov. 5, Skew additionally showed increasing open interest (OI) on largest global exchange Binance — a key prelude to volatility in recent weeks.
OI and perp delta here is literally people longing LTF highs and shorting LTF lows
OI continues to ramp up on binance ~ important for early next week pic.twitter.com/2bfc9Q2SwG
— Skew Δ (@52kskew) November 5, 2023
Continuing, fellow trader Daan Crypto Trades referenced funding rate data showing longs paying shorts.
“There’s still quite a lot of positions that opened during the weekend so I’d expect some further volatility after the futures open and on Monday to take those out (on both sides),” part of X commentary read at the time.
As Cointelegraph reported, bets among market participants include $40,000 as a popular BTC price target. The timing is up for debate, but predictions for the end of 2023 revolve around even higher levels.
For the meantime, however, more conservative approaches remain. Among them is popular trader Crypto Tony, who over the weekend told X subscribers not to bet on bulls sweeping through resistance.
“I am only short if we lose that support zone at $34,100, and will close my current long position if we lose $33,000,” he wrote, updating his current trading strategy.
“I would not recommend longing here into resistance at all.”
Fed speakers lead macro week
With a break from U.S. macroeconomic data prints this week, attention is once more on the Fed as a source of market volatility.
Various speaking engagements over the week prior to the Veterans Day holiday on Nov. 10 will see officials including Chair Powell take to the stage.
The timing is perhaps more noteworthy than the speeches themselves — the Fed continued a pause in interest rate hikes last week, this despite the data showing inflation beating expectations.
Previous comments have directed markets away from expecting a pivot in rates policy until well into next year. Per data from CME Group’s FedWatch Tool, bets for the outcome of the next rates decision, due in just over one month, are for a repeat pause.
Fed target rate probabilities chart. Source: CME Group
“All attention remains on the Fed,” financial commentary resource The Kobeissi Letter wrote in X comments on the upcoming macro diary.
Key Events This Week:
1. Fed Chair Powell Speaks – Wednesday
2. Initial Jobless Claims – Thursday
3. Fed Chair Powell Speaks – Thursday
4. Consumer Sentiment data – Friday
5. ~10% of S&P 500 reports earnings this week
6. Total of 12 Fed speaker events
All attention remains…
— The Kobeissi Letter (@KobeissiLetter) November 5, 2023
Kobeissi added that volatility may continue in the coming days on the back of turbulence on bond markets. Stocks also saw notable changes last week, with the S&P 500 making an abrupt about turn after dropping through the second half of October.
Continuing, investment research platform Game of Trades suggested that “major economic volatility” is on the horizon thanks to a rare contraction in U.S. consumer credit.
“This has happened ONLY 3 times in the last 75 years,” it noted, referring to savings as a percentage of U.S. national income.
The other two occasions coincided with the 2008 Global Financial Crisis and March 2020 COVID-19 crash.
This has happened ONLY 3 times in the last 75 years
Savings as a % of national income is now contracting
The previous 2 contractions coincided with the:
– 2008 Financial Crisis
– 2020 Pandemic
High interest rate + high debt environment is a strong headwind for the consumer… pic.twitter.com/T7EXvBSaMT
— Game of Trades (@GameofTrades_) November 5, 2023
Hash rate, difficulty propelled to new all-time highs
It feels as if Bitcoin network fundamentals’ march higher is truly relentless after this year’s gains.
Hash rate and mining difficulty have cancelled out every comedown on the road to current all-time highs, and the upcoming adjustment will cement those levels.
Difficulty is slated to increase by another 2.4% on Nov. 12, taking its tally to nearly 64 trillion for the first time in Bitcoin’s history, per data from monitoring resource BTC.com.
Bitcoin network fundamentals overview (screenshot). Source: BTC.com
Hash rate, while more fluid and hard to measure accurately, has nonetheless made its trend obvious in recent months.
As noted by James van Straten, research and data analyst at crypto insights firm CryptoSlate, last week was especially significant for hash rate — the estimated combined processing power dedicated to the network by miners.
Yesterday, saw the single biggest day in #Bitcoin hash rate history, 521 eh/s.
— James V. Straten (@jimmyvs24) November 5, 2023
As Cointelegraph reported, one theory which calls for the trend to continue into next year’s block subsidy halving revolves around miners’ own goals.
In an interview in September, Filbfilb, co-founder of trading suite DecenTrader, argued that miners would want to up their BTC retention prior to the halving cutting their BTC reward per block by 50%.
By the time of the halving itself, however, BTC/USD could trade at $46,000 as a result, he suggested.
Exchange flow gap reaches second-highest levels
As crypto markets come back to life, profitability conditions among Bitcoin hodlers are changing.
As Cointelegraph reported, the initial return above $30,000 saw the BTC spot price head above the acquisition cost of various more recent investor cohorts.
Now, signs of change are visible on exchanges, with inflows taking a back seat and withdrawals nearing year-to-date highs.
For Van Straten, the phenomenon marks a “a significant shift in the Bitcoin exchange flow.”
“A renewed momentum in Bitcoin withdrawals is evident, with over 61,000 BTC recently withdrawn, a substantial surge from the year-to-date low of nearly 43,000 BTC,” he wrote in CryptoSlate analysis on Nov. 3.
“This uptick suggests an increasing preference for investors to hold their Bitcoin assets off-exchange, possibly indicating a stronger long-term belief in the value of Bitcoin.”
He added that the gap between exchange deposit and withdrawal volume in BTC terms had reached its second-largest value ever — a “remarkable” 10,000 BTC, per data from on-chain analytics firm Glassnode.
“This differential is only shadowed by the FTX collapse aftermath, which witnessed an overwhelming peak of over 80,000 BTC withdrawn,” the analysis concluded.
“These trends could suggest a shift in investor sentiment, with more investors seemingly opting to hold their assets long-term rather than seeking immediate liquidity on exchanges.”Bitcoin exchange flow data chart. Source: James Van Straten/X
Glassnode also shows aggregate capital inflows hitting year-to-date highs — an event described by popular social media trader and analyst Ali as representing “strong investor confidence.”
A lot of capital is flowing into #crypto right now, signaling strong investor confidence.
In fact, we spotted nearly $10.97 billion in positive capital inflows, the highest level in 2023! pic.twitter.com/XfXz6aaVOK
— Ali (@ali_charts) November 5, 2023
Crypto “fear” hits post-$69,000 highs
Improving sentiment often contains a double-edged sword in crypto, as the average hodler’s mindset becomes increasingly profit-focused.
This is evidenced by the Crypto Fear & Greed Index — the classic market sentiment indicator which flashes a warning when the market enters phases of irrational exuberance.
Fear & Greed hit 84/100 during Bitcoin’s trip to current all-time highs in November 2021, and as of Nov. 6 is just 10 points off that peak.
At 74/100, the market is already “greedier” than at any point in the past two years. For Crypto Tony, however, there is still leeway for further upside before the sentiment imbalance becomes impossible to ignore.
“I want to see EXTREME GREED before i consider closing some positions,” he told X subscribers about the Index’s readings on Nov. 5, arguing that Ethereum (ETH) should head higher first.
Fear & Greed’s historical extremes have come in at around 95/100, the last time being in February 2021.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.