Key Points
- Bitcoin experienced a 7.96% surge over the past week, reaching July levels of $69k.
- Analysts suggest that market fundamentals indicate a potential correction for Bitcoin in the near term.
Bitcoin’s performance in October has been robust, with significant gains noted. The cryptocurrency started the month on a subdued note but rebounded strongly, recouping previous losses.
From a low of $58867, Bitcoin made a significant upswing, reaching July levels of $69k. At the time of writing, Bitcoin was trading at $69028, marking a 7.96% increase over the past week and a 9.52% gain on monthly charts.
Market Sentiments and Predictions
The recent surge has resulted in a mix of optimism and pessimism among analysts. CryptoQuant analyst Burak Kesmeci, for example, suggested that Bitcoin might be due for a market correction, citing the NVT golden cross.
Kesmeci suggested that Bitcoin’s NVT Golden Cross has entered a hot zone in the short term, implying that a market correction may be imminent before another uptrend is attempted. The NVT Golden Cross reaching the hot zone suggests that Bitcoin’s current value is higher than its network activity justifies, indicating a potential overbought condition.
Bitcoin’s Performance Indicators
Kesmeci observed that the current fundamentals do not support a sustained rally and Bitcoin could drop to meet demand. Key indicators to consider include Bitcoin’s NVT Ratio, which measures network value to transaction. According to CryptoQuant, the NVT ratio has been rising over the past week. This rise implies that Bitcoin is overvalued compared to actual utility and network activity, suggesting that prices are unsustainably high.
Furthermore, Bitcoin’s Stock-to-Flow Ratio has declined over the past week, indicating a rise in supply. An increased availability of Bitcoin tends to turn the market bearish, especially if demand is not growing. Lastly, Bitcoin’s Price DAA divergence has remained negative throughout the past week, suggesting an unsustainable price increase.
In conclusion, despite Bitcoin’s recent surge, market fundamentals suggest that a correction is imminent. The current rally is mostly speculation-driven and not supported by demand. A correction could see Bitcoin drop to the $65872 support level.