Key Points
- Bitcoin [BTC] shows signs of a potential short-term bearish trend despite optimistic market expectations.
- Increased BTC sell pressure and decreased demand in derivatives are contributing factors to this trend.
Despite the market’s hopeful outlook for Bitcoin [BTC] in October, various indicators suggest a possible bearish trend in the short term.
Factors Influencing Bitcoin’s Performance
Factors such as lower interest rates, historical performance, and BTC’s recent bullish trend have fueled investor optimism. However, analyses from CryptoQuant and other sources suggest a different outcome.
CryptoQuant’s analysis, based on BTC’s NVT golden cross and its recent push above 2.2, suggests that BTC’s recent highs could mark its latest local high. Another analysis points to a potential struggle for Bitcoin to maintain its bullish momentum in October, based on historical performance.
In 2019, Bitcoin rallied for two weeks post a major rate cut, followed by two months of bearish performance. These observations hint at potential sell pressure on Bitcoin, which is already visible in BTC’s recent performance.
Increased Bitcoin Sell Pressure
Bitcoin has already surrendered some of its September gains, indicating profit-taking by some investors. On 1 October, Bitcoin threatened to dip below $60,000 and is currently on track to fall to the $59,580 and $57,940 price range, as per the Fibonacci retracement.
The pullback suggests that the post-rate cut announcement hype has subsided. This brings up questions about whether demand will resume if the price retests the Fibonacci level.
On-chain data supports the bearish outcome. For example, Bitcoin exchange reserves have been on a general downtrend over the past few months, with slight upticks. The uptick at the end of September confirms that some coins have moved from private wallets to exchanges, usually a sign of increased sell pressure.
This uptick in exchange reserves coincides with a decrease in Bitcoin open interest since 26th September, indicating a slowdown in demand for Bitcoin in the derivatives segment.
These findings suggest a significant possibility of increased BTC sell pressure in the short term. However, the exact timeline remains unclear. The current situation could be a brief pullback or a longer one, depending on how events unfold.