BITCOIN NOT AS DYNAMIC IN NOVEMBER AS IT WAS IN OCTOBER
This month so far Bitcoin (BTC/USDT) hasn’t performed as well as it did in October during which the largest crypto by market cap ($1.22T with BTC domination at 41.2%) increased by whooping 40%. By comparison in the first 13 days of November the asset has only grown by modest 4% leaving quite a large portion of investors a little puzzled if not disappointed. In previous years November saw, on average, some of the greatest yields, so understandably the situation right now could automatically cause many of the BTC enthusiasts to ask themselves if the current bull cycle is coming to its end soon.. That would naturally correspond with the previous bull cycles’ epilogues as well as with predictions from many experts, media influencers and market analysts but in our opinion it’s a bit early to be worried.
There might be other factors causing the current period of a cool-off and in fact, the Bitcoin World did receive quite a lot of negative news that could explain why we haven’t seen the widely expected gains over the last two weeks. First and foremost, just like the cryptomarkets, the S&P 500 had a bit of a dip starting last Monday due to a return of the China FUD when the communist state’s largest real estate developer faced their biggest interest payment test to date, the company then reportedly defaulted on its debt only to seemingly make last-minute tranfers totalling the overdue $148M the very next day.
This red flag is not going to go away and that’s the one and only thing that we can be certain of as far as Evergrande is concerned. In addition to that, the already infamous and highly controversial Infrastructure Bill was passed by the US Senate and sent to the POTUS Joe Biden who is obviously expected to sign the legislation. Even more FUD on its way next week. Another bad piece of news broke this past Friday when, after last month’s debut of the first funds linked to Futures of the cryptocurrency, the SEC ultimately rejected a proposal from VanEck for an ETF that would directly hold Bitcoin. Oh well, that’s it for the problematic news, allow us to move on to BTC’s on-chain data then.
EXTREMELY LOW TRANSACTION FEES & SOME ON-CHAIN DATA
Let’s start by saying that current transaction fees for sending BTC tokens are incredibly low with a median of $3.4 compared to the peak readings at $62 on the 21st of April. What’s worth remembering is that at the height of the previous bull cycle, which concluded in December 2017, an average cost of a BTC transfer was $53, and that is our first green flag for the ongoing uptrend to continue in the coming weeks. Taking into consideration the asset’s record prices this month, at least such low fees won’t deter a proverbial ‘average Joe’ from putting his money into the token, and that always is an important catalyst.
As far as the latest BTC balance on all exchanges, November has so far seen a very sharp decline and presently there are only just 2.4 million coins potentially available for sale making it the lowest count since September 2018! Now let’s finally check if new investors have been keen on purchasing more coins by analyzing BTC supply held by addresses with 0.1 to 1 Bitcoin first. According to glassnode.com the number of these relatively small wallets has been on the rise since the very beginning of October.
Let us not forget that the cryptomarket whales need these smallest investors to get greedy (by the way, latest Fear & Greed Index reading at 74/100 signalling Greed compared to S&P 500 F&G Index at 83/100) and start FOMOing IN en masse in order to distribute their BTC to them eventually without immediately dropping the price in a drastic fashion. As for the whale wallets, which hold between 100 and 10k BTC, more good news- these market movers are not yet showing any intentions to end the current bull cycle any time soon, in fact they seem happy HODLing for now.
Turning to the daily chart we immediately notice an ascending trendline originating right from the very bottom of a three month long correction that started when BTC (BTC/USDT) hit its all-time high of $64.8 back on the 14th of April. The trendline has been nicely respected as rising support with more than 10 contacts with the price action, in fact the value of the coin fell below this purple line only once, and that occured due to the first China Evergrande FUD back in September leading to a brutal decrease as deep as -16.5% (I promise not to mention this again… in this article at least.)
At the moment the coin is trading at approximately $64k with the bulls fighting to keep the price above the very crucial area of support around the April’s ATH mark, which also was a level of resistance several times this past October. Thankfully there is a bit of a promising confluence between the ascending trendline and the crucial area of support around $64-64.8k, so the bulls should theoretically have the upper hand in this battle. Still, if we do happen to lose this level, we will have another huge chance to stop the potential farther decline at exactly 60k, not only a psychologically vital price, but also a level that was tested like eleven or twelve times over the recent month and additionally played a pivotal role during the previous rally that ended up with ATH nearly seven months ago.
Last 5 days have seen a whole lot of indecision in the market that created an unusual ‘collection’ of 5 bearish spinning top candlesticks in a row indicating a small local correction within a long term bullish run, but the silver lining is that it could be considered as healthy because the Fear & Greed Index had started looking dangerously overheated at 84/10 at the beginning of this week. The most likely scenario for the next week is, in our opinion, the continuation of the ongoing macro bull cycle. A 10 to 15% pull-back should not come as a surprise at some point since it’s been a while since Bitcoin had one.
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