Financial markets saw a broad sell-off on Wednesday. On the macroeconomic front, driven by strong U.S. economic indicators and concerns about the deficit, the 10-year U.S. Treasury yield climbed to 4.25%, the highest level since July, while the U.S. dollar index rose to a high for the year, putting further pressure on risk assets including cryptocurrencies.
At the close of U.S. stocks, major indexes fell across the board, with the S&P, Dow Jones and Nasdaq falling 0.92%, 0.96% and 1.60%, respectively.
According to Bitpush data, Bitcoin fell below the $67,000 support level in the early hours of Wednesday morning, falling to a low of $65,160 before bulls successfully pushed it back above $66,000. As of press time, Bitcoin is trading at $66,484, down 1.82% in the past 24 hours.
The altcoin market was weak, with the top 200 tokens by market cap falling more than rising on the day.
The biggest gainer was Jupiter (JUP), up 5.5%, followed by ZetaChain (ZETA) and UMA (UMA), up 4.4% and 4%, respectively. First Neiro (NEIRO) was the biggest loser, down 15%, while Baby Doge Coin (BabyDoge) and Safe (SAFE) fell 10%.
The current overall market value of cryptocurrencies is $2.28 trillion, with Bitcoin accounting for 57.5% of the market share.
Shows weakness in the short term, but is expected to hit new highs
Bitcoin prices have risen 18% in the past few weeks, climbing from $58,845 on October 9 to a high of $69,495 on Monday, but the recent gains have weakened, accompanied by stablecoin trading volumes that have been stagnant since the end of September. The Fear and Greed Index has soared to 72, the highest greed level since July, and analysts believe that Bitcoin will usher in a correction and consolidation period.
“As Bitcoin attempts to reach the $70,000 mark, on-chain indicators may suggest that the market is a bit overheated. Despite optimistic ETF inflows, a short-term top is the more likely scenario at this point,” Copper Research analysts wrote.
“Bitcoin on-chain movement can provide information on how many addresses are in profit based on the price Bitcoin has moved and the current price,” they said. “Patterns emerge, and it is clear that when there is a big move — where the profitability of addresses rises from around 75% to 98% (the current ratio) — the market starts to see selling pressure as investors hold onto unrealized gains. This could signal a short-term top in Bitcoin ahead of the U.S. election.”
Bullish sentiment in the derivatives market has recovered somewhat, but it is still insufficient. Data from Copper Research shows that although the three-month rolling basis trading has increased, it is still far below the high point earlier this year. This shows that the market's expectations for future prices are relatively stable, but the overall trading activity is not high.
In another report from Bernstein, its analysts said that the price of Bitcoin could be as high as $200,000 by the end of 2025, calling it a "conservative forecast."
“Currently, ten global asset managers hold approximately $60 billion in regulated [ETFs], compared to $12 billion in September 2022,” the report states. “By the end of 2024, we expect Wall Street to replace Satoshi as the largest Bitcoin wallet.”
As for BTC’s short-term price, market analyst Rekt Capital noted that “Bitcoin is now in the process of retesting the top of the channel (black line in the chart below) as support.”
Specifically, the top of the channel represents a price point of approximately $66,200. BTC tested the late September high in its recent downtrend, so a weekly close above the top of the channel at approximately $66,200 is needed to confirm upward momentum.
Michaël van de Poppe, founder of MN Consultancy, expressed optimism that Wednesday’s pullback to $65,000 could mark the low point of this correction, saying on the X platform: “Indeed, Bitcoin fell to the $65,000 area and quickly reversed upwards. I think this minor correction is coming to an end. The macroeconomic narrative begins, including the election, and it’s time to see these bond yields fall and the cryptocurrency market boom.”
Fairlead Strategies, a U.S. market research firm, took a more cautious view. The company said in a report that Bitcoin triggered a counter-trend sell signal last weekend, which could cause Bitcoin to consolidate around current price levels for a few weeks. Fairlead said: "Bitcoin is in a testing area and is testing the trendline resistance around $677,000. Support remains around $59,800, and resistance is at $67,700 and $73,800."
