Volatile outbreaks and positivity are often rare in relation to other market conditions. Therefore, these phases must be analysed very carefully in advance and possible scenarios presented in order to adopt anti-cyclical behaviour and positioning. Only those who can anticipate the market will be successful in the long term!
Thought of the week
Digital Asset News
In recent months, the price of gold has repeatedly reached historic highs, driven by a mixture of geopolitical tensions, inflation and economic uncertainty. On 19 October 2024, gold once again reached an all-time high of around USD 2,722 per troy ounce. At the same time, Bitcoin is experiencing a significant price increase and is approaching its previous all-time high. The developments in both assets raise the question: Why are investors increasingly looking for safe havens, and what does this mean for the market in general? On the one hand, the fall in the US dollar index has made gold more attractive to international investors. On the other hand, the ongoing uncertainty caused by geopolitical crises, such as the conflicts in Ukraine and the Middle East, is driving up demand for the precious metal. In addition, central banks have significantly increased their gold purchases. In addition to gold, Bitcoin, the digital gold, has also staged a strong price rally. The price rose by 7% in September 2024 and is approaching the USD 70,000 mark. Experts see similarities to gold in the development of Bitcoin: both are seen as a hedge against inflation and currency fluctuations in times of economic uncertainty. Another reason for the rise in Bitcoin is the increasing investment in spot Bitcoin ETFs. These have attracted over USD 2 billion in new funds in just a few days. Analysts assume that Bitcoin ETFs will continue to grow in the next few years.
While Bitcoin (BTC) and Ethereum (ETH) gained 7-9 % in value last week, the third-largest cryptocurrency Tether (USDT) also recorded further growth. Tether (USDT) is the leading stablecoin, which is pegged to the US dollar. It recently exploded to a new all-time high in terms of market capitalisation. The market capitalisation of a stablecoin comes from the total amount of coins in circulation multiplied by the fixed price, which is linked to a fiat currency such as the US dollar. This increases through the issue of new stablecoins when more users buy them, but not through an increase in value. A larger market capitalisation therefore reveals the increasing demand for the stablecoin. Tether (USDT) has now reached a valuation of USD 120 billion for the first time in history. Crypto analyst @MartyParty points to the massive growth. In 2021, the valuation was still USD 11 billion, meaning that Tether has increased more than tenfold in less than three years.
Stablecoin investments and thus rising market capitalisations mean that investments are often being prepared and it is an indicator of rising prices in the near future. This has also been the case in recent weeks.
Bitcoin moved along the important USD 69,000 mark over the weekend, but a previous ‘FOMO liquidity grab’ failed to reach it. The previous day, BTC was able to post a three-month high, which allowed the market-leading cryptocurrency to climb surprisingly close to the USD 69,000 mark before these gains were lost again. ‘Low trading volumes and bearish divergences were the driving forces behind this breakout,’ as crypto trader Roman explains the lack of sustainability of the climb on X . He adds:”I think it will go down further before we catch ourselves and climb back up. This was just a FOMO liquidity grab before the real breakout comes soon.”
Meanwhile, data from market researchers at CoinGlass suggests that strong liquidity is currently building up on both sides of the price, with high supply liquidity likely to put a clear cap on further gains. It could therefore be some time before Bitcoin reaches a new all-time high. Looking at macroeconomic developments, the investment firm QCP Capital again has good news for Bitcoin investors. It notes that the strong institutional capital inflows and the three-and-a-half-year high in Bitcoin’s market capitalization should be beneficial for all ‘layer-1 cryptos’. On 17 October, BTC’s market share stood at 58.88%, although in the meantime.
Digital Asset Market:
Market report including trading idea
The majority of digital assets experienced a strong and volatile upswing last week, which brought Bitcoin close to the $70,000 resistance level. Most altcoins were also able to end the consolidation and break out of the narrow trend channels due to the general upswing. Institutional inflows are at multi-month highs, so large spot buying demand tends to be met with ‘little’ selling pressure as retail investors cater to the classic ‘uptober’ narrative (October as the most positive month of the year) and thus invest emotionally in the market. These circumstances, coupled with the generally falling interest rate policy, an outlook for expansive monetary policy and the ‘lagging’ of digital assets compared to the rest of the global financial market, ensure medium-term positivity.
If increased volumes continue to flow into the market, Bitcoin could easily surpass the $70,000 mark.
Chart technology
From a chart perspective, Bitcoin is now below half of the strong resistance zone of $70,000. A volatile breakout above this level, as well as a stabilisation of support, would prepare Bitcoin for a new all-time high. Should this resistance be utilised, volatile short-term sell-offs could follow and cause the market to consolidate. In particular, altcoins that had previously risen sharply could then experience setbacks.
Bitcoin has rarely seen the current price levels, so it can be assumed that many emotional decisions will be made in the coming days, especially by retail investors. Care must always be taken here, as professional trading strategies always incorporate anti-cyclical thinking, meaning that unplanned volatility could materialise.
The next price targets in the event of a positive development: ~$71,000, ~$73,500, ~$75,000
The next price targets in the event of a negative development: ~$66,500, ~$64,000 ~$62,500
Trading idea
Positions held should be traded in such a way that the stop-loss triggers are not triggered by short-term volatility. New entries only seem sensible after setbacks or clear trend confirmations.
Weekly overview
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.