2023-10-24 03:30:06
Like all risk assets, Bitcoin underwent a very strong correction, first in the phase of hardening central bank rhetoric, then in that of rising rates. Without forgetting the headwinds also linked to the rise in the US dollar.
The bursting of the post-Covid bubble against a backdrop of monetary tightening and the later bankruptcy of the giant FTX had caused Bitcoin to go from $69,000 to nearly $15,000 in a few months, a 77% drop. That is to say the equivalent, in terms of decline, of the bursting of the internet bubble in the early 2000s.
Bitcoin then rebounded in the first half, like the stock markets, before entering a “range” type consolidation phase, that is to say within a horizontal channel whose lower limit is at $25,000 and the upper limit in the $31,000 zone.
What is interesting is that Bitcoin has not been at all sensitive to the new phase of growth in bond rates in recent weeks, while the stock markets, for example, are feeling it quite strongly. Same observation in the face of the vigorous rise of the dollar since this summer: Bitcoin is relatively insensitive to it.
This resilience in the face of an unfavorable rate and dollar environment should clearly be underlined, especially since a subject is keeping the sector in suspense, that of the highly anticipated validation of the first “spot” Bitcoin ETFs by the American regulator.
The SEC has still not given the green light to the issuance of this type of financial product for the moment, but the fact that it has still not appealed a court decision against it, with of the federal court regarding its dispute with Grayscale Investments, may suggest that a door remains open for the validation of spot Bitcoin ETFs. As a reminder, Grayscale Investments had filed an application to convert its flagship product, the Grayscale Bitcoin Trust, into a spot Bitcoin ETF. This request was refused by the SEC but a court ruled against it.
The significant drop in volatility on Bitcoin in recent months also speaks in favor of requests for the issuance of Bitcoin ETFs. The objective of this type of product for issuers is to capture part of the savings and the task is made simpler if volatility is limited. Volatility attracts speculators but can tend to repel savers who are looking for quieter investment vehicles, particularly within the framework of savings plans for retirement, for example.
The return to the top of the consolidation channel for Bitcoin is not necessarily an immediate signal of a breakout from above, and consolidation could continue for some time in this zone, but this configuration nevertheless seems to argue for a new bullish push classes in a while. The technical objective in the event of an exit from the consolidation range is at $37,000, or 26% higher than current levels, then at $42,000 thereafter.
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