Bitcoin was on course for modest weekly gains on Oct. 16 as fresh downside took the market ever closer to $11,000 support.
After hitting $11,700, this week saw BTC/USD consolidate higher, but unforeseen circumstances sparked sudden selling pressure Friday.
Modern Consensus takes a look at this week in Bitcoin and considers what the coming days might have in store for price action.
Corporate interest buoys Bitcoin bulls
Bitcoin exited the previous week on a surprise high after a mixed bag of factors seemed to do little to dent bullish momentum.
Over the weekend, BTC/USD passed several significant support levels, outperforming expectations. These were $10,800, $11,000 and $11,150, all of which remained untested since.
The fresh uptick came amid news of several major corporate buy-ins, coming on the heels of MicroStrategy’s now famous $425 million investment completed last month.
Analysts and other market participants continue to view new corporate market entries as a watershed moment — proof that Bitcoin is coming of age and that major capital is coming.
Among them is Raoul Pal, CEO and founder of Real Vision, who last week forecast an “enormous wall of money” hitting Bitcoin over the coming years.
In total, public companies now hold almost $7 billion in Bitcoin, data shows, with asset manager Grayscale still the majority holder. Should the trend continue, demand will begin to outweigh the fixed number of Bitcoins appearing each block to an ever greater extent.
“84k BTC were mined in Q3. Just CashApp, Square & MicroStrategy account for 169% of that. Grayscale accounts for another 70% (not necessarily all new purchases),” Ben Davenport, co-founder of BitGo, tweeted on Friday.
Davenport added that the lack of price appreciation due to this uptake may be because of selling pressure elsewhere.
“Given lack of price movement, feels like there is a major seller in the market. When seller runs out of coins… moon,” he wrote.
OKEx debacle sparks volatility
Trader optimism did not end up reflected in price trajectory this week. After a four-day consolidation below $11,500, Bitcoin saw fresh trouble after news that major exchange OKEx had stopped all withdrawals.
The reason, official correspondence said, was a Chinese law enforcement investigation which had summoned one of its senior executives. Without that executive, who is a private key holder, the exchange said, it could not authorize any withdrawal transactions.
“One of our private key holders is currently cooperating with a public security bureau in investigations where required. We have been out of touch with the concerned private key holder. As such, the associated authorization could not be completed,” a blog post read Friday.
“…We will resume digital assets/cryptocurrencies withdrawals immediately once the concerned private key holder is able to authorize the transaction.”
The result was a roughly 3% dip for Bitcoin in a matter of hours, with Friday seeing lows of $11,230.
According to data from on-chain monitoring resource Glassnode, OKEx wallets contain around 200,000 BTC, worth $2.3 billion at press time and equal to 1.1% of the total circulating supply.
The exchange’s blog post confirmed that funds security was “not affected” and that other user functions remained in operation.
Rebound or something more?
As Modern Consensus reported, eyes will be on institutional activity in the coming days as open interest in Bitcoin futures continues to climb.
The commitments of traders (COT) report, due Friday, will provide some insight into buy and sell plans from both institutions and retail in this respect.
The weekend’s trading will also reveal the strength of $11,000 as a support level, and whether analysts’ bullish expectations are correct.
Among them is Tone Vays, the veteran trader who this week said that he believed the current correction below $11,500 would only last for four daily candles. Friday marked the final one of the four.
At press time Friday, Bitcoin was beginning to recover from the OKEx news, putting in a brief run to $11,400 before returning to around $11,350.
The response mirrors that of earlier this month, in which markets shook off news that senior executives of derivatives giant BitMEX were wanted by U.S. law enforcement over failures to stop residents of the country from using its services.