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Markets Report: Bitcoin shoots past $11,500 as hopes build of new breakout

Successful attempts to crack $11,500 mark a bullish start to the week as U.S. dollar strength remains under pressure

Bitcoin has begun a new week by testing and breaking through $11,500 after the weekend preserved $11,000 support. 

After several days of sideways trading, Bitcoin looks set to challenge resistance closer to the significant $12,000 level as markets open around the world. 

On Monday, Modern Consensus takes a look at what might be in store for Bitcoin price action in the coming days. We also publish a weekly price digest every Friday, the latest installment of which can be found here

Focus on U.S. elections and dollar

Attention is firmly on the U.S. and the dollar this week as the presidential elections draw closer and markets begin pricing in a Democrat win.

November’s vote comes amid deteriorating strength in the U.S. dollar currency index—the measure of the dollar’s strength against a basket of 20 major trading partner currencies. 

Having gained in the second half of September, DXY has lost ground in October, circling 93.35 on Monday as 93 holds as support. 

Bitcoin has developed inverse correlation with DXY, and a marked move up or down tends to have a noticeable impact on BTC/USD. Continued weakness, therefore, is a potential win for hodlers.

Reacting to the latest DXY movements, however, traders seemed to expect more from Bitcoin.

“I’m surprised to see $BTC not reacting much to that DXY candle,” popular Twitter trader Crypto Krillin summarized on Monday. 

“Could be because DXY is also forming a bullish c-fork. Or we’re about to see a huge delayed $BTC pump?”

U.S. dollar currency index 2-month chart. Source: TradingView

The idea that Bitcoin is overdue a rebound has remained in place thanks to last week’s slow leg down towards $11,000—something that fellow trader Tone Vays said would only last a matter of days. 

With anticipation building, trader and analyst Josh Rager identified $11,200 the key level for Bitcoin to defend in order to maintain the prospects of a bullish uptrend.

“Not a lot going on, a lot of grinding so not much excitement, but that is a key level to watch,” he said in his latest video update, noting that the weekly chart’s corridor between $10,100 and $11,500 was also significant.

Institutions: “Who’s wrong?”

Friday meanwhile delivered a favorable picture of institutional investor activity for Bitcoin. The latest commitments of traders (COT) report showed high-frequency traders were all-time short, while institutions were overwhelmingly long at current levels.

“Who’s wrong?” on-chain analytics resource Skew mused uploading the fresh data for CME Group’s Bitcoin futures open interest.

As Modern Consensus reported, trader Vays, a long-time market participant, was adamant that at levels just below $11,500, Bitcoin was in a “complete no-trade zone” and that shorting was not an option. 

On the back of multiple buy-ins from public companies, hopes likewise hinge on institutions driving demand and preventing a deeper price correction.

CME Group commitment of traders report. Source: Skew/ Twitter

Technical fundamentals smash records… again

In terms of technicals, the foundations for continued price strength are plain to see for Bitcoin. 

On Monday, hashrate joined difficulty in hitting fresh all-time highs, marking another instalment of an uptrend which has persevered for much of the past few months. 

Hashrate provides a rough estimate of the computing power dedicated to Bitcoin mining, with a higher average implying bigger miner commitment and belief in profitability. 

Bitcoin’s seven-day average hashrate is now 146.5 exahashes per second (EH/s), according to data from on-chain monitoring resource Blockchain.

Difficulty meanwhile gained 3.5% at the latest automatic readjustment over the weekend. An essential metric, difficulty’s gains highlight competition among miners in gaining block subsidies.

“Bitcoin difficulty (all time high), price not yet,” quant analyst PlanB summarized on Monday. 

As ever, PlanB noted that zooming out, the picture remained more than favorable for bulls — BTC/USD is in the middle of its third best month on record.

In terms of his stock-to-flow price forecasting tools, Bitcoin is also performing just as expected and in line with behavior seen following the past two block subsidy halving events. These cut the block subsidy available to miners by 50%, and form the basis of stock-to-flow’s prediction of a $100,000 price tag for Bitcoin by 2022.

The current halving cycle finishes in 2024, by which time PlanB calculates that BTC/USD will have periods trading at $288,000.

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.