Bitcoin Plunges $4K, Analysts Predict Quick Rise to $100K
Cryptocurrency traders licked their wounds in early Wednesday trading as the dream of an "Uptober" faced the harsh reality of war on Tuesday, with escalating conflict between Iran and Israel causing a flight from the cryptocurrency market, leading Bitcoin (BTC) to retest support levels as it fell from $64,000 to $60,000.
FxPro's senior market analyst Alex Kupcsikevich said: "The cryptocurrency market fell by 4.2% over the past 24 hours to $2.16 trillion, after reaching a two-month high of $2.30 trillion, further correcting." "This appears to be a reaction to the flight from risk during Iran's missile attack on Israel. Cryptocurrencies and risk assets took a hit, while the dollar, gold, and oil surged significantly."
"Bitcoin fell below $61,000 on Tuesday, losing about $3,000 (nearly 5%)," he added. "A technical factor added to the selling: the day before, BTCUSD fell below the 200-day moving average, reinforcing the 'weak hands' exit from the asset."
Kupcsikevich noted that "Bitcoin found local support near the 50-day moving average, slightly above $60.3 million," and said, "Geopolitics seem to have disrupted bullish trading, pushing Bitcoin away from the upper limit of the multi-month channel. However, it did manage to crawl over the previous high. Under this trend, moving towards the lower limit would indicate that Bitcoin will fall to the $52,000 area."
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As for the widely anticipated October as a breakthrough month for the cryptocurrency industry, macro strategist Alex Krüger provided a more cautious analysis of why "Uptober" is unlikely to meet expectations.
He said: "It's strange to see everyone getting very excited and calling for 'Uptober.' From doom and gloom to sunshine in an instant." "Yes, the previous Federal Open Market Committee (FOMC) was very optimistic, surprisingly so for all macro decision-makers, but that was two weeks ago."
"Despite conflicts in the Middle East, this year is an election year in the United States," he emphasized. "There is significant uncertainty ahead. Who wins will indeed make a big difference. Especially if the Democrats win big. Speculators do not like uncertainty. Therefore, in election years, October is the most volatile month, with slightly negative historical returns in the stock market."
Krüger said: "It makes sense. Unlike nonsense, such as saying 'when September is positive, October will also be positive.'" "This is what is called false correlation. It doesn't take a high IQ to understand this."
Nevertheless, Krüger noted that certain data points could help push the market higher, but ultimately advised traders not to go all in before the election.
He said: "Of course, if this Friday's employment numbers are very strong, the stock market will plummet because we are in a 'good news is good news' state." "But the pressure and timing of the event is after the election, possibly starting on election night."Analysts at QCP Capital have indicated that the pullback triggered by the war will be short-lived, as concerns over the broader global economy will soon lead to a bid for Bitcoin.
They wrote: "Middle East geopolitics will be in focus for now, but the mild selling suggests that the market's bid for risk assets remains high." "This minor setback should not distract from the bigger picture."
They added: "China's policy actions and economic situation are reminiscent of Japan in the 1990s." "To combat Japan's deflation, the Bank of Japan cut interest rates, introduced negative interest rates, and initiated what was then a novel quantitative easing program. The People's Bank of China's ample liquidity and potential fiscal support could underpin Chinese asset prices, and bullish sentiment could spill over globally to support risk assets, including cryptocurrencies."
QCP analysts also noted that in a recent Q&A session with Federal Reserve Chairman Jerome Powell, he supported further rate cuts in 2024. They stated: "With the world's largest (Federal Reserve) and third-largest (People's Bank of China) central banks both embarking on a serious rate-cutting cycle, asset prices are expected to continue to be supported through 2025."
Cryptocurrency analyst CRG spoke optimistically, stating that Tuesday's pullback "could be the quarterly low," despite it being the first day of the quarter.
He said: "The market likes to touch highs/lows at the beginning of the candle." "Furthermore, geopolitical moves have a high tendency to fade."
He noted that while "there may still be some turbulence depending on the extent of Israel's retaliation, the market has already anticipated this, so it may not be surprising and could have a minor impact. Time will tell. Liquidity will rise from here, and Bitcoin should immediately recognize this."
He concluded: "Bears are praying for a full-blown war to prove them right, which is their only hope of delaying the inevitable: $100,000 Bitcoin is coming."
However, before Bitcoin finally reaches its long-sought $100,000 price point, veteran trader Peter Brandt stated that it must first "close above $71,000" before setting a new all-time high to confirm that "the trend from the November 2022 lows remains valid."
Bitcoin analyst Willy Woo commented on Brandt's remarks, saying "The medium-term structure is bearish towards neutral and trying to be bullish. ATH takes time."Woo added: "The short-term structure suggests a pause to cool down for 1-3 weeks before the next bullish attempt." "I don't think we'll get Uptober, consolidation in October and November-December laser eyes party. Long-term, it's bullish."
Currently, Bitcoin is trading at $61,658, down 0.90% on the 24-hour chart.
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