Bitcoin hangs near 18-month high as bulls and bears battle it out
Bitcoin (BTC) remains at its highest levels in 18 months, but a testing "micro-range" has created uncertainty for traders. The key question now is whether BTC will experience a deeper retracement or continue to rise to $40,000, leaving the skeptics behind. As the monthly close approaches, various potential catalysts could impact Bitcoin's trend, and there are signs that the market is due for a boost.
Monthly close could determine Bitcoin's next move
The monthly close is a crucial date for day traders this week. Bitcoin is currently at a crossroads, with untested liquidity levels and resistance creating a stubborn trading range. Despite new higher highs on daily timeframes, bulls and bears have been unable to break out of the narrow corridor. As the monthly close approaches, Bitcoin is up 7.8% month-to-date, which is average compared to previous years. However, gains for Q4 overall have reached nearly 40%.
Fed inflation data and interest rate policy decisions
This week, Bitcoin traders should pay attention to macroeconomic events, particularly in the United States. The Federal Reserve will receive key data on inflation, which will impact next month's decision on interest rates. Fed Chair Jerome Powell is scheduled to speak on December 1, following comments from other senior Fed officials. The market will be particularly interested in Q3 GDP and Personal Consumption Expenditures (PCE) data for October.
GBTC nears BTC price parity
The Grayscale Bitcoin Trust (GBTC), the largest Bitcoin institutional investment vehicle, is nearing parity with its underlying asset pair, BTC/USD. Previously, the GBTC share price had a discount of nearly 50% to net asset value, but it now has only an 8% discount. This shift in sentiment indicates growing expectations for the approval of the first spot price exchange-traded fund (ETF) in the United States. The approval is expected to happen in early 2024.
Bitcoin hash rate hits all-time high
Bitcoin miners are deploying record processing power to the network, with the hash rate surpassing 500 exahashes per second (EH/s) for the first time. This milestone reflects miners' confidence in future profitability, even though BTC price performance is still below its peak. Additionally, outflows from miner wallets to exchanges are at their lowest levels in seven years. Miners are currently selling an average of 90 BTC per month, the lowest since 2017.
Bitcoin exchange balances continue to decrease
Bitcoin balances on crypto exchanges are trending down once again after a month of turmoil caused by withdrawal shutdowns and legal actions. This downward trend is consistent with the overall trend of decreasing exchange balances over the past five years. The combined holdings of major exchanges are at their lowest since April 2018. In March 2020, during the COVID-19 market crash, the tally stood at its peak of 3.321 million BTC. Recent events, such as Binance receiving a hefty fine and other exchanges halting withdrawals after a hack, have influenced traders' reactions.
This article does not provide investment advice. Readers should conduct their own research before making any investment or trading decisions.
