Bitcoin – Will the Struggle Ever End?

From June 2022 to October 2022, Bitcoin’s price struggled in a tight range and investors found it quite boring. The current sideways channel is even more extensive. The price has been struggling in a range for around six months. And investors are worried about which direction Bitcoin will take after this everlasting struggle.

Whatever direction it takes, the price move will be explosive because the price moved sharply after breaking out of the previous range. The following Bitcoin weekly news may give an idea about the direction Bitcoin may take over the coming weeks.

Bitcoin is More Resistant to Economic Events

Many Bitcoin holders are angry about Bitcoin’s recent price movements but they need to understand that Bitcoin is showing strong resistance while other markets have experienced a significant decline. Some analysts think that Bitcoin is showing this strength because it doesn’t have a strong correlation with the U.S. Dollar Index (DXY).

However, it’s worth noting that the number of long-term Bitcoin holders has reached close to the all-time highs. It means more investors are interested in holding Bitcoin because they think that the approval of a Bitcoin ETF will leave a strong positive impact.

Low Volatility is an Alarming Sign

Bitcoin’s investors are surprised by the recent price movement of Bitcoin because Bitcoin is historically known for its extreme volatility. But during the recent months, Bitcoin’s volatility has significantly reduced. Currently, the volatility levels have reduced to 11%. And some analysts say that it will even drop below 10%.

The shrinking volatility is usually associated with the bear markets. And Bitcoin’s boring price movement is ringing the bell. Sometimes, the prolonged periods of low volatility lead to substantial price movements. So, investors need to manage their investments properly so they don’t get stuck.

Bitcoin Might Lose Investor’s Attention

A decrease in the equity risk premium has increased the importance of government bonds while drawing investor’s attention away from Bitcoin and other risk assets. Following this update, the third quarter of Bitcoin and S&P 500 may end with losses. The equity risk premium has reached its lowest point since 2009.

Government bonds are offering higher returns compared to the risk assets. More investors are looking to invest in these bonds because they’re considered safe havens. Bitcoin is commonly viewed as a non-yield-bearing, risk-on asset. Therefore, investors may avoid investing in Bitcoin over the coming weeks.

MicroStrategy has Purchased $147 Million Worth of Bitcoin

MicroStrategy has purchased another 5,445 BTC worth $147 million. MicroStrategy is one of the leading firms that actively invest in Bitcoin. The company now holds a total of around 158,245 BTC. Thus, they have 4.68 billion worth of Bitcoin holdings because they’ve acquired BTC tokens at an average price of $29,582.

Although Bitcoin price fluctuations have confused most investors, MicroStrategy still has a strong bullish stance on Bitcoin.

The Correlation Between BTC and EURUSD Pair

Josh Olszewicz, a renowned technical analyst, has recently highlighted a correlation between Bitcoin and EURUSD pair. Bitcoin has an inverse correlation with the Dollar Index. EURUSD is the leading pair that is affected by the movement of the Dollar Index. Therefore, the analyst has drawn the correlation between Bitcoin and EURUSD.

The historical data shows that BTC follows the price pattern of EURUSD. Currently, EURUSD is following a bearish trend. If BTC follows this pattern, its price may also drop to $20,000. The analyst has also highlighted the formation of a bearish ‘head and shoulders’ pattern in these assets.

However, the major crypto players may influence this correlation if they’re bullish about Bitcoin. For example, the correlation was disrupted in November 2022. So, the disruption may still appear if some big players tried to influence Bitcoin. It means that the investors can’t make their decisions solely based on the correlation between these assets.

However, it can be used as an additional factor to make an informed decision.

Important Events for This Week

Most investors are happy that, unlike other risk assets, Bitcoin didn’t take a significant impact from the interest rate update last week. However, most analysts say that the authorities will most probably increase the interest rate in November or December. Jerome Powerll’s speech and PCE Price Index are the two important events this week. But they are unlikely to leave a significant impact on the crypto market.

Bitcoin Weekly Technical Analysis

Bitcoin’s weekly sideways channel is still intact but the struggle around the channel’s support is a warning sign. The price can trade close to the support for 2 to 3 weeks but Bitcon’s price has struggled in this zone for more than 5 weeks. It means the price may drop below the recent low before continuing its movement upward.

As a reminder, it’s important to understand that the sideways channel will be considered valid if the price touches the upper resistance for the third time. Therefore, the investors need to wait for the confirmation before taking any trades following this channel.

Conclusion

Bitcoin’s enduring struggle with price stagnation and reduced volatility raises concerns among investors. Its resistance to economic shifts, contrasting correlation with traditional markets, and continued investments by firms like MicroStrategy offer glimmers of hope. However, the current low volatility, diversion of investor attention to government bonds, and potential correlations with traditional assets present challenges.

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