Bitcoin continues to show strong momentum despite rising open interest (OI) and financing rates – a signal for short-term caution.
It appears that the expectation of Bitcoin Futures Exchange Traded Funds (ETF) has driven the price above $ 60,000.
After a strong weekly close above $ 52,900, indicating a full bear trap, BTC is pushing further up into the expected resistance area between $ 55,000 and $ 58,300. This zone contains strong technical resistance and on-chain resistance, which is likely to create short-term selling pressure.
The technical momentum shows strength on the 3-day and weekly charts and signals an upward trend in the coming weeks and months. The September pullback turned the daily momentum down, but recently the rally turned bullish as Bitcoin continued to test large resistance.
On-chain indicator does not show a positive distribution
During the consolidation to the average of $ 50,000, on-chain indicators show that long-term owners are not investing much and are not affecting the general bullish accumulation trend. As BTC rose to the upper levels of the $ 50,000 region, cash inflows began to increase, causing the exchange’s reserves to gradually increase.
According to CryptoQuant’s UTXO Age Distribution Index, long-term owners “easily” distribute in very small amounts compared to a “heavy” distribution in later stages of the bull market. Long-term holders tend to spread heavily as BTC pushes up significantly in the later stages of the bull market. This shows that they are currently not interested in selling even if the price tests a large level of resistance.
Average Coin Age, an on-chain metric that helps determine distribution or re-accumulation trends, has cooled in the 2 days since the distribution was weak, but is now continuing an upward trend that has lasted for almost 5 months and reaching a new high all the time. This shows that long-term keepers did not distribute aggressively, especially when compared to bull traps where they distributed heavily during the recovery period.
SPX signals return of risky assets
After the SPX fell, the price hit a double bottom with a bullish divergence on the 4-hour chart. Last week the SPX made a higher high-low and continued to confirm the bottom. While bottoming, the US dollar peaked near technical resistance, forming a bearish engulfing candle that is expected to continue falling and is a bullish signal for risk assets.
In addition, money continues to flow from long-term bonds, which often suggests investors are back to investing in stocks or other risky assets. This is important and should be kept in mind as macro conditions can also affect the movement of Bitcoin. Overall, return over risk is a positive catalyst for BTC as investors look for places to keep their assets.
In the medium to long term, there are currently many positive catalysts beyond bullish on-chain and fundamentals such as Bitcoin ETF approvals, profit season and companies potentially announcing BTC purchases, yet there are signs of FOMO in the market.
It is important to note that on the day of the announcement, the price may fall as the market is selling the truth. Given the outstanding rates, rising borrowing rates and a major rally in recent weeks, the short-term downside risk should not be ignored. It is very likely that after a possible adjustment, BTC will continue to rise as the overall trend is still bullish.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cryptopotato