Key Takeaways
Is Bitcoin Showing Signs of a Bottom?
Bitcoin shorts are being squeezed and demand from the spot market is picking up, but macro uncertainty and persistent inflation mean the trend is far from guaranteed.
What could drive Bitcoin to a new ATH?
Whales are in the lead, but momentum may favor a break rather than a clean run.
Short positions are under pressure, the cryptocurrency market cap is up 4% and sentiment is moving back towards neutral. In this setup Bitcoin [BTC] The retesting of $111,000 shows spot-led demand, not just speculative flows.
But does this really mean BTC has hit a bottom?
ATH in sight, but CPI and FOMC threaten big for BTC
The macro shock continues to test Bitcoin’s fourth-quarter tailwind.
The Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) report on October 24, and the timing is hitting risky assets at the worst possible time.
The report comes just five days before the FOMC.
With inflationary pressures still on the table and the US-China trade war continuing, economists are drawing in an increase of 3.1% year-on-year, up from last month. Simply put, the market expects consumer prices to rise.
Source: TradingEconomics
Add to that the labor market report still secret due to the closure.
For context, one of the main catalysts behind Bitcoin’s rise to $125,000 in early October was US macro uncertainty, with market prices in a weak labor market giving the Fed room for rate cuts at the next FOMC.
Now that catalyst is gone and inflation remains sticky. So the macro volatility is far from over. Even if the Fed cuts rates, risk assets may not get a clear bullish lift, repeating the post-rate cut cycle we saw in September.
Whales lead the way as Bitcoin braces for volatility
The Fed’s interest rate cut in September barely moved Bitcoin’s price.
BTC fell 8% in the week after the cut, while inflation fell +0.2% MoM.
Although BTC advanced $125,000 to a new ATH, the rally failed to continue, causing fear to sideline the bulls and the momentum to fade.
Given the setup, Bitcoin price discovery could hit a ceiling. However, market positioning suggests whales are a bullish leg, with perp markets leaning long and leverage piling up.
Source: CoinGlass
In short, Bitcoin’s November run is anything but linear.
With less than a week until the FOMC, the The market is pricing in an almost certain interest rate cutexpecting that, despite persistent inflation, the Fed will lean on weak labor market data for another 25 basis points, as it did in September.
But a pure bull run is not guaranteed.
Rising long positions and a stacked liquidity cluster could make BTC’s move toward an ATH messy, setting up a “high-stakes” break-or-make setup in the coming days, with momentum currently leaning toward the break side.