- Bitcoin stabilizes at around $63,000 on Monday.
- US spot Bitcoin ETF experienced outflows week-on-week.
- NYDIG report highlights that Bitcoin remains the best-performing asset this year, with a 49.2% year-to-date gain.
Bitcoin (BTC) stabilizes at around $63,000 on Monday after finding support around its key level last week. Despite last week’s volatility, which saw BTC prices drop from a high of $65,618 to a low of $59,828, an NYDIG report reveals that Bitcoin remains the best-performing asset of the year with a 49.2% year-to-date gain, even as United States (US) spot Bitcoin Exchange Traded Funds (ETFs) saw week-on-week outflows.
Bitcoin sees a fall in institutional demand
Institutional flows to BTC declined last week compared to the previous. According to Coinglass data, the flow into US spot Bitcoin ETFs decreased from $1.10 billion in inflows to $262.8 million in outflows from the last week of September to the first week of October. This sharp decline in ETFs suggests that institutional investors’ demand is decreasing.
Total Bitcoin Spot ETF Net Inflow chart. Source: Coinglass
Following the US September’s Nonfarm Payrolls (NFP) release on Friday, that showed 254,000 new non-farm employments were created in September, surpassing the market expectation of 140,000 by a wide margin, and the Unemployment Rate edged lower to 4.1% from 4.2% in August, Crypto asset trading firm Capital QCP’s Friday report said that despite prior month’s dismal print, the strong data reflects a robust labor market in the US. The report stated, “We believe the recent positive macro data supports our view of the long-awaited “Uptober” trend.”
Furthermore, according to historical Bitcoin’s monthly returns, BTC generally yielded positive returns for traders in October, with an average of 21.01%, giving it the name “Uptober.” Coinglass historical Bitcoin’s monthly returns chart flipped green after surging above $63,000 on Monday. This could be an optimistic sign for Bitcoin.
Bitcoin Monthly return (%) chart. Source: Coinglass
New York Digital Investment Group (NYDIG) reported last week that Bitcoin remains the best-performing asset this year, with a 49.2% year-to-date gain.
Different types of assets year-to-date returns chart. Source: NYDIG
Moreover, the report explains that Bitcoin’s rolling 90-day correlation with US stocks continued to rise during Q3, ending the quarter at 0.46. While Bitcoin’s correlation with equities rose, the most recent level is still low, implying that Bitcoin offers significant diversification benefits to multi-asset portfolios. Thinking of Bitcoin as a “levered US equities” is incorrect as the long-term average of its 90-day rolling correlation is only 0.12.
Bitcoin correlation chart. Source: NYDIG
The report also mentions that the upcoming US election on November 5 will play a big part in market performance for Q4, and if Trump wins, expect larger gains in the crypto market. “We expect to see a change in the head of the SEC, with Gensler being replaced with someone likely to be more pro-crypto. Q4 is traditionally a bullish period for BTC, and there are a number of catalysts that could see history rhyme.” said the report
Technical Analysis: BTC bounces from $60,000 support level
Bitcoin price retraced last week, and support was found at the 200-day Exponential Moving Average (EMA), around $60,000, on October 2. It rose 3.5% in the following four days and broke above the $62,125 resistance level. As of Monday, BTC extends recovery and trades above $63,000.
If the $62,125 holds as support, BTC could extend the rally to retest its psychological level of $66,000.
The Relative Strength Index (RSI) on the daily chart is trading at 53, just above its neutral level of 50, indicating indecisiveness among the traders. For Bitcoin’s strength to be sustained, the RSI must rise above its neutral level and continue rising.
BTC/USDT daily chart
However, if the $62,125 level fails, BTC could decline to retest its 200-day EMA level at $60,000.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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