Bitcoin stabilizes above $63,000 following retest of critical support

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.

Cryptocurrency prices FAQs

How do new token launches or listings affect cryptocurrency prices?

Token launches influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.

How do hacks affect cryptocurrency prices?

A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.

How do macroeconomic releases and events affect cryptocurrency prices?

Macroeconomic events like the US Federal Reserve’s decision on interest rates influence crypto assets mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.

How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?

Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs.

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