The Bitcoin (BTC) bulls have regained control to push the price of the world’s largest cryptocurrency by market capitalization back above $35,000. This comes after a volatile trading session filled with important macro risk events, including the latest policy announcement from the US Federal Reserve.
The Fed’s decision to hold interest rates at multi-decade highs of 5.25-5.5% with a potential for further hikes has sparked a renewed wave of optimism among Bitcoin investors. Prior to the meeting, the bitcoin market had been relatively stable, hovering within the $34,000 to $35,000 range following October’s increase from lows in the $26,000s.
Bitcoin pumped 28.5% in October due to the anticipation of BlackRock and other major asset managers’ spot Bitcoin ETF applications being approved by the US SEC. Industry observers believe that this approval would pave the way for institutional investors to enter the Bitcoin market in large numbers.
Bitcoin as a Safe Haven
Bitcoin’s strong performance in October is particularly notable considering the negative trends in the broader macro landscape, such as falling stock prices and rising bond yields. Traditionally, Bitcoin has been positively correlated to stocks, especially in the tech sector, and negatively correlated to US bond yields.
However, this year has seen a shift in the narrative promoted by Bitcoin maximalists. They argue that Bitcoin should be considered a safe haven, similar to gold, during times of economic and geopolitical turmoil. This viewpoint gained support from influential figures on Wall Street, including BlackRock’s Larry Fink, who praised Bitcoin for its digitized gold properties. The strong October performance of Bitcoin, despite weakness in stocks, further strengthens this argument.
The macro landscape is currently experiencing volatility, with stocks pumping and US bond yields dumping, as traders digest the latest news from the Fed. If November sees a continuation of rising stock prices and falling yields, it could provide additional tailwinds for Bitcoin’s momentum.
The Path Ahead for Bitcoin
With Bitcoin surpassing the $35,000 mark, it has convincingly broken out of the pennant structure that formed over the past few days. The next major level that the bulls will set their sights on is the psychologically important $40,000 level, which represents the early May 2022 highs.
Looking even further, there are mid-April 2022 highs at $43,000 and the 2022 highs above $48,000. Although the Fed’s stance was not particularly dovish, if the macro environment becomes more favorable for cryptocurrencies, coupled with Bitcoin-specific bullish narratives like institutional adoption and the upcoming halving, the potential for BTC to reach these resistance levels is strong.
Already up over 110% this year, Bitcoin has the potential for gains of close to 200% by reaching these key long-term resistance levels in the next two months. It’s an exciting time for Bitcoin investors as the bullish momentum continues to grow.
