Bitcoin remains range bound in lower timeframes trading at $54,277. The first cryptocurrency by market cap records almost no gains in the daily chart, but a massive 23.9% in the 7-day chart.
BTC moving sideways in the daily chart. Source:
The general sentiment in the market has flipped bullish, as investors seem to be waiting for further appreciation in Q4, 2021, a period that usually works for the bulls.
Investment firm QCP Capital BTC’s price recent returned to the mid $50,000 was due to a “short squeeze”. Triggered by a high number of liquidations in short positions, the big move to the upside has its origin on Chinese crypto exchanges.
In addition, QCP Capital found that institutions were behind Bitcoin reclaimed of the $50,000 as evidence by the uptick in the Chicago Mercantile Exchange (CME) open interest and the increase on the premium for these derivatives versus the price of BTC in the spot market. QCP Capital claimed:
The unusually large premium indicates an overwhelming amount of outright buying. Both factors combined lead us to believe that there has been large institutional buying of BTC in the past week.
Additional factors seem to have worked out in favor of the Bitcoin bulls, as noted by the investment firm: the dissipation of uncertainty around Chinese real state company Evergrande, the very likely approval of a BTC ETFs based on CME Futures, BTC gaining more prestige as an investment vehicle, and others.
Gonna start a thread laying out a case as to why and I are putting odds at 75% for a Bitcoin Futures ETF coming to the U.S in October. Here's where we view the odds of the ETF getting first approval 1/x
— James Seyffart (@JSeyff)
However, QCP Capital points out some potential obstacles that could prevent BTC from reaching its previous highs and beyond. First, the high amount of leverage in the crypto market as shown by the BTC Futures Aggregated Open Interest, 3x times more than in October 2020.
Source: Skew via QCP Capital
In previous months, BTC’s price has taken significant downside action when the leverage in the futures sector reaches a certain point. In addition, QCP Capital said:
The options market continues to indicate downside nervousness in spite of the spot rally. ETH risk reversals (RR) continue to be skewed to the downside (puts are more expensive than calls). BTC has only just turned from a persistent downside skew to neutral.
What Could Work Out For The Bitcoin Bulls
QCP expects some short-term bearish price action for Bitcoin. As seen below, the Tom Demark Sequential, a metric used to measure if a price move has been overextended to a certain direction, flashed a TD 13 sell signal on October 7th.
Source: QCP Capital via Twitter
A separate report by investment firm CoinShares stated that there are 3 factors lineup for more appreciation in Q4, 2021: regulation, adoption, and the macro environment.
On a previous occasion, the BTC Bulls have some but not all of these 3 factors in their favor, the report claimed. About regulation, CoinShares believes the U.S. is “starting to warm to crypto” due to certain statements provided by the FED and SEC Chair, Jerome Powell and Gary Gensler, on cryptocurrencies.
In addition, El Salvador’s effect on driven BTC adoption could have been underestimated. Following the launch of the Bitcoin Law many countries, such as Ukraine, Brazil, Paraguay, and others, have expressed their desire to make BTC legal tender and could drive a new wave of institutional adoptions. The firm said:
From an institutional perspective, our most recent survey representing US$400bn of assets under management (AuM), highlights growing institutional participation. Average portfolio weightings in digital assets now represent 1.1% of AuM, although this varies considerably across different institutional investor types.
Finally, the macro-environment factors with high inflation, rising commodity prices, worsened employment conditions, and others could continue to be a tailwind for store of value assets, such as Bitcoin (BTC). CoinShares said:
(…) it is likely that bitcoin will appreciate against those currencies, even if its purchasing power were to remain stagnant.
A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.
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