The Bitcoin (BTC) market recently experienced significant volatility, with the price reaching a high of $30,000 on October 16 before retracing. In this article, we’ll delve into the key factors that contributed to this rally, the influence of fake ETF approval news, and explore technical analysis to provide insights into what the future holds for Bitcoin.
On October 16, Bitcoin soared to $30,000, marking a notable increase from its recent low of $25,000, which acted as a strong horizontal support area on October 11. A crucial moment in this surge was the breakout from a descending resistance trendline that had been in place since the yearly high in July. This trendline’s validation as support on October 11 accelerated the price’s upward momentum, resulting in a new monthly high of $30,000 on the same day.
However, the euphoria was short-lived, as the price witnessed a sharp drop after hitting $30,000. The creation of a long upper wick on the price chart indicated significant selling pressure.
This abrupt price movement was likely triggered by reports of iShares BlackRock ETF approval. The market briefly surged to $30,000, causing funding rates to turn positive. Nevertheless, the rally was short-lived, as BlackRock clarified that the approval was still pending SEC investigation. This reversal led to over $100 million in liquidations, affecting both long and short positions and causing a spike in social volume related to “ETF,” “ishares,” and “$30k.”
Matteo Greco, a research analyst at Fineqia International, emphasized that the key date for BTC Spot ETF approval or rejection is January 10, coinciding with the ARK 21Shares filing deadline. Subsequently, the SEC will make decisions on other applications, potentially leading to mass approvals or rejections in mid-January.
Apart from the fake BlackRock ETF approval incident, there have been several other significant Bitcoin-related news items. The U.S. government seized 200,000 BTC worth $5.4 billion from cybercriminals, but there hasn’t been any indication of an urgent need to liquidate these holdings.
Before the recent price increase, Bitcoin whale addresses, those holding between 100 and 1000 BTC, saw a substantial increase, marking the most significant surge since February 28, 2022. Additionally, the launch of a Bitcoin exchange-traded fund (ETF) is drawing closer since the SEC did not appeal its order to review Grayscale’s application to convert its Bitcoin trust into an ETF.
Furthermore, transactions in the Lightning Network have surged by 1200% over the past two years, primarily driven by activities related to gaming, social media tipping, and streaming.
The daily Relative Strength Index (RSI) provides valuable insights into the current market sentiment. It serves as a momentum indicator, helping traders determine whether an asset is overbought or oversold.
At present, the RSI reading has yet to confirm the direction of the trend. If the RSI is above 50 and the trend is upward, bulls maintain an advantage. Conversely, a reading below 50 indicates bearish sentiment.
The pivotal point for the RSI is the bullish divergence trendline. As long as this trendline remains intact and the BTC price closes above $28,000, a 12% increase to the next resistance level at $31,350 is a likely scenario, potentially setting a new Bitcoin monthly high.
However, a close below the $28,000 resistance area could lead to a sharp decline, with the descending resistance trendline at $25,700 providing the closest support, resulting in a 9% decrease from the current price.
In conclusion, Bitcoin’s recent volatility has been influenced by a combination of factors, including fake news, regulatory considerations, and technical analysis. The cryptocurrency market remains unpredictable, and traders should closely monitor developments and market indicators to make informed decisions.