Bitcoin (BTC) declined 1.09% to close at $66,649 on October 23, testing strong support near $65,000 amid shifting sentiments regarding the U.S. election and Fed rate path. While outflows were observed in the Bitcoin ETF market, sustained inflows this month suggest potential for recovery to $70,000. Investors should monitor economic indicators that could impact BTC demand and market dynamics.

As of October 23, Bitcoin (BTC) experienced a decline of 1.09%, closing at $66,649 after a modest gain of 0.12%. The cryptocurrency encountered significant buyer resistance around the $65,000 mark, hitting a low of $65,225 before regaining its footing above $66,000. Concurrently, the overall cryptocurrency market witnessed a contraction of 1.45%, resulting in a total market capitalization of $2.242 trillion. Current market sentiment has been notably influenced by developments related to the upcoming United States Presidential Election and the Federal Reserve’s interest rate trajectory, thereby affecting the demand for high-risk assets such as Bitcoin. The Nasdaq Composite Index also fell by 1.60% on the same day, reflecting apprehensions regarding potential shifts in monetary policy. Notably, yields on 10-year U.S. Treasury bonds escalated to 4.260%, marking the highest levels observed since July. Recent economic indicators have suggested a robust U.S. economy, challenging investors’ assumptions regarding multiple anticipated Fed rate cuts in Q4 2024. Adding to the volatility, the latest election polling positions Vice President Kamala Harris slightly ahead of former President Donald Trump by 1.8 points, although Trump’s previous 3.7-point deficit has narrowed. Notably, the betting platform Polymarket assigns Trump a probability of 61.1% for victory compared to Harris’s 39.0%. Market analysts anticipate that a Trump presidency could trigger inflated inflation rates, leading to a more aggressive stance from the Federal Reserve, which might adversely impact the appetite for riskier assets. Conversely, Trump’s articulated policies regarding cryptocurrency could bolster Bitcoin’s long-term demand, potentially outweighing bearish influences stemming from a hawkish Fed stance. His proposals include an intention to dismiss SEC Chair Gary Gensler immediately upon taking office and to include Bitcoin in the strategic reserves of the United States. If the government were to adopt a favorable stance towards Bitcoin, it could significantly enhance the supply-demand dynamics for BTC and curtail risks of oversupply. Presently, the U.S. government possesses 203,239 BTC, a figure that could escalate if a more supportive policy environment is adopted. In the realm of ETFs, the U.S. Bitcoin spot ETF market faced net outflows totaling $79.1 million on October 22, terminating a seven-day inflow period. On the following day, additional outflows were recorded, with data from Farside Investors revealing total outflows of $125.1 million when excluding iShares Bitcoin Trust (IBIT). Despite some current retracement, October has yielded significant inflows to the U.S. spot ETF market, aggregating $2,482.8 million as compared to $1,262.8 million in September. These sustained inflows may help mitigate oversupply concerns and facilitate a potential recovery towards the $70,000 milestone for BTC. Investors are advised to remain vigilant, as upcoming economic metrics are expected to sway expectations regarding the Fed’s interest rate adjustments. Encouraging labor market data and private sector PMI results are due on October 24, with the potential to diminish speculation about a Fed rate cut in December, thus influencing demand for Bitcoin ETFs. If demand weakens, it could result in BTC testing the pivotal $65,000 level. Despite the downturn on Wednesday, BTC continues to maintain positions above its 50-day and 200-day exponential moving averages (EMAs), signifying bullish price momentum. A breach above the resistance threshold of $69,000, alongside October 21’s peak at $69,402, could propel BTC towards the $70,000 region. Should it successfully break through $70,000, there is a possibility for bulls to engage the all-time high resistance at $73,808. Conversely, if Bitcoin falls below $66,500, it may compel a test of the $65,000 support level, where further declines could expose the $64,000 mark to selling pressure. With a 14-day RSI reading of 60.80, BTC appears poised for a potential ascent to $70,000 prior to entering overbought conditions. Ethereum (ETH) struggles to remain above both its 50-day and 200-day EMAs following yesterday’s pullback, indicating bearish signals for the asset. A rebound above the 50-day EMA could lead to a challenge against the $2,664 resistance level, and surpassing this could position the 200-day EMA in focus. Attention towards updates related to U.S. Ethereum spot ETFs is equally warranted. A drop beneath $2,500 for ETH may provoke a decline towards the $2,403 support line, while the 14-period Daily RSI value of 49.50 suggests a potential fall towards the $2,124 level before reaching oversold territory.

The current analysis of Bitcoin (BTC) is influenced by various macroeconomic factors, including the U.S. Federal Reserve’s interest rate policy and the upcoming Presidential Election. The broader cryptocurrency market has been experiencing fluctuations in response to shifts in investor sentiment related to economic performance and regulatory outlook. The interplay between political developments and financial market dynamics is critical in understanding potential price movements in Bitcoin, given its sensitivity to economic indicators and political forecasts.

In conclusion, Bitcoin’s trajectory remains uncertain as it faces pressure from macroeconomic factors, including shifting sentiments regarding the Federal Reserve’s interest rates and the U.S. Presidential Election. Current trading indicators suggest that a break below $65,000 could signal further declines, while sustained inflows to Bitcoin ETFs may offer some support. Investors are urged to remain cautious and vigilant regarding forthcoming economic data that could influence market movements and demand for Bitcoin.

Original Source: www.fxempire.com

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