On October 23, Bitcoin’s market dynamics shifted as investors took advantage of a dip in prices, contributing a substantial $192.3 million in inflows to Bitcoin ETFs, particularly BlackRock’s IBIT. This influx occurred as Bitcoin tested a critical support level at $65,000, following a 3.3% decline to close at $66,649.
Despite the drop, Bitcoin managed to find support around $65,161 before recovering above the $66,000 mark. The broader cryptocurrency market reflected this downturn, experiencing a 1.45% decrease, bringing the total market capitalization to approximately $2.242 trillion.
Market Influencers
The market’s bearish sentiment was largely influenced by concerns surrounding the upcoming U.S. Presidential Election and the Federal Reserve’s monetary policy trajectory. As investors reacted to tightening monetary policies, risk assets like Bitcoin faced selling pressure. The Nasdaq Composite Index fell by 1.60%, with 10-year U.S. Treasury yields reaching 4.26%, their highest since July, indicating economic strength and challenging expectations for multiple Fed rate cuts in Q4 2024.
As the election nears, uncertainty weighs heavily on investor sentiment. Recent polling shows Vice President Kamala Harris leading former President Donald Trump by a narrow margin of 1.7 points, although Trump has significantly closed the gap from a previous deficit of 3.7 points. Betting platforms, however, predict a higher chance of victory for Trump, attributing a 59.7% probability to him against Harris’ 40.4%. A potential Trump presidency could bring inflationary pressures, leading to a more hawkish stance from the Federal Reserve, which might dampen demand for riskier assets like Bitcoin. However, Trump’s pro-crypto policies could support long-term demand for the digital asset.
Spot Bitcoin ETFs Drive Recovery
Despite the uncertain macroeconomic environment, Bitcoin rebounded from the $65,000 support level, primarily fueled by renewed inflows into spot Bitcoin ETFs. On October 23, the 12 spot Bitcoin ETFs collectively recorded net inflows of $192.31 million, with BlackRock’s IBIT contributing a significant $317.47 million. This marked the fourth instance in six trading days that the fund attracted over $300 million, bringing its total net inflows to over $23 billion as of October 21.
Grayscale’s Bitcoin Minit Trust also played a role in bolstering sentiment with $4.71 million in inflows. In contrast, other ETF products, including ARKB, BITB, and VanEck, saw a collective outflow of $129.8 million, indicating a more cautious approach from some market participants.
Technical Outlook for Bitcoin
Despite the price decline on Wednesday, Bitcoin remains above critical technical levels, including the 50-day and 200-day exponential moving averages, reinforcing bullish signals. A breakout above the resistance level at $69,000 and the October 21 high of $69,402 could pave the way toward the psychological $70,000 mark. A successful breach of $70,000 may prompt bulls to challenge the all-time high of $73,808.
However, a drop below $66,500 could reignite bearish momentum, bringing the critical $65,000 support level back into focus. A further decline below this threshold might lead to a deeper correction, with $64,000 identified as the next key support level.
As of press time, Bitcoin was trading up 0.5% at $67,345, with a 14-day Relative Strength Index (RSI) reading of 60, suggesting potential for reaching $70,000 before approaching overbought conditions.
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