Bitcoin enters the second week of November trading near 18-month highs, defying sell pressure and displaying a significant shift in market sentiment. While traditional assets like stocks face pressure in a challenging macroeconomic environment, Bitcoin and altcoins remain on an upward trajectory. Analysts and investors are closely watching for potential volatility triggers in the coming week, including statements from the United States Federal Reserve, extended "out-of-hours" trading due to a shorter Wall Street trading week, and the continuous strength of Bitcoin's technical fundamentals such as hash rate and mining difficulty.
Meanwhile, Bitcoin continues to impress with its weekly candle closes, recently achieving an 18-month high above $35,000. Despite strong resistance levels and intense buyer-seller dynamics, Bitcoin's resilience is evident. Liquidations and rising open interest on major exchanges hint at potential volatility ahead. Traders such as Crypto Tony remain cautious, emphasizing the need to closely watch support and resistance zones in the current market.
Former Day Traders Remain Unconvinced by Bitcoin’s Recent Rebound
Between 2013 and 2017, Peter To was a name synonymous with success in the world of cryptocurrency day trading. He claimed to have raked in over a million dollars during Bitcoin's meteoric bull runs. Those were the days when the cryptocurrency market was a wild, uncharted territory, offering massive opportunities for traders like To. However, as the cryptocurrency landscape has evolved, so have the fortunes of traders like him.
To, a 34-year-old professional stock trader based in New York, now finds himself looking back at those heady days with a sense of nostalgia. While Bitcoin has recently surged, more than doubling its value from the lows of the previous year, To believes it is no longer the same game. "Bitcoin is not as volatile or as driven as it was," To remarked. "For traders like me who are hunting for inefficiencies in the market, it's not as interesting. The allure is kind of gone."
As the cryptocurrency industry matures, traders like To are facing a changing landscape. The recent conviction of FTX co-founder Sam Bankman-Fried on fraud charges marks a turning point for the industry, signaling the end of its immature and chaotic phase and possibly the dawn of a more mainstream acceptance era.
Bitcoin made headlines last week when it climbed above the $35,000 mark, albeit still significantly below its all-time high of nearly $69,000 in 2021. Optimism has surged due to the anticipation of the approval of the first exchange-traded fund (ETF) holding Bitcoin, with BlackRock Inc. filing an application for one in June this year. Additionally, a judge's decision in August to overturn a ruling blocking the conversion of a Bitcoin trust from Grayscale Investments LLC into an ETF provided further positive momentum.
However, the excitement has waned among retail investors following the FTX debacle. A year ago, Bitcoin plummeted below $16,000, and traders' returns fell by around 40% for the year 2022, according to JPMorgan Chase & Co. But cryptocurrency is not the only market witnessing a retreat by day traders. The share of retail investors in the US equity market volumes also saw a 40% drop at the end of last year compared to the beginning of 2021, according to the bank, with stocks once buoyed by the retail crowd vastly underperforming the market.
Although the overall market has experienced a slight pullback, there are signs of a resurgence in retail cryptocurrency trading. Retail cryptocurrency trading volume as a percentage of total volume on the Bitstamp exchange in the US has increased from 33% to 35% between the first half and the ongoing second half of the year. Globally, this percentage has risen from 8% to 9%.
Bobby Zagotta, CEO of Bitstamp USA, commented on the improving situation, saying, "The retail marketplace in a bear environment is generally quite sleepy. I feel like we are seeing some improvement here."
Nevertheless, many cryptocurrency day traders have moved on, feeling disillusioned with the market. Craig Murray, a 23-year-old who estimated making nearly $200,000 in the market, narrowly escaped financial ruin during the FTX collapse, thanks to insider information from industry friends. That experience was a wake-up call for him, leading him to question the long-term viability of cryptocurrency investments. He stated, "That kind of put me over the edge. I just decided it wasn't worth it. Why would I have my money in this space when there's a chance that one day it could just all go away?"
Another indicator of the fading interest in cryptocurrency day trading can be observed in the shift in trading volumes between weekdays and weekends. Traditionally, weekends were a popular time for day trading, but nowadays, weekday trading volumes often surpass weekend volumes by 50%, according to Fredrick Collins, CEO and founder of the cryptocurrency data platform Velo Data.
Tim van den Berg, a 24-year-old who dabbled in various cryptocurrencies between 2016 and 2019 while in college in the Netherlands, incurred significant losses, amounting to around $12,000 over that period. Van den Berg initially struggled with the complexities of the market, which led him to focus on improving his financial stability through other means. He commented, "I was constantly losing so much money. I had to save up, find a better job, and worry about my studies."
Van den Berg believes that the cryptocurrency market has fundamentally changed, with digital assets losing their initial appeal. He stated, "Crypto is so manipulated now. It started out as a thing that would beat the banking system, but now it's just for the rich to move a lot of money. When the US market closes, crypto basically doesn't move at all."
To echoes this sentiment, recalling the days when he made his largest cryptocurrency profits around 2 a.m., capitalizing on significant price dips while New Yorkers were asleep. He noted, "In the early days, you would hunt for these glitches to make money. Now, if crypto goes up, you make money, and if it goes down, you lose. It's more directional, which is a different game."
While some, like Murray, continue to hold funds on exchanges and share their knowledge with newcomers, they remain cautious about recommending cryptocurrency trading to the masses. Murray warns against the allure of quick and easy money, saying, "A lot of people go into crypto thinking it's going to be easy money because of the millions of people who made money in nonfungible tokens and other coins. Then they take bigger risks than they intended and kind of just break their accounts."
Bitcoin Maintains Strong Position Near 18-Month Highs as Sentiment Shifts
As Bitcoin enters the second week of November, it continues to stand strong, trading near 18-month highs, leaving many investors and analysts wondering where the price of BTC might be headed next. The largest cryptocurrency has successfully resisted selling pressure, securing another impressive weekly close.
What makes this situation particularly noteworthy is the changing sentiment in the cryptocurrency market. Bitcoin and alternative cryptocurrencies, known as altcoins, are displaying remarkable resilience and refusing to retrace their gains that began over a month ago. This resilience is especially noteworthy in the face of a challenging macroeconomic environment where traditional assets like stocks are experiencing pressure.
Bullish investors are hopeful that the upward momentum in the cryptocurrency market is far from over, and they are keeping a close eye on potential triggers for volatility in the coming week. One significant factor is the ongoing concern about inflation. The United States Federal Reserve is scheduled to make several statements and remarks as part of its planned engagements, with Chair Jerome Powell among the key speakers. The cryptocurrency market will closely watch these statements for any potential impact on its trajectory.
Furthermore, the upcoming week will witness a shorter trading week on Wall Street due to holidays, which could result in extended periods of "out-of-hours" trading. This extended trading time may lead to more significant price fluctuations in the cryptocurrency market as it approaches the next weekly close.
Behind the scenes, Bitcoin's technical fundamentals appear as robust as the price action suggests. The hash rate, which measures the computational power securing the network, and the mining difficulty, which adjusts to maintain block production consistency, are both at all-time highs and are expected to continue setting records in the days ahead.
Bitcoin Bulls Stand Their Ground
Bitcoin's performance in the past week did not disappoint, particularly with the weekly candle closing yesterday. The price of Bitcoin reached just over $35,000 during the close, setting a new 18-month high. Subsequently, the market witnessed a brief period of volatility, with Bitcoin briefly dipping below the $36,000 mark.
The current market dynamic is characterized by a fierce tug-of-war between buyers and sellers, making it challenging to breach current resistance levels. Liquidations were also observed at the close, indicating the intensity of trading activity.
Market analysis by popular trader Skew revealed that both buyers and sellers were highly active on exchanges, leading to a balanced trading book. Additionally, open interest (OI) on the largest global exchange, Binance, continued to rise, serving as a precursor to recent bouts of volatility.
Another trader, Daan Crypto Trades, referred to funding rate data, indicating that long positions were paying shorts. He anticipated further volatility following the opening of futures trading after the weekend and into Monday, expecting these positions to be cleared on both sides.
While some traders adopt a more aggressive approach, others remain cautious. Notably, Crypto Tony, a popular trader, advised subscribers not to bet on a bullish breakthrough without careful consideration. He stated that he would only go short if the support zone at $34,100 was lost, and he would close his long position if the price dropped below $33,000, reflecting a conservative trading strategy in the current market environment.
At press time, CoinStats indicated that BTC experienced a slight 0.09% loss over the past 24 hours. As a result, the market leader was trading hands at $34,863.78.
Price chart for BTC (Source: CoinStats)
Despite the drop in price throughout the past day of trading, BTC remained in the green on its longer time frames. CoinStats data indicated that the cryptocurrency was still up 1.9% on the weekly time frame and around 25% on the monthly.