- Bitcoin failed to break its all-time high last week amid increased profit-taking from short-term holders, but could be poised to challenge this level soon.
- Bitcoin showed double-digit weekly gains immediately after the ATH breakout in previous cycles, suggesting that this event could be accompanied by increased volatility.
- Bitcoin now appears to be more in line with previous cycles, approaching the level where a significant upward trend unfolded.
Weekly outlook
Consolidation before a breakout?
Over the past week, Bitcoin’s price has been flirting with its all-time high (ATH), coming within less than $200 of reaching it. However, Bitcoin failed to break it, consolidating around $73,000, and then dropping to the ascending support line (white line). Declining volume during this phase, highlighted by a symmetrical triangle on the Volume Oscillator, hints at an upcoming strong directional move in both price and volume.
According to VPVR analysis, the closest significant volume clusters are located at $66,500-$68,000 (orange) and $72,000-$72,700 (green). This suggests that Bitcoin could see possible support and resistance in these areas if the asset price bounces off or drops below the ascending support line.
Nevertheless, it is not uncommon for Bitcoin to consolidate near its previous ATH before breaking it decisively. In 2020, for instance, Bitcoin initially stalled near $20,000 before breaking through after a week of consolidation.&
Bitcoin’s price is currently approaching its 20-day EMA (yellow line), a dynamic support level for bullish sentiment, indicating that this pullback could be a healthy setup for the next ATH test. Furthermore, the 50-day and 200-day SMAs formed a golden cross (green circle), typically a bullish signal.&
Meanwhile, the daily MACD is again on the verge of a bearish crossover, indicating potential downward movement. However, this signal could be considered only if bulls fail to defend the 20-day EMA.
The power of the ATH breakout
Historically, breakouts above ATH levels have been followed by sharp swings in Bitcoin’s volatility:
- January 2017 ($1,500 breakout): A 10% weekly drop, followed by a 12% weekly increase.
- December 2020 ($20,000 breakout): A 22% weekly increase, with sustained double-digit gains in the following weeks.
- March 2024 ($69,000 breakout): A 9% weekly increase, though momentum gradually slowed.
One of the catalysts behind this is that Bitcoin’s approach to ATH levels typically brings an increase in search interest (green circles) and media coverage, amplifying attention on the cryptocurrency. While current search levels are relatively low, a renewed rally could re-engage public interest, though this effect might be somewhat muted given the ATH was already reached earlier this year.
Source: Google Trends
Profit-taking by short-term holders
As Bitcoin approached its all-time high, the Short-Term Holder (STH) Realized Profit/Loss Ratio surged to a historic peak, reflecting that recent buyers were taking profits. This level of profit-taking might have acted as a resistance, temporarily holding back Bitcoin from breaking its ATH. However, these dips could attract new buyers, helping sustain market liquidity and supporting future upward momentum.
Source: Checkonchain
On the other hand, long-term holders (LTH) have shown more restraint, with only a modest increase in profit-taking. This indicates confidence in Bitcoin’s longer-term potential, as LTHs likely wait for more substantial price signals or higher levels before selling.
Source: Checkonchain
What’s on the radar?
- U.S. elections (November 5): With slim margins between candidates, heightened tension around the election results could introduce short-term volatility in the market. This event might also serve as a trigger for cautious investors waiting on the sidelines to enter the market, potentially boosting market volume shortly after. However, the broader outlook is likely to remain stable regardless of the winner, with increasing signs of a post-halving rally appearing.
- Federal Reserve meeting (November 6-7): According to FedWatch, two 25 bps rate cuts in November and December are still the most anticipated outcome. Consequently, this week’s decision may have a limited impact on prices unless the Fed makes an unexpected move. Comments from Fed Chair Jerome Powell will likely be a more impactful factor, especially following Friday’s U.S. non-farm payrolls data, which revealed the weakest job growth since late 2020, along with downward revisions to previous months’ figures.
- ETF inflows: U.S. spot Bitcoin ETFs reported their largest weekly inflow since March 2024, totaling $2.2 billion. Although these ETFs were only launched in January, notable inflows typically precede price corrections or tapering net inflows. However, this week may be an exception, falling into a “boom or bust” category, as participants could both be extra cautious amid the U.S.-related events, or find the trigger that might have limited previous inflows.
Source: SoSoValue
Longer-term outlook
When Bitcoin reached a new all-time high in March 2024, it marked the first time the asset updated its cycle peak just before a halving event. Typically, Bitcoin approaches the 0.382 Fibonacci retracement level around the halving period. However, in 2024, it was near the 0.786 Fibonacci level, hitting this mark approximately six months earlier than usual.
Earlier this year, this unusual scenario caused some indicators to turn “weird,” leading to deviations from past cycle patterns. However, after 8 months of consolidation, Bitcoin now appears more in line with previous cycles. For instance, Bitcoin has surpassed its previous cycle peak and is testing its ATH around the same time as in previous cycles (white arrows). Additionally, the weekly MACD recently formed a bullish crossover (green circle) near the ATH, a pattern that has historically preceded classic post-halving bull runs.
Conclusion
With Bitcoin hovering near its all-time high, the market seems poised for a decisive move. Short-term holders taking profits temporarily capped gains, but technical indicators suggest the bullish potential if the 20-day EMA holds. A solid drop below that level could potentially indicate a short-term delay before Bitcoin challenges its ATH again. However, the longer-term outlook remains primarily bullish, with Bitcoin gradually aligning with previous cycles and potentially preparing for a strong upward move.
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