It may be the official end of summer, but this week has been a bumper one for the Bitcoin price. Spot markets appear to be reacting to bullish news that institutional involvement is increasing. A SIMETRI Research analysis (below) highlights that if Bitcoin successfully passes $11,000, the market might see a retest of $15,000.
Following a rather flat weekend, in which Bitcoin hovered around $9,600, things started to pick up again early on Monday morning. By Tuesday, prices had pushed past $10,700, where BTC consolidated until this morning, when it started to test the $11,000 mark.
Institutional involvement is driving Bitcoin’s price
Bitcoin is currently trading at $10,875, giving it a market cap of over $194bn. Prices are up by 11% since Monday morning. This has been the best week for gains since the middle of August, when BTC increased by over $1,200.
There’s a common thread tying these two weeks together: the Bitcoin price increases whenever there are any positive developments for an institution-facing product.
Back in mid-August, the Bitcoin futures exchange Bakkt finally announced its long-awaited launch date, after receiving approval from the NYDFS. This week, VanEck and SolidX, famed for their Bitcoin ETF applications, launched a new Bitcoin Trust, giving institutions exposure to BTC through a traditional investment vehicle so they don’t have to hold the underlying asset.
It’s not news to say that institutional investors are only interested in Bitcoin. That might be because its the most well-known and accessible, making it the logical first step into the asset class, but it also has the most liquid market of any cryptocurrency. It’s also one of the few digital assets with any sort of regulatory clarity – it has been classified as a commodity in both the US and in China.
Considering its near non-existent correlation to equities, as well as to traditional recession hedges like gold and other precious metals, institutions can see the sense in holding Bitcoin because it helps diversify their portfolios and might protect value in the event of a global economic downturn.
The absence of an altcoin rally, with Bitcoin dominance at eighteen-month highs, shows that the crypto market has been led by the institutions this year.
In an asset-class increasingly dominated by the institutions, new products that can increase accessibility to the asset-class will have a bullish effect on the market.
Deposits and withdrawals have gone live today on Bakkt, which could explain why BTC is beginning to test the $11,000 resistance level. Prices could rise still further as Bakkt prepares for its launch later this month.
Technical Analysis: SIMETRI’s Nathan Batchelor on Bitcoin
Bitcoin has quickly moved to a fresh monthly trading high as we head towards the weekend, following a fairly uneventful twenty-four hours of trading action. The BTC / USD pair is primed for some movement over the next few sessions after being confined to a $500.00 trading range since Wednesday.
The short-term technicals show an interesting pattern building and one that has been particularly successful at predicting future Bitcoin price movement. The four-hour time frame shows that a valid inverted head and shoulders pattern is starting to develop, with an upside projection of about $1,500 above current prices.
We should also consider the neckline of the bullish pattern, or the trigger area, which is found around the $10,950 level. This strongly suggests that once a breakout occurs above the area the BTC/USD pair will quickly head towards the $12,450 level.
Furthermore, if we see the pattern reach its full upside potential the BTC / USD pair will form an even larger bullish pattern, with a $3,000 upside target that would take the BTC / USD pair above the $15,000 level.
With this in mind, the short-term technicals are now confirming my earlier medium-term analysis, that a confirmed breakout above the $11,100 level will lead to an eventual test of the important $15,000 level.
*The short-term technicals are strongly suggesting that a sustained break above the $10,950 area and Bitcoin could be on a one-day journey towards the $12,450 level.*
Intraday bullish sentiment for Bitcoin is marginally lower than yesterday, at 55.5.00%, according to the latest data from The TIE. The long-term sentiment indicator is unchanged, at 68.60 % positive.
The short-term technicals are certainly aligning with my medium-term analysis, which points to Bitcoin eventually breaking above the August monthly trading high and then taking-off towards the $15,000 level.
The $10,950 level appears to be the foremost resistance area now that the $10,800 level is broken, although the $11,100 is technically the most significant level to watch according to analysis on the daily time frame.
The four-hour time frame is showing that a drop towards the $10,000 level would help to complete the previously mentioned inverted head and shoulders pattern. This would ideally help to form the right-hand shoulder.
The mentioned time frame is also showing pockets of un-tested demand around the $9,900 area if we do see a pullback below the $10,000 support zone.
A full version of Nathan Batchelor’s Daily Bitcoin Commentary, together with his calls, is available to SIMETRI Research subscribers earlier in the day.