The Bitcoin price rose on Nov. 4. A market-wide rally of crypto prices suggests that Bitcoin ( Bitcoin), Binance Coin ( BC), and Ether ( Ethereum_) have started November in the black.
After the Federal Reserve’s November 2 announcement of a 0.75-basis point interest rate increase, Bitcoin and the Market are fighting back. This initially had a positive effect on equities markets and cryptocurrency markets but then led to a market decline.
Bitcoin has maintained its $20,000 price floor despite the downward pressure. It is now $21,000 above as the general market responds strong job numbers and employment data.
The jobs report reveals that payrolls increased 261,000 in October, while labor participation fell. Investors analyzed the numbers and found a market resilience despite the Federal Open Market Committee (FOMC), raising rates by 0.75 percent. This report sent equities higher.
According to Cointelegraph Bitcoin and other cryptocurrencies such as Ether and BNB are likely to remain closely correlated with U.S. equities, and will display the same price dynamics.
In tandem with Bitcoin’s rapid growth, major cryptocurrencies such as Ether, Bitcoin Cash, Solana, SOL, Cardano (ADA), Polygon, MATIC, Ripple, XRP, Tron (TRX), and Cardano (ADA) registered briefly green candles following the announcement of jobs. There are many reasons for this recent movement.
Crypto market performance. Source: CoinMarketCap
After several important developments, the current rally in BTC/altcoins could signal an increase in market confidence.
These are the reasons Bitcoin prices rallied and then fell again today, as well as the details of the key drivers of growth.
Bitcoin open interest is still tilted towards short traders
The open interest in BTC futures contracts has risen since the June 18th crash of Bitcoin’s price to $17,600. Although sharp price movements in Bitcoin could lead to another liquidation event it is hard to know if the move will be to the upside of the downside.
Many traders believe that if the Fed reverses its current policy of quantitative tightening, interest rate hikes and inflationary pressures, the BTC price would surge to the upside and liquidate large amounts of short-term interest in futures contracts.
The current price movement triggered a wave in liquidations. One data point to watch is the sharp decline in aggregate open interest. Data shows that $704 Million in cross-crypto shorts was liquidated on October 25, which helped Bitcoin to surpass $20,000.
Short liquidations can directly push Bitcoin prices higher, as they force automated buy pressure. After remaining consistent in October, the current rally is witnessing open interest gain momentum which helps explain much of the sideways trading and the current rally.
Market analysts believe that Bitcoin is more favorable for long-term data.
Investor confidence in crypto markets could be increasing due to the belief that the United States Federal Reserve will offer smaller interest rate increases in the coming two months.
The Fed stated that the possibility of a policy shift remains open.
To achieve a monetary policy that is sufficient restrictive to bring down inflation to 2 percent per year, The Committee will consider the cumulative tightening of the monetary policy, the lags in which monetary policies affect economic activity and inflation, as well as economic and financial developments when determining the pace at which future increases to the target range.
Macromicro publishes investors’ consensus estimations on expected changes to interest rates. This firm shows that interest rates could be lower than originally anticipated.
The graph indicates a slowdown in interest rate increases. Investors believe this is a sign of a possible slowdown in future interest rate hikes.
The S&P 500 gives a broad overview of the economy. The S&P 500 and Bitcoin share a high correlation coefficient.
If interest rates are lower and the economy expands, Bitcoin could see a reversal in its course. This is also true if similar changes occur in equities markets. Bitcoin’s price will rise if the macro environment is favorable.
Related: Bitcoin bulls are facing $21K sellers after BTC price erases Fed FOMC losses
Bitcoin’s recent sharp sell-offs may be over
For traders, Bitcoin’s $20,000 remaining is significant as they view it as both a psychological support and resistance. On-chain data at the moment confirms that a $20,000 floor is not only speculative, but also technically sound.
Bitcoin’s realized value is currently between $17,000 to $22,000. This highlights a strong base.
Bitcoin UTXO realized price distribution in October 2022. Source: Glassnode
Bitcoin long-term holders are still making money, and 60% of all long-term holders are also in profit.
Investors might see Bitcoin’s current low volatility and steady consolidation in the $20,000 area, as a sign that the price is bottoming.
These views and opinions are the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your research before making any investment or trading decision.
