Bitfinex Alpha | Selling Alleviates but Market Remains Reactionary

Bitcoin saw a significant pullback last week, and dropped more than 11 percent from its late September high of  $66,587, driven by aggressive spot selling, to a low of  $58,943 on October 10th. However, the selling pressure eased, and BTC quickly rebounded, recovering to $64,500 as spot buying aggression returned. Notably, much of the early-week selling last week originated on Coinbase, as reflected in the Coinbase Premium Gap indicator, which dipped to -100 points before the price recovery.

On-chain metrics highlight the importance of Bitcoin’s short-term holder realised price, currently near $63,000, as a key resistance level. Breaking above this level could signal further bullish momentum, while a failure to do so may lead to a retest of lower support levels, potentially near $59,000 or even $55,000.

The market remains reactionary, with future movements likely dependent on whether Bitcoin can decisively pass the realised price of short-term holders. Until then, traders should anticipate potential corrections but also be prepared for a stronger recovery bounce from lower levels, given the underlying market resilience.

The latest economic data revealed the ongoing cooling of  inflation, with the Consumer Price Index rising just 0.2 percent in September, marking the slowest annual increase in over three years. This disinflation is largely driven by declines in energy and housing costs, though core inflation, led by the service sector, remains slightly elevated. 

Producer inflation remained steady in September, offering relief from broader inflationary pressures. Declines in energy prices helped keep producer costs flat, signalling that inflation may not escalate sharply in the near term. Businesses however are still responding cautiously to the still elevated interest rates, as slower inventory growth and heightened uncertainty reflect concerns over demand and financing costs. While small business optimism has slightly improved, businesses are focusing on efficiency to navigate the challenges posed by higher interest rates.

Recent developments in the cryptocurrency industry show key movements in regulatory and market activities. South Korea’s Financial Services Commission is reconsidering its ban on local spot cryptocurrency ETFs and institutional crypto accounts, signalling a potential shift in the country’s crypto investment landscape. Meanwhile, Canary Capital has filed with the US SEC for a spot XRP exchange-traded fund, aimed at simplifying XRP investment for traditional brokerage users by eliminating the need for direct crypto management.

In other news, the Mt. Gox trustee has extended the repayment deadline for creditors to October 31, 2025, due to procedural delays. This postponement eases market concerns over a potential Bitcoin sell-off, as many feared that creditors might liquidate some of the 44,900 BTC set to be distributed, which could have pressured Bitcoin prices. 

Have a great trading week.

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