Bitcoin shows strength amid economic uncertainties By  |  Editor Hari G

Published Nov 01, 2023 09:46AM ET

This week marks a crucial period for Bitcoin, with the Federal Reserve’s decision on interest rates, the release of key American labor market data, and the start of the financial earnings season. Bitcoin has demonstrated resilience in the face of rising US Treasury yields and geopolitical uncertainties that have impacted stocks. The cryptocurrency ended October at a 550-day high of $34,525, a stark contrast to the S&P 500’s 3.5% decline.

The market is closely watching potential developments that could shape Bitcoin’s future valuation. These include the anticipated approval of a Bitcoin Exchange-Traded Fund (ETF) and BlackRock (NYSE:BLK)’s spot Bitcoin ETF.

Last week witnessed a historic surge in the yield of 10-year US treasury bonds to over 5%. This trend could be further influenced by strong labor market data from last Friday’s employment report. Following the FOMC meeting, the US central bank is expected to disclose its stance on interest rates, with predictions tilting towards no further increases.

The robust 4.9% Q3 economic growth in the US signals a strong labor market and the potential for enduring higher interest rates.

In parallel, data from Datamish indicates a yearly low in Bitcoin’s short positions on Bitfinex. This trend reflects a decrease in bearish sentiment and increased optimism among traders about Bitcoin’s price. Hedged short positions, which serve as a protective measure against potential losses, have outnumbered unhedged ones.

Despite these market dynamics, Bitcoin experienced a slight 0.35% decrease in price, trading at $34,406.07 recently. The cryptocurrency’s decreasing correlation with the NASDAQ index underscores its growing independence from traditional markets, enhancing its appeal as a less risky asset.

However, traders may exercise caution due to an increase in Bitcoin’s Implied Volatility, which suggests possible price fluctuations. Despite these market dynamics and slight price decreases, the overall sentiment towards Bitcoin appears to remain positive.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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