Bitcoin (BTC) is still heading higher towards $37,000 for the new week as macroeconomic data returns.
The largest cryptocurrency continues to hit 18-month highs, with excitement over the potential approval of exchange-traded funds (ETFs) in the United States boosting sentiment.
However, the situation is becoming increasingly greedy as the situation matches what was seen when BTC price action hit its current all-time high in late 2021, according to the Crypto Fear & Greed Index.
What will change the status quo and create volatility in the coming days?
External triggers are more likely this week. A raft of US macro data, including the Consumer Price Index (CPI), has the potential to disrupt any sideways trading activity in risk assets.
Several Federal Reserve officials are also scheduled to speak, while the unstable geopolitical situation in the Middle East continues.
Meanwhile, on the institutional front, Bitcoin’s future looks firmly bullish — the Grayscale Bitcoin Trust (GBTC) is trading near parity in terms of net asset value ahead of the expected ETF approval.
Can the Bitcoin market remain stable and avoid a sharp correction? Cointelegraph takes a weekly look at the catalysts for Bitcoin price movement.
Funding Rates Send Warnings, BTC Price Hovering at $37,000
On November 12, Bitcoin’s weekly close hit an 18-month high, but what followed was not the kind of gains that have followed other recent closes.
BTC/USD 1-hour chart
Bitcoin fell below $37,000 against the U.S. dollar during the Asian trading session, sticking to the trading range it had traded in throughout the weekend, according to data from Cointelegraph Markets Pro and TradingView.
Credible Crypto, a well-known trader and analyst who closely follows developments, said that this will soon change. The reason, he said, is that open interest (OI) is currently at multi-day highs, which is prone to volatility. "Open interest has recovered from its lows, which means that more positions can be squeezed out," X's post said in part.
Credible Crypto gave a price target of $36,600 as a potential local low, with another article adding that Bitcoin is “very close” to further gains.
BTC/USD chart with OI.
Countering the bullish sentiment of short-term market action are funding rates. Not only are these positive, but they are the highest since Bitcoin’s all-time high in November 2021, indicating an overall disadvantage to being long BTC at current levels.
“Funding rates have increased across the board,” trader Daan Crypto Trades commented, citing data from monitoring resource CoinGlass.
“While this is not always the direct cause of a flush, ideally things will return to normal after more ranging. It is worth noting that during a strong uptrend this can continue for weeks or even months.”
Crypto funding rates as of 7am UTC on November 13 (screenshot)
Popular analyst Caue Oliveira also noted the notable situation on the funding side and told traders to proceed with caution.
“This value indicates widespread optimism in the market, driving a large number of futures contracts betting on rising prices,” he wrote in a Quicktake market update published Nov. 10 for on-chain analytics platform CryptoQuant.
“However, this setup is dangerous as it could signal overly bullish sentiment, while a price contraction could trigger a cascade of liquidations.”
The Consumer Price Index (CPI) comes amid turmoil over a new U.S. government shutdown
The third week of November is a classic macro setup – with the Consumer Price Index (CPI) leading a slew of data releases that have in the past sparked volatility in risk assets.
The Consumer Price Index (CPI) for October, released on November 14, will be closely watched by inflation monitors, with the Producer Price Index (PPI) to be released a day later.
Several Fed officials will also take the stage to speak during and after the data release, providing the Fed's views on inflationary forces in real time.
“This is a big week for inflation and the Fed,” the financial review resource Kobeissi Letter concluded as it uploaded important macro diary dates to X.
Meanwhile, popular trader Skew noted that despite some unpleasant surprises in the October data, inflation will fall back.
In theory, this should provide a tailwind for cryptocurrency markets, but as Cointelegraph reported, Bitcoin’s response to bigger misses has been muted this year.
Adding insult to injury is another familiar wildcard – the looming partial shutdown of the U.S. government. While consensus has eluded it so far this year, the need to reach a spending deal in Congress before the Nov. 17 deadline has once again become real.
If this happens, the U.S. government shutdown would be the fourth in the past decade.
Altcoins in focus as crypto capital inflows return
As cryptocurrency market participants keep their eyes firmly on the approval of potential ETFs, capital inflows into the industry are being closely monitored.
Buyer interest is a key factor in a bull market comeback and the reversal in inflows has already attracted mainstream attention.
“For the first time in years, crypto markets are beginning to see a significant amount of new liquidity,” Kobeissi wrote in a dedicated X thread.
It noted that since November 2022, following the FTX crash and Bitcoin’s cycle low of $15,600, the total cryptocurrency market capitalization has increased by $600 billion.
It added: “That’s up 75% in a year, while Bitcoin is up 120% over the last year.”
“This comes after years of sustained outflows from the crypto market. One thing we have seen many times in the past? The return of liquidity always leads to historic moves in crypto.”
Traders and analysts say it’s not just Bitcoin that’s showing potential, the altcoin market is waking up.
While Bitcoin’s dominance of the entire cryptocurrency market cap remains strong, analysts CryptoCon advise against viewing this as a sign of relative weakness for altcoins.
“Some people are telling you to ignore altcoins completely because Bitcoin dominance is rising. As you may have noticed, this is a grave mistake,” he told X subscribers over the weekend.
The accompanying chart shows Bitcoin’s price action each year during the halving cycle, with altcoins similarly showing specific reactions.
Bitcoin halving cycle theoretical chart.
According to CryptoCon, Bitcoin will reach an “early” cycle top in mid-2024, and altcoins are unlikely to underdeliver.
“I think altcoins have probably bottomed out in the cycle now and those who do nothing will have to buy higher,” he continued.
“Imagine someone telling me, ‘Ignore altcoins at the bottom and only buy Bitcoin that’s already going up.’ That’s what happened this year. 2024 is coming and altcoins are ready to get even stronger!”
Bitcoin market cap dominance chart.
GBTC discount breaks two-year low
The standard for Bitcoin’s return to the mainstream spotlight despite the lack of retail interest is its status as the largest institutional investment vehicle.
Grayscale Bitcoin Trust (GBTC) is rapidly approaching parity with the net asset value (NAV) of Bitcoin’s spot price.
In the past, GBTC’s implied share price traded at a premium to BTC/USD, but over the past two years, the premium has turned into a discount, at one point approaching 50%.
Now, the discount to NAV is just 10.35%, the smallest discount since August 2021.
GBTC Premium vs. Asset Holdings vs. BTC/USD Chart (Screenshot).
Commenting on the phenomenon, William Clemente, co-founder of market research firm Reflexivity, linked GBTC’s reversal of fortune to the anticipated ETF approval.
“It appears that the market is currently pricing in a very high probability of a BTC ETF being approved,” he wrote last week.
Grayscale continues to request the right to convert GBTC into a Bitcoin spot ETF.
Cryptocurrency investors remain greedy
After a record-long cryptocurrency bear market, the desire to squeeze out profits is impossible to ignore.
Related: BTC price "collapses" before ETF listing or falls to $150,000 in 2025? Bitcoin predictions diverge
This continues to be aptly reflected by the Crypto Fear & Greed Index, a classic market sentiment indicator, which is currently at levels last seen in November 2021.
While not yet at extreme levels, the index clearly shows that the average cryptocurrency investor is approaching a state of irrational exuberance.
On November 13, Fear & Greed had a score of 72/100, while on November 6 it reached 74/100.
Crypto Fear & Greed Index (screenshot).
Commenting on market psychology earlier this month, popular trader Pentoshi reminded X readers that extreme fear and greed can provide the “best opportunities” for those who can grasp and exploit market moves at extreme emotional levels.
Typically, when the index is below 10/100 or above 90/100, a trend reversal occurs in the cryptocurrency market.
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