Bitcoin achieves positive returns in September for the first time in six years
Bitcoin Pullback: What Happened and What Comes Next?
Dollar dominance: Uncovering the dollar ripple effect
The percentage of Bitcoin supply held by long-term holders has officially reached an all-time high
Bitcoin achieves positive returns in September for the first time in six years
As October approaches, Bitcoin has achieved positive returns in September for the first time in 6 years, up 3.91% month-on-month. Now that the worst month on average is behind us, looking ahead to the last three months of the year, seasonality is clearly in the bulls’ favor.
Bitcoin Pullback: What Happened and What Comes Next?
Bitcoin has seen a significant surge recently, reaching over $28,400. However, shortly after this rise, we saw a significant correction in Bitcoin.
So, how bad is it?
There is a general belief that this pullback will not lead to a further decline. Recent polls show a common belief among followers. The data shows that if Bitcoin falls to $25,000, about 60% of people believe that this surge was just a "bull trap" and they will be ready to buy Bitcoin. In short, many people do not think that a big drop will occur in the short term.
Reasons behind the callback
The reason for this pullback can be traced back to a large transfer of 9,895 BTC (equivalent to approximately $275.5 million) from an unidentified wallet to Kraken yesterday. This move caused a sensation in the market and many people fell into panic.
Challenges
As Bitcoin has surged higher after a long period of calm, breaking through the upcoming resistance level may prove difficult, something we discussed a few days ago.
This is because many long-term holders may think that now is the perfect time to sell their holdings and cash in some of their profits. As noted on Twitter, many short-term holders are ecstatic because more than 46,000 Bitcoins were sold yesterday, providing them with a chance to see profits after a tough month.
Macro Market Influences Sentiment
Despite the pullback, the general consensus appears to be optimistic about Bitcoin’s near-term prospects.
However, there is a conflicting factor to consider: the DXY (US Dollar Index) is currently on a strong upward trajectory. If the US Dollar Index continues to rise sharply, it may affect the Bitcoin price, as we have previously said on Twitter that "if the dollar goes up, everything else goes down."
The dominance of the US dollar
The U.S. dollar (USD) has shown significant strength in the last month and has caused damage to the global economy.
The best of times are yet to come for Russia’s ruble, which is under sanctions; it is trading near historic lows against the dollar.
The U.S. dollar index DXY, which tracks the performance of the U.S. dollar against other major currencies, has been on an upward trend. The index has now broken through the 107.00 mark, reaching its highest point in nearly a year. It has risen by 7.5% from July.
Reasons behind the strong performance of the US dollar
There are two main factors driving the dollar’s gains:
U.S. Treasury yields:
Treasury yields have been rising, with the 10-year yield already exceeding 4.8%, a rate we haven’t seen since 2007.
The Fed’s decision:
The Fed has been signaling that they may raise interest rates due to looming inflation. With political budget concerns also at play, some investors are leaning toward the safety of the dollar.
What's the good thing?
While the dollar is stronger now, markets are always changing. When the dollar eventually retreats from its current highs it will likely mark the beginning of the next bull cycle for risk assets. But until the U.S. can properly manage inflation, it will likely not change much.
The percentage of Bitcoin supply held by long-term holders has officially reached an all-time high
After months of waiting, the percentage of Bitcoin supply held by long-term holders officially reached an all-time high last week, reaching 76.09%.
Defined by the statistical likelihood of a coin being spent, this means that more than 3 out of every 4 Bitcoins in circulation are currently held by on-chain entities with a low probability of being sold anytime soon.
This reflects the strong conviction of the core group of Bitcoin holders, despite the industry-wide outbreak and macro headwinds in 2022. That being said, it is also worth noting that the reduction in Bitcoin trading volume on exchanges means that price volatility may be exacerbated in both directions, as prices are set based on margin.
Note: All content represents the author's personal views only, is not investment advice, and should not be construed in any way as tax, accounting, legal, business, financial or regulatory advice. Before making any investment decision, you should seek independent legal and financial advice, including advice on tax consequences.
Agency: Kepler Research
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