Bitcoin (BTC) price is expected to hit its highest daily price since July. It rose to 31st place after hitting an intraday high of $67,953. The rally hit a new high (HH3) compared to the previous local high of $66,450 on September 27th.
Bitcoin 1 day chart. Source: Trading View
With a rise of 6.17% on October 15, market expectations are growing that it will recover to the $70,000 level for the first time in the second half of 2024.
Bitcoin’s apparent return to Q1 levels
One of the key observations about the ongoing rally is the lack of demand for Bitcoin from retail. Crypto Rover, founder of Cryptosea, highlights the fact that while Bitcoin is near all-time highs, “retail interest is close to zero.”
CryptoQuant CEO Joo Ki-young notes that Bitcoin’s apparent demand is starting to increase.
According to Youngju, the apparent demand for BTC is a key indicator determined by the difference between new supply (mined issuance) and changes in long-term reserves (supply suspended for more than a year).
Clear demand for Bitcoin. Source: CryptoQuant
If Bitcoin supply decreases by more than production, this is a sign that demand is increasing as more Bitcoin is in circulation. Conversely, if production outpaces changes in supply, demand may weaken.
Historically, Bitcoin’s apparent demand has increased with each significant rally since 2016. Current apparent demand mirrors February 2024 levels, after which BTC hit an all-time high of $73,800 in March.
Bitcoin purchase demand increases by 3%
Bitcoin on-chain researcher Axel Adler Jr highlights a similar trend among investors. Adler noted in his X post:
“Demand to purchase coins from new investors has resumed, increasing by 3% over the past 10 days. “This is a positive signal for the market.”
Axel Adler Jr.’s Bitcoin New Investor Coin Purchasing Demand Source: X.com
Related: Bitcoin ‘Loose’ from $70K as ‘Uptober’ Flips Green
Coinbase (US-based) and Kimchi Premium (Korea) also showed positive gains, indicating that retail investors are starting to bid for BTC. The rising Coinbase premium indicates buying pressure in the US retail market, while the Kimchi premium is channeled to Korean individual investors.
Bitcoin: Coinbase Premium Index. Source: CryptoQuant
However, it is important to note that the overall premium for both indices is still negative. On-chain analyst Hansolar notes that certain periods in the market can be considered ‘distrust’ rallies when Bitcoin prices are available on exchanges at ‘discounted prices’ before rising exponentially.
Bitcoin’s leverage-driven rally is ‘very risky’
Although spot demand for BTC has improved over the past few days, the recent rally is largely due to the derivatives market. Last week, Bitcoin saw its weekend open interest increase by $800 million as BTC price rose to $64,500. As the week progressed, the price quickly reversed and made lows below $60,000.
Bitcoin open interest and price chart. Source: Velo.data
A similar situation occurred this weekend. Since October 11, the price has risen 10%, but at the same time open interest has risen almost 18%. In light of these developments, market analyst Maartunn struck a cautious note, suggesting last week’s decline was also triggered by ‘excessive leverage’.
Additionally, Capriole Investments’ Bitcoin heater chart shows a similar outlook when it comes to futures markets.
As can be seen in the figure, this indicator has now crossed the overheating threshold (red line) for the first time in 2024. High values indicate greed (bearishness) and overleveraged positions, which means the leveraged market should reset soon.
Bitcoin Heater Chart. Source: Capriole Investments
Related: Is Bitcoin’s Uptober Coming, or Will Today’s BTC Rally End in More?
Bitcoin Faces Major Resistance at $68,000
With more than five days left, Bitcoin may breach the psychological $70,000 level before October 20th.
However, it may take time for the $68,000 overhead resistance to turn into support. Bitcoin’s strong supply zone remains between $67,000 and $68,300, and a retest of that range would also test the downtrend line that has been active since March 2024.
Bitcoin 1 day chart. Source: Trading View
As you can see in the chart, the Bitcoin price entered the supply zone on October 15th, but is currently experiencing a sharp correction after testing the price range. The price rejection also occurred after the price tested the downtrend line.
Historically, each HH position has gone through a period of correction since it first formed a high HH1 last August. Therefore, market action suggests that Bitcoin may struggle to break above $70,000 this week unless it closes daily positions above $68,300 in the coming days.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.