Bitcoin and Ethereum Market Analysis
Bitcoin Dominance and Polymarket Insights
Crypto Outlook: As we head into the final weeks of October 2024, Bitcoin’s dominance remains a key focal point for crypto traders. It’s currently at very high levels which is unfavorable for altcoins but might come back down after BTC passes the $70k mark.
Source | Tradingview
On Polymarket, users are betting on whether Bitcoin will hit $70,000 by the end of the month. Current odds show a 74% chance of hitting this milestone, signaling strong market optimism. However, traders should remain cautious of pullbacks, with RSI divergences on the 4-hour timeframe indicating a potential correction.
Source | Polymarket
Heatmaps from Hyblock suggest significant short liquidation pressure could lead to volatility if Bitcoin surpasses $72,462. Over $33 billion in short positions could be liquidated, potentially driving further upward momentum or leading to a sharp correction.
Ethereum’s Position
Ethereum is following a similar trend, with Polymarket users predicting a 68% chance of ETH reaching $2750 by the end of October. A smaller chance of Ethereum hitting $3000 (21%) suggests that while bullish sentiment exists, market participants are wary of broader market conditions. ETH dominance and its potential to break above key resistance levels could play a significant role in the upcoming weeks.
Source | Polymarket
Macro Economics and Crypto Impact
M2 Money Supply and Fed Policy Impact on Crypto
An increase in M2 money supply suggests that more capital is circulating in the economy, which is typically bullish for assets like crypto. When money supply grows, more liquidity is available to invest in markets, including Bitcoin and Ethereum.
Source | Macromicro
The M2 money supply increase also reduces the opportunity cost of holding non-interest-bearing assets like crypto, as investors move away from cash and bonds towards higher-yielding opportunities in the digital space.
The Federal Reserve has already initiated rate cuts, moving towards easing policies after the aggressive hikes to fight inflation. With a potential 25 bps cut in November, we are seeing signals that the Fed is transitioning towards a more accommodative stance. This should provide a push for Bitcoin, Ethereum, and broader crypto markets, as lower rates tend to weaken the U.S. dollar and make alternative stores of value more appealing.
Source | CMEGroup FEDWatch
US Election: Trump vs. Kamala Harris and the Crypto Debate
It’s important to clarify that Donald Trump has expressed pro-crypto sentiments more recently, showing support for Bitcoin and decentralized finance (DeFi) like his own crypto DEFI project WLFI. This stance aligns with his broader view of fostering financial innovation and promoting deregulation. A Trump administration could bring favorable regulations for the crypto industry, encouraging broader adoption of digital currencies and creating an environment where crypto businesses can thrive.
On the other hand, the Democratic stance has generally been more skeptical toward cryptocurrencies. A Kamala Harris presidency may continue the trend of heightened regulatory scrutiny. Key figures within the Democratic Party have voiced concerns about crypto’s role in tax evasion, financial instability, and environmental impact. This could lead to stricter regulations, particularly around stablecoins and decentralized exchanges (DEXs), which could dampen innovation in the sector.
Global Economics and World Events Impacting Crypto
Oil Prices and Geopolitical Tensions
Oil prices have surged amid geopolitical tensions, particularly in the Middle East. Any conflict that threatens the supply of oil, particularly through key routes like the Strait of Hormuz, sends shockwaves through the global economy. Higher oil prices typically fuel inflation, which could benefit Bitcoin as a hedge against monetary devaluation.
The possibility of further conflict, including concerns over World War III, is creating uncertainty in global markets. Historically, such instability drives capital towards safe-haven assets like Bitcoin. If tensions escalate further, we could see a huge drop in prices, followed by significant positive price action in the crypto space as investors look to hedge against macroeconomic risk.
China’s Economy and Global Economic Slowdown
China’s economic struggles, particularly its issues with the housing market and weak domestic demand, continue to affect global growth. Recent measures by the Chinese government, including rate cuts and real estate stimulus, are aimed at stabilizing the economy. However, these steps haven’t fully quelled concerns, and continued weakness in China could have ripple effects on global markets.
For cryptocurrencies, China’s economic policies are significant because of the country’s influence on global supply chains and its historic role in Bitcoin mining. As China attempts to stabilize its economy, its policies on capital outflows and regulation of digital assets will continue to shape the crypto landscape.
Outlook for Bitcoin and Ethereum
- Bitcoin: If Bitcoin crosses the $70,000 mark, it could trigger significant short liquidations, accelerating price movement. A crucial support level to watch remains at $63,000, and bulls need to defend this to avoid a bearish reversal. With a strong macro tailwind from potential further rate cuts, Bitcoin remains well-positioned for continued upside momentum.
- Ethereum: Ethereum, with its major milestones like ETH 2.0 staking, is seeing increasing institutional interest. Breaking above $2750 is essential to maintain bullish momentum, with $3000 being a psychological barrier. Ethereum’s role in DeFi and NFTs continues to be a major driver of its value.
Upcoming Events
- Federal Reserve Meeting: The Fed’s November meeting will be closely watched for potential 25 bps rate cuts. If the Fed opts for another cut, this could provide significant bullish momentum for risk-on assets like crypto.
- NFT and Token Unlocks: Several projects, including Nakamoto Games (NAKA), Karrat (KARRAT), and Ethena (ENA), will see token unlocks in the coming week. These events often lead to increased liquidity in the markets and could impact token prices. Cardano (ADA) and ApeX (APEX) have some heavy unlocks this week as well.
Key Levels and Takeaways
- Bitcoin: Bulls need to hold $65k to maintain momentum, while the critical resistance level stands at $70k.
- Ethereum: Watch for a break above $2750 to initiate a move towards $3000. The $2250 support level remains critical for holding current market structure.
In conclusion, while the crypto markets are poised for growth, external economic factors, geopolitical risks, and macroeconomic trends will play a pivotal role in shaping the next week’s movements. None of the information provided here is financial advice, and we strongly encourage our readers to always do your own research (DYOR) by visiting trusted sources like blog.millionero.com. Once you feel confident and ready, you can trade spot and perpetuals on Millionero to take advantage of these market opportunities.