October has been exciting for the bulls as BTC continues to push above multiple major resistance levels. The first week of the month isn’t even complete, and BTC has already reached an intra-week high of $55.4K, just entering into the critical $55k to $58k zone of resistance. Since the higher low at $40.7k, Bitcoin managed to rally over 36% to today’s intraday highs.
During the weeks of risk-off, Bitcoin managed to hold the deepest higher low at $40.7k, which we covered and started to form sub Wave 3 to the upside.
BTC continued to outperform stocks even with risk-off, managing to reclaim key resistance levels and print higher highs. It also managed to push above a major downtrend line around $50.8k, with a successful backtest of support before soaring up to $55.4K. Holding above the downtrend line and following through higher will likely validate the powerful breakout.
Third-Largest Whale Moves 3,000 BTC to Coinbase
The pace of the BTC rally is picking up even as the third-largest BTC whale transferred 3,000 BTC to Coinbase yesterday. The whale entity has purchased 15,227 BTC between $50k to $58.2k earlier this year, roughly 12% of its total BTC position. Although this is not a large percentage of total holdings, we can expect the entity to distribute, especially if BTC starts testing $55k to $58k, a major technical and on-chain zone of resistance.
The whale entity is likely to break even or realize a small profit between $50k to $58k, likely to reduce risk and rebalance. It is important for the bulls to continue stepping in to absorb supply from this entity along with other remaining sellers who purchased BTC between $50k to $58k. Once the supply is fully absorbed, the bullish trend in on-chain strongly suggests Bitcoin is likely to push higher and potentially make new all-time highs.
Wyckoff Accumulation Potentially Completing Phase D
Wyckoff Accumulation continues to hold a larger structure and recently formed the BU/LPS or higher low at $39.6k before BTC soared to $55.4K, signaling a potential completion of Phase D. The massive liquidations and FUD in September further extended Phase D consolidation after a failed attempt to break out above $50k as open interest and leverage was overextended.
BTC bulls protected $40k, a critical level of technical and on-chain support, as larger buyers stepped in as sentiment turned extremely bearish. Since then, BTC managed to push above $52.9k, which is the key level to conclude Phase D and start Phase E Mark-Up. Ideally, a weekly close above $52.9k with follow-through higher should conclude Phase D.
Near Term Caution After Large Rally
Near term, BTC is reaching overbought levels on the 4-hour chart, spot exchange reserves have slowly increased for three days, whale ratio pushed higher, while the third-largest BTC address moved 3,000 BTC to Coinbase. This signals near-term caution as Bitcoin staged a powerful rally in just a week. Ideally, it would be good to see price consolidate with a small pullback while continuing to establish $50k as support.
Although the 4-hour chart might look cautious, the mid to long-term trend in fundamental and on-chain analysis remains firmly bullish and has a higher weighting on price action looking at the next few months.
On-chain Trend Remains Firmly Bullish
On-chain metrics continue to overall show firm accumulation in long-term holders and miners, which are the most important cohorts because they own the largest percentage of total BTC supply. Although spot exchange reserves have been slowly trending higher for 3 days, there is no major trend of aggressive distribution from long-term holders and miners. We will have to closely watch On-chain metrics as BTC continues the breakout attempt above $52.9k.
Critical Week for a Breakout to $55k to $58k
This week’s price action will be critical in validating the bear trap from $52.9k to $39.6k. So far, BTC managed to close above $45.2k, printing a higher high. Most importantly, we need to see it make a strong weekly close above the highs from September 7th, 2021, at $52.9k and follow-through higher to fully validate the bear trap.
Today’s rally looks very bullish so far, but it’s still early, and we need to wait for price confirmation. Bitcoin’s performance relative to other risk assets has been very impressive considering risk-off. For the last week, the bulls have firmly regained control, managing to hold the low $40s in a difficult environment while significantly outperforming.
If the momentum continues and BTC successfully establishes $50k as support, the probability of entering the major resistance zone between $55k to $58k will continue to increase. If $58k is reclaimed, the bulls will start eyeing the previous all-time highs at $64.8k, which has very low technical and on-chain volume suggesting the path to new all-time highs could be likely.
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