Bitcoin traders bought the dip near $80K, then $548M in ETF inflows and rising leverage pushed BTC toward the $85K resistance. Will the ceiling give way?
Key Facts
Bitcoin rallied toward $85,000 on Oct. 21 after holding $80,000 support during an Oct. 19 drop to $80,500, and spot Bitcoin ETFs took in $548 million across Oct. 19 and Oct. 20.
Bitcoin’s aggregate open interest rose 10.8% over three days to $27.46 billion, while its price gained nearly 4% over seven days.
A daily close above $86,700 would put investors who bought six to 12 months ago back in profit on average, according to Glassnode, and the CME FedWatch Tool shows markets favoring a hold at the US Federal Reserve’s Oct. 27-28 meeting.
Bidders showed their hand on Oct. 21 after Bitcoin (BTC) abruptly rallied toward $85,000. The breakout to the range highs followed the second day of spot ETF inflows, bringing the total between Oct. 19 and Oct. 20 to $548 million.
Despite the Oct. 19 sell-off to $80,500, the $80,000 support held, and bid liquidity in that area was absorbed.
Futures market data highlighted robust leverage use, with Binance 1-hour open interest rising from $7.79 billion to $8.14 billion as the price broke out. Over the last three days, BTC’s aggregate open interest rose 10.8% to $27.46 billion, while Bitcoin's price is up nearly 4% over the seven-day period.
BTC/USD price, open interest, funding rate. Source: Ray Salmond
Will $85K Finally Give Way?
In the near term, a liquidation cluster of short positions sits at $84,300 to $84,700 (Binance), which the price leaned into during the Wednesday rally. Above $85,000, large liquidation clusters extend to $87,500, reinforcing the trend of Bitcoin’s price action remaining bordered by bids at $80,000 and investors’ 6- to 12-month cost basis near $86,700.
BTC/USD liquidation heatmap, 7-day lookback. Source: Hyblock
One positive developing trend is that as BTC’s price presses against its ceiling, holders' profit-taking continues to decline. According to Glassnode,
“Selling by the 1 to 2 year group peaked at the start of October, after the September high, and the group now moves less than a third as many coins a day.
A daily close above $86.7K would put the 6 to 12 month buyers back in profit on average and clear the nearest band of supply overhead.”
Bitcoin buyers’ profit-taking declines. Source: Glassnode
What’s Next for Bitcoin in October?
The US Federal Reserve has entered a blackout period where no public statements will be issued until the next FOMC on Oct. 27-28. Current odds favor a hold in October and a hike in December. This consensus view theoretically gives Bitcoin and altcoins some “room to run,” as it removes a degree of uncertainty until a few days before Oct. 27.
October and December interest rate hike probabilities. Source: CME Group
New narratives revolving around the US midterm elections on Nov. 3 may impact market sentiment and positioning. Democrats are projected to pick up a handful of seats and swing the balance of legislative power. Some market participants continue to project a message that Democrats are, and will continue to be, “bad for crypto.”
Narratives drive positioning and shape investor sentiment, so depending on where one stands, some risk adjustment could occur in the last two weeks of October.
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