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Bitcoin climbs above $27k but faces stiff resistance

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(Kitco News) - Cryptocurrency prices climbed higher on Thursday to the delight of crypto traders who have experienced a month of sideways, volatile price action – but it remains to be seen if the price spike is more of the same chop that has been plaguing the market or if the rally has the momentum to sustain the gains.

Stocks also trended in the green as traders set aside concerns about the approaching U.S. government shutdown and last week's Fed’s comments that interest rates will remain higher for longer, opting to recover some of the losses experienced over the past two days.

At the market close, the S&P, Dow, and Nasdaq all finished higher, up 0.59%, 0.35%, and 0.83%, respectively.

Data provided by TradingView shows that Bitcoin (BTC) bulls initiated a rally near mid-day that pushed the top crypto to a high of $27,315 before profit-taking led to a pullback to support at $27,000. Bulls now have their sights set on resistance at $27,500, which has proven to be a tough hurdle to overcome in the two previous attempts at climbing higher.

BTC/USD Chart by TradingView

The positive day for Bitcoin was foreshadowed in the futures market, as Kitco senior technical analyst Jim Wyckoff noted “October Bitcoin futures prices [were] firmer in early U.S. trading Thursday.”

Bitcoin futures 1-day chart. Source: Kitco

“While bears still have the slight overall near-term technical advantage, the bulls have stabilized the market this week,” Wyckoff said. “More price gains in the near term would give the bears some fresh technical momentum to begin to suggest a near-term price bottom is in place.”

For Markus Thielen, head of research at Matrixport, Bitcoin’s track record of performing positively in October and the approaching halving in April suggest bulls may be able to extend the rally moving forward.

Bitcoin average monthly return. Source: Matrixport

“While we maintain a positive outlook for Bitcoin, despite signals indicating the SEC’s likely delay of a US-listed Bitcoin ETF until January 2024, the prospect of October, historically a robust month for Bitcoin with average returns of +20%, and the anticipation of the Bitcoin halving event (expected in April 2024) continue to contribute to our optimism and we remain bullish on the prospect of more positive price movements for Bitcoin,” Thielen said in a note to subscribers on Thursday.

In a strategy well-known to traders of gold and gold miners’ stocks, Thielen suggested that investors may be able to capture more upside potential by investing in Bitcoin miners rather than buying Bitcoin directly.

“It’s worth noting that if Bitcoin were to ascend towards a new all-time high at $70,000, an investor would realize a return of only +167%,” he said. “While respectable, we believe there’s potential for investors to outperform Bitcoin by acquiring a diversified portfolio of publicly listed Bitcoin (predominantly) mining companies.”

Bitcoin-related stocks. Source: Matrixport

“Based on Bitcoin’s current price, these stocks are currently trading at a -33% discount, offering an attractive +52% upside,” Thielen said. “In our regression analysis [above], the 10 stocks included could be valued +97% higher if Bitcoin returns to $30,000 or an impressive +572% higher if Bitcoin reaches a new all-time high and trades at $70,000.”

He also noted that certain altcoins could also outperform Bitcoin and Bitcoin-related stocks.

“MicroStrategy [MSTR] and Grayscale’s Bitcoin Trust (GBTC) are poised to exhibit only limited potential for outperformance,” he said. “In contrast, tokens like Dot-USD (Polkadot), which we use as a proxy, could potentially yield returns that are 10x higher if Bitcoin reaches $70,000. But, at the same time, it’s important to acknowledge that tokens come with a more elevated level of risk when compared to (listed) stocks.”

MSTR vs. GBTC vs. DOT/USD when BTC is worth $70,000. Source: Matrixport

As for the near-term price action for Bitcoin, market analyst Rekt Capital noted that $27,100 has been acting as strong resistance recently, and its price will only climb higher once this level is flipped to support.

Altcoins climb higher

Altcoins followed Bitcoin’s lead higher, with 90% of the tokens in the top 200 recording gains on the day while losses were minimal.

Daily cryptocurrency market performance. Source: Coin360

Biconomy (BICO) led the gainers with an increase of 39.6% to trade at $0.283, followed by a 21% gain for Compound (COMP) and a 15.3% increase for MAGIC (MAGIC). Merit Circle (MC) gave back some of its recent gains with a loss of 5.05%, while Moonbeam (GLMR) declined by 4.5%, and GateToken (GT) fell by 4.05%.

The overall cryptocurrency market cap now stands at $1.07 trillion, and Bitcoin’s dominance rate is 49.1%.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.