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Cryptos spike after U.S. debt deal, but momentum fades

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(Kitco News) - The broader cryptocurrency market climbed higher in the early hours on Monday after the U.S. government announced a 45-day funding deal that averted a government shutdown, but the momentum began to fade in the afternoon as traders took profits in the face of deepening struggles for the global economy.

Stocks had a mixed response to the debt deal, with investors showing relief that one near-term threat was neutralized while also acknowledging that the agreement is but a temporary solution to the budget differences that exist between the Democrats and Republicans. At the closing bell, the Nasdaq finished up 0.67% while the Dow closed down 0.22% and the S&P finished flat.

Data provided by TradingView shows that Bitcoin (BTC) spiked to a high of $28,615 near midday, but ran into a wall of bearish resistance that resulted in a pullback to $27,650 before bulls bid it back above support at $27,850.

BTC/USD Chart by TradingView

“October Bitcoin futures prices [were] solidly higher and hit a six-week high in early U.S. trading Monday,” according to Kitco senior technical analyst Jim Wyckoff.

Bitcoin futures 1-day chart. Source: Kitco

“The bulls have the near-term technical advantage amid a price uptrend in place on the daily chart,” Wyckoff said. “That means the path of least resistance for prices is now sideways to higher in the near term.”

According to MN Trading analyst Gunter Lackmann, the move by Bitcoin to take out the swing highs of September 19 and August 29, along with the formation of a “higher high – higher low” pattern has vaulted Bitcoin out of the consolidation pattern it had been stuck in for weeks.

“For a temporary uptrend to continue, price should stay over $26k, and after another higher low, ideally around $27k - 27.5k, the dealing range EQ of $28.3k can be broken,” Lackmann said. “ If this [turns out to be] the case, a further increase towards at least $30k can be anticipated.”

BTC/USD 1-day chart. Source: MN Trading

“For those not already in long positions, it could be worth considering scaling into some exposure if we see a price pullback towards $27k - 27.5k, with invalidation at <$26k,” he said. “Once BTC starts running again in this relatively low liquidity market environment, it will be designed to leave anyone not already in a position behind.”

Lackmann noted that “a safer entry or addon orders could be sought after a confirmed break of the dealing range EQ at $28.3k while watching lower timeframes (h1 - h4) for signs of any breakout that occurs to be a liquidity raid (fakeout) instead.”

If Bitcoin price retraces back under $26,000, it could “continue the consolidation, and a liquidity raid under $24.8k would not be out of the question,” he said.

Altcoins trend lower

The majority of tokens in the top 200 were in the red on Monday afternoon as profit-taking erased the gains that most tokens enjoyed in the early trading hours.

Daily cryptocurrency market performance. Source: Coin360

Bitcoin SV (BSV) price increased 22.63% to trade at $39.10, while Merit Circle (MC) gained 9.8%, and TomoChain (TOMO) climbed 9.4%. tomiNet (TOMI) was the biggest loser, declining by 8.3% to trade at $2.84, followed by an 8% loss for Maker (MKR).

The overall cryptocurrency market cap now stands at $1.09 trillion, and Bitcoin’s dominance rate is 49.6%.

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.