(Kitco News) – Gold was the odd asset out on Monday, while stocks and cryptos rallied higher to start the week as investors embraced a risk-on sentiment despite persistent concerns about the future of interest rate cuts amid ‘sticky’ inflation.
“While consumers might be feeling some price pressure, the costs to producers are not escalating as quickly, which could help ease the situation in the long run,” noted analysts at Bitfinex. “Moreover, we feel that the overall trend in both consumer and producer inflation remains downwards, and any small blips of inflation numbers coming in 10-20 bps higher than expected will be natural as we potentially enter a disinflationary cycle for consumer prices.”
“One key issue that continues to weigh on inflation is the cost of shelter, which remains a significant factor in consumer inflation data too,” they added. “However, when shelter costs are excluded, producer price inflation has consistently remained below the Federal Reserve's 2-percent target.”
“While consumer inflation is admittedly up, the steadiness in producer prices offers a silver lining,” the analysts said. “If these trends continue, they could signal that inflation is coming under control at the production level, which might provide some relief for policymakers and consumers alike in the coming months. Moreover, a downward trajectory for inflation allows the Fed to be less considerate of these moderations during the current cutting cycle.”
A 3% rally for Nvidia (NVDA) helped propel the major indices higher despite a spike in the DXY, leading to a positive close for the S&P, Dow, and Nasdaq, which finished up 0.77%, 0.47%, and 0.87%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) bulls used support at $63,000 as a springboard to vault higher on Monday, pushing King Crypto to a high of $66,290 in the afternoon.
BTC/USD Chart by TradingView
According to Bitfinex analysts, “Bitcoin remains in a reactionary environment as short-term holder cost basis is tested. Traders should anticipate potential corrections but also be prepared for a stronger recovery bounce from lower levels, given the underlying market resilience.”
“Bitcoin has been trading within a broad range for the past eight months,” they added. “In the event of the onset of a bear market, selling typically ensues when the Coinbase Premium turns negative. However, such selling has not been observed, suggesting that despite the fluctuations, the market remains relatively stable without widespread fear-driven divestment. This resilience could indicate underlying strength or a balanced market sentiment that may steer future price movements.”
At the time of writing, Bitcoin trades at $66,013, a gain of 5.36% on the 24-hour chart. Spot gold has seen some minor selling and trades at $2,651.30/oz at the time of writing for a loss of 0.21% on the session.
Q4 catalysts
Looking ahead to what catalysts could push BTC price beyond $70,000 in the fourth quarter, Ryan Lee, Chief Analyst at Bitget Research, said the biggest factor affecting all markets in the Federal Reserve.
“Bitcoin’s resistance despite increased volatility last week reflects investors' hopes for strengthening the US economy, with positive unemployment data hinting at a further easing of the Fed’s monetary policy, which would likely benefit riskier assets like Bitcoin,” he said. “The state of the labor market and inflation data directly affect the Federal Reserve’s decision on interest rates. If rates remain low or drop, it usually weakens the U.S. dollar, pushing investors to seek alternative assets such as Bitcoin.”
As for why the focus on Labor Data is important, Lee noted that a strong labor market begets a strong dollar.
“On October 4, a report revealed that U.S. non-farm payrolls increased by nearly 254,000, far exceeding August's 159,000 growth,” he said. “This unexpectedly strong job growth strengthened the US dollar, prompting speculation that the Fed might hold off on cutting rates until after the U.S. elections in November.”
As for what this means for the broader markets, he noted that “Despite the stronger dollar, digital assets like Bitcoin remained less affected than many fiat currencies.”
“This is seen as a positive indicator that Bitcoin is entering a bullish phase in the medium term,” Lee said. “Large investors appear confident enough to buy during periods of weakness, which helps to keep prices stable. In addition, good figures for ‘non-farms’ (US jobs outside of agriculture) reduce fears of a potential recession in the Western economies, which has been a source of pressure on the crypto industry.”
Another positive factor for cryptos is the increased liquidity from stablecoin issuance, he said. “The recent issuance of over $10 billion in stablecoins means a large influx of liquidity into the cryptocurrency market, bringing a potential spike in institutional investor interest. The corresponding increased investment and trading activity, with companies increasingly deciding to include Bitcoin on their balance sheets or use it for trading, can drive Bitcoin's BTC prices higher already this month.
On the geopolitical front, Lee noted that “Global events, such as the ongoing conflict in the Middle East, also influence crypto market sentiment. When geopolitical tensions rise, capital often flows to safer assets like the U.S. dollar. However, a de-escalation could spark renewed interest in riskier investment options such as Bitcoin.”
“Monetary and fiscal stimulus measures from major economies, such as China, could lead to capital flowing into cryptocurrencies as an alternative to fiat currency,” he added. “Bitcoin may be viewed as a hedge, boosting its value.”
“Moreover, the cryptocurrency market responded positively to Elon Musk’s support of Donald Trump’s candidacy for the US presidency,” Lee said. “Musk's appearance at a campaign rally in Pennsylvania contributed to the growth of hopes for a Republican victory in the November presidential election, which could be a positive factor for the crypto market.”
Google Trends data for the term “Bitcoin” shows the index has dropped to 15, meaning there is little interest in searching for Bitcoin, but that doesn’t necessarily portend weakness ahead.
“The last time the search interest for Bitcoin dropped to an index of around 20 was in late January to early February 2024,” Lee noted. “At that time, the BTC price skyrocketed from $41,000 to nearly $71,500, reaching a historic high within the following month and a half.”
“During the ‘market stagnation period’ from May to September 2023, this was also an excellent opportunity to build positions while waiting for a major market rally,” he added. “Therefore, buying in during periods when BTC search volumes hit a low, when interest is scarce, remains a relatively rational and more certain strategy.”
Lee predicted that “By the end of the month, volatility in the crypto market will likely increase ahead of key events — the next Fed meeting on the key rate in early November and the US presidential elections at the same time,” which could result in “BTC price fluctuations [possibly ranging] from $58,000 to $69,000.”
“On a technical pattern, indicators like a ‘golden cross’ on the MACD, where the short-term moving average crosses above the long-term moving average, may signal a bullish trend,” he added. “If this pattern continues, accompanied by a spike in trading volumes, we can see Bitcoin reaching or even exceeding the $70,000 mark.”
MN Consultancy founder Michaël van de Poppe also likened the current price action to Bitcoin’s performance in 2023 and predicted it would move towards a new all-time high in the coming weeks.
#Bitcoin is breaking upwards,
We should continue moving upwards to an ATH in the coming weeks.
However, before that, I suspect we'll have more consolidation before continuing.
It's just copypasting 2023 all over again. pic.twitter.com/zvJPYqRvDG— Michaël van de Poppe (@CryptoMichNL) October 14, 2024
As for a price target, TradingView analyst TradingShot noted that “We have had 3 major Bullish Legs so far, more or less around the same levels (+92.27% to +101.57%). So a bad case scenario would be to see a +92.27% rally from the August 04 Low, which would still give us a $94500 Target.”
Sea of green in the altcoin market
Bitcoin’s price surge benefited the altcoin market as only four tokens in the top 200 recorded losses on Monday.
Daily cryptocurrency market performance. Source: Coin360
Memecoin (MEME) was the biggest gainer with an increase of 38.8%, followed by a gain of 31.4% for Book of Meme (BOME) and an increase of 29.8% for Saga (SAGA). Safe (SAFE) was the biggest loser, falling 4%, while Bittensor fell 2% and Tron (TRX) lost 1.2%.
The overall cryptocurrency market cap now stands at $2.29 trillion, and Bitcoin’s dominance rate is 56.9%.
