(Kitco News) – Bitcoin (BTC) and gold trended higher on Tuesday while stocks fell under pressure after the earnings report from ASML Holding (ASML) was accidentally released early, showing a disappointing sales outlook for 2025. The price of ASML stock fell more than 16% in response and dragged down Nvidia (NVDA) and AMD (AMD) shares with it, which put pressure on the major indices.
As investors weigh how to respond to the recent weakness in equities, “China's economic strategy also remains a point of interest, as the Minister of Finance indicated the potential for increased debt issuance to stimulate economic growth, noting considerable leeway to expand the deficit, although specifics on size and timing remain undisclosed,” reported analysts at Secure Digital Markets.
The S&P, Dow, and Nasdaq all struggled in the red for most of the trading day and, at the closing bell, finished down 0.76%, 0.75%, and 1.01%, respectively.
“Bitcoin surged to over $67,000, marking its highest valuation since July 29th, buoyed by anticipation of further economic stimulus measures from China and a renewed correlation to former U.S. President Donald Trump's election prospects,” Secure Digital Markets analysts said. “The cryptocurrency is testing resistance within a descending channel that has been in place for seven months, delineated by trend lines from the highs of March and June and the lows of May and July.”
“Open interest in Bitcoin is [at] record levels, predominantly fueled by institutional investors,” they added. “The open interest weighted funding rate is now at a multi-month high, reflecting a bullish outlook in the short to medium term. Market sentiment on Polymarket gives Bitcoin a 64% chance of setting new records in 2024, an increase of 9% from last week.”
Data provided by TradingView shows that Bitcoin’s price whipsawed in the early going on Tuesday, surging to a high of $67,960 before rapidly falling to $64,787 as bears attempted to crush bulls building momentum.
BTC/USD Chart by TradingView
But bulls remained determined to push higher, regaining their footing in the afternoon to once again climb above $67,000, with their sights set on overcoming the next resistance level at $68,000.
Bulls' efforts have been aided by heavy inflows into spot Bitcoin exchange-traded funds in recent days. “Bitcoin has witnessed substantial inflows, totaling $810 million over two sessions, with notable activity from Fidelity and ARK,” Secure Digital Markets analysts highlighted. “Meanwhile, Ethereum (ETH) attracted $17 million in inflows yesterday, predominantly from Blackrock.”
As for the source of building momentum, OTC Capital CEO Brian Dixon pointed to positive remarks from BlackRock CEO Larry Fink and other favorable developments that have encouraged traders to reengage with the crypto market.
“I believe the market sentiment and public perception, often swayed by media coverage, can lead to increased buying or selling,” Dixon said in a note shared with Kitco Crypto. “Positive news about adoption, technological advancements, or regulatory clarity can drive prices up, while negative news or regulatory crackdowns can lead to price drops. Positive news released yesterday on Bitcoin while Blackrock's CEO Larry Fink noted that Bitcoin is an asset class in itself. I believe this is one key factor that created a buying spree in Bitcoin.”
At the time of writing, Bitcoin trades at $66,415, an increase of 0.68% on the 24-hour chart. Spot gold continued to hold near its all-time high and currently trades at $2,662/oz for a gain of 0.50% on the session.
Bullish outlook from JPMorgan
Bitcoin’s building bullish momentum was highlighted in Friday’s Alternative Investments Outlook and Strategy report from JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou.
“In all, we are bullish on digital assets into 2025,” the analysts said, pointing to several factors fueling their outlook, including the emergence of the “debasement trade,” a trend in which investors turn to alternative asset classes – such as gold and bitcoin – to hedge against economic instability.
The analysts noted that with rising geopolitical tensions and the upcoming U.S. election dominating news headlines, speculative institutional investors - like hedge funds - might view gold and Bitcoin as beneficiaries of this trend.
With polls showing increasing odds of Trump securing a second term in office, the analysts said the debasement trade could be further reinforced as tariffs related to geopolitical tensions and an expansionary fiscal policy, also known as debt debasement, could further weaken the U.S. dollar.
Other developments putting a bid under cryptos include traditional wealth advisors such as Morgan Stanley allowing recommendations of spot bitcoin ETFs to clients, the end of bulk Bitcoin liquidations by Mt. Gox and Genesis creditors, and the upcoming cash payments from the FTX bankruptcy, which the analysts said could potentially be reinvested into the market.
They also highlighted that the market cap of stablecoins is approaching its previous peak of around $180 billion, which was reached before the collapse of Terra/Luna in 2022. While the U.S. is still working to pass stablecoin legislation, the analysts said it would most likely come sometime in 2025 and anticipate adoption will increase once finally implemented, making stablecoins more mainstream.
The one caveat to a positive outlook is Tether, the largest stablecoin by market cap, as U.S. compliant stablecoins are poised to see the biggest benefit while non-compliant ones – such as USDT – could face challenges, they said.
Regarding Bitcoin and its current price above $66,000, the analysts noted that it remains significantly above their estimated average production cost of $47,000 but said that its volatility-adjusted comparison to gold is currently at $63,000.
Commenting on Bitcoin's performance on Tuesday, John Glover, Chief Investment Officer at Ledn, highlighted that its price “has broken above the parallel channel (flag pattern, blue lines below).”
“Typically, for safety, I look for two consecutive daily closes above or below a break of a trendline, so while it’s not time to jump in with both feet yet, this break could be signaling the next move up to retest the highs at $73k,” he said. “Be patient and watch for a confirmation on today’s close as we have to stay above $65k, but things are looking more positive for BTC from a technical standpoint.”
And according to Bitcoin Archive, further technical support exists for the rising bullish sentiment, as the Bitcoin MACD is set to make a bullish crossover on the weekly chart for the first time in almost a year.
Bitcoin MACD about to make a bullish cross-over on the Weekly chart for the first time in 364 days. ? pic.twitter.com/XOB1fMAxNg
— Bitcoin Archive (@BTC_Archive) October 15, 2024
Altcoins decline amid profit-taking
The early morning volatility and profit-taking took a toll on altcoins, with most tokens in the top 200 recording losses on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
Storj (STORJ) overcame Bitcoin’s early pullback to post a gain of 22.1%, while Scroll (SCR) climbed 13.7% and Metis (METIS) gained 9.9%. Saga (SAGA) saw the largest decline, falling by 11.5%, while Mog Coin (MOG) lost 10.7% and Sui (SUI) fell 9.4%.
The overall cryptocurrency market cap now stands at $2.3 trillion, and Bitcoin’s dominance rate is 57.5%.
