(Kitco News) – Bitcoin (BTC) and gold saw their fortunes rise in early trading on Wednesday as the recent struggles in the stock market, uncertainty about the future of interest rate cuts, and persistent geopolitical tensions had traders opting for the safe haven play to preserve wealth.
“Yesterday’s decline [in stocks] meant that the Dow and S&P pulled back from their record closes made on Monday,” noted David Morrison, Senior Market Analyst at Trade Nation. “With little in the way of economic data releases, earnings will be in focus. But investors will also be mulling the outlook for rate cuts from the Federal Reserve.”
“There is some concern that the Fed panicked last month when it reduced rates by a thumping 50 basis points. The feeling is that it overreacted to a clutch of disappointing economic data releases over the summer, particularly those related to the labour market,” he added. “It turns out that the dip in Non-Farm Payrolls was temporary, while the latest data releases show an economy which is pushing along very comfortably.”
“Given this, and with expectations of a further 50 basis points-worth of cuts before year-end, then the bullish argument for equities remains compelling,” Morrison said. “This should remain the case as long as there’s a quick and clean election result. But it does suggest that investors may have to dial back their rate cut expectations as we head into 2025.”
While traders are still planning their strategy regarding stocks, optimism that the next phase of the cryptocurrency bull market is starting has helped boost the cryptocurrency market cap back above $2.3 trillion.
“The crypto market cap rose by 1.4% to $2.31 trillion. Cryptocurrencies and equities are now out of sync (there was profit-taking in equities), but they maintain a general upward bias,” said Alex Kuptsikevich, senior market analyst at FxPro. “The crypto market is forming an uptrend, which will be confirmed if local highs exceed the previous high of $2.32 trillion.”
“Bitcoin received a jolt on Tuesday, first jumping 4% in four hours to almost $68K and then losing over 4.6% to $64.7K,” he noted. “The market digested this influx of stop orders and soon began to rise again, trading near $66.8K at the time of writing. It will be interesting to see the bulls and bears continue to battle on a retest of $68K.”
BTC/USD 1-day chart by TradingView
“The first cryptocurrency was not allowed to go higher in July, but now the bulls have the breakdown of the descending channel and an active pullback from the 200-day moving average on their side,” Kuptsikevich observed. “At the same time, the RSI on the daily timeframe is not yet in the overbought territory, leaving room to run.”
Data provided by TradingView shows that the bulls and bears are indeed locked in a battle at the $68,000 support/resistance level, with the four-hour chart showing that so far, bears have rebuffed two attempts by bulls to break higher.
BTC/USD 4-hour chart by TradingView
But with sentiment rising and more experienced crypto traders highlighting that it is around this time following a halving that Bitcoin and the broader crypto market start to break higher, most analysts say it's only a matter of time before a new all-time high is reached.
“This is not the first time we make a case for October being the start of an aggressive rally for Bitcoin (BTCUSD), and lately, we have presented you the evidence on the long-term 1W time-frame,” wrote TradingView analyst TradingShot. “This time we want to focus on the 1D chart, where a more detailed analysis can be made on the fractals that lead to this rally.”
“As you can see both fractals (2023 and 2024) traded initially within a Triangle pattern that bottomed on an Inverse Head and Shoulders (IH&S),” he underscored. “The bottom took place at the same time as the 1D Death Cross formation. Throughout the whole process, they were supported by the 1W MA50 (red trend-line).”
TradingShot noted that based on the October 2024 fractal, “we are at the point where BTC just broke above the top (Lower Highs trend-line) of the Triangle.” He highlighted that in 2023, this point “led to a brutal rise that only took a ‘break’ after reaching the 2.0 Fibonacci extension, right after forming a 1D Golden Cross.”
“As a result, it is possible to see $88000 (Fib 2.0 ext) in December, before the market 'cools' again,” TradingShot concluded. “Much, of course, will depend upon how the markets digest the November U.S. elections, but as we've shown you in analytical charts here, the result of event tends to make little difference.”
At the time of writing, Bitcoin trades at $67,680, an increase of 3.25% on the 24-hour chart. Spot gold currently trades at $2,673.40/oz for an increase of 0.43% on the session after hitting a high of $2,685.75 following the U.S. market open.
