October's Unexpected Downturn
Bitcoin (BTC USD) price concluded October in negative territory, defying the historical trend associated with the month, often referred to as "Uptober." This bearish outcome has led investors to re-evaluate their previously optimistic expectations. The declining sentiment surrounding the impact of potential interest rate cuts was a significant factor in Bitcoin's lackluster performance during October.
Concerns echoed in macroeconomic forecasts also contributed to this sentiment. A decrease in the anticipated scope of rate cuts emerged as one of the elements that highlighted waning market confidence in Bitcoin's price potential. While certainty regarding rate cuts was previously close to 100%, the probability of the Federal Reserve (FED) lowering rates to key targets has diminished. The upcoming FOMC meeting was scheduled for December 10th, with the probability of the FED slashing rates by 350 to 375 basis points falling to 63%, and approximately 37% for a reduction of 375 to 400 basis points.
FED chair Jerome Powell had cautioned about persistent inflation risks and the potential impact of the trade war on the market. These concerns are likely contributing factors to the declining probability of rate cuts.
Bitcoin Sender/Receiver Ratio Declines to a 12-Month Low
In addition to reduced expectations for interest rate cuts, bullish Bitcoin price predictions have also been tempered by a recent decline in on-chain activity. The demand for the cryptocurrency in October was notably lower compared to the preceding two months, prompting investors to question whether the bull run might be nearing its end.
Data from CryptoQuant indicated that the ratio of senders to receivers had cooled down to its lowest point in the past 12 months. This ratio has historically trended downwards when the cryptocurrency enters a consolidation phase.
A lower sender/receiver ratio signifies fewer active addresses on both the buying and selling sides, which is typically associated with increased market uncertainty. This consolidation phase suggests a market attempting to balance, weighing the possibility of extending its rally against further downside capitulation. A more in-depth examination of Bitcoin's (BTC USD) performance indicators may provide further clarity on the cryptocurrency's likely future direction.
Potential for a Bitcoin Comeback Amidst Pullback
Despite the prevailing uncertainty, several noteworthy observations from October offered a glimmer of hope for Bitcoin bulls. Notably, the cryptocurrency experienced net exchange outflows over the past four weeks, even with the significant pullback. The reduction in Bitcoin exchange reserves during October suggested that investors, particularly long-term holders, were not inclined to sell.
Regarding the recent pullback, Bitcoin data indicated that the cryptocurrency remained on an overall bullish trajectory despite the retracement. According to Bull Theory, Bitcoin (BTC USD) price touched its mean reversion trend line following its dip on Thursday. Historically, the cryptocurrency has demonstrated a significant bullish rebound each time it has interacted with this mean reversion trend line throughout October.
The Bull Theory analysis also highlighted that Bitcoin's regression slope was still trending upwards on its 100-day and 200-day moving averages. This aligns with recent sentiments from prominent industry figures, such as Michael Saylor, who anticipates Bitcoin reaching $150,000. While these indicators suggest a pause for the bulls, it is evident that the markets are also attentive to downside risks.
Bitcoin had previously surged to historic highs, with market excitement approaching euphoric levels. At that time, markets were oversold, a gold rush mentality was prevalent, and recession concerns influenced sentiment. Changes in macroeconomic environments observed at the peak of the previous bull run were indicative of that cycle's top, and these factors could serve as a crucial benchmark for assessing the peak of the current cycle.