Bitcoin Takes A Ride Above $12k
Bitcoin is starting to decouple from the stock market as its correlation weakens. It made sense that bitcoin was correlated to equities in the short-term but now it must prove itself worthy of being a safe haven asset. Bitcoin needed to hold $11.1k-$11.3k and it did. Now it’s reaping the rewards. On October 20th, bitcoin finally broke $12k but it’s facing crucial resistance at $12.3k.
We continue to break the record for days trading above the $10k price. This strengthens the confidence of veterans while provides validation to new investors. We also see a macro environment that is set up for bitcoin’s success. It’s important to acknowledge that $12k is not a technical barrier but a physiological one. The price to beat is $12.3k which has the potential to start a new bull cycle.
A continuation of momentum can bring the price towards a new yearly high. The most optimistic investors predict price to go to as high as $17k.
Bill Nobel, cryptocurrency strategist, said “ETH and DeFi are watching BTC awaken like a sleeping giant. The BTC move to $12,000 is sending the altcoin universe scrambling for cover.” His statement is referring to the prior neglect towards bitcoin due to the spike in excitement for new DeFi protocols offering juicy rewards.
Bitcoin’s dominance has been on the decline until recently. As seen in the graph below, we saw this year’s bottom during September when DeFi was at its prime.
Now, the king of crypto has come out of hibernation to reclaim its market share. If bitcoin continues to rise up and maintain strong support traders will buy up DeFi tokens at a discount, for a rising tide lifts all boats.
Thanks to all eyes on bitcoin, Ethereum’s network is once again usable. Fees hit a three-month low bringing their daily average to levels not seen since July.
This is great for DeFi and the Ethereum network as a whole since this creates a reset to the hype that can later be rebuilt and go higher than ever.
As we get closer to $12.3k we must remember that historically, this price level has acted as a strong resistance area for bitcoin. Many experienced investors are cautious and aren’t placing any bets until resistance turns support or the bulls get rejected and sent home. The futures markets are reflecting a cautious take on the matter since showing contrasting directions which could spark significant volatility in the short term.