Bitcoin Trying to Get Over The 12k Hurdle
To quickly update, Fidelity has released its Bitcoin Investment Thesis which details the importance of having a 1–3% allocation of bitcoin in a portfolio. Also, bitcoin continues to bounce between $11,285 and $11,555 as it struggles to decided on the direction to move to next. Let’s go over bitcoin’s state as of October 14th.
Inside Day
Bitcoin, the cryptocurrency we all know and love, has formed an “inside day” candle on Tuesday. This has put a halt on the immediate bullish technical outlook we had just 2 days ago. An inside day candle occurs when the cryptocurrency trades well within the preceding day’s high and low and indicates consolidation.
This now puts Tuesday’s high of $11,569 the next resistance level to beat for our lovely bulls. Breaking this would confirm a continuation of the recent rally and pave the way to prices above $12k. On the flip side, acceptance under the day’s low of $11,314 implies a bearish reversal and could yield deeper declines.
The good news is that fundamentals are on the bullish side. On-chain metrics favor a continued rally due to the new 7-day hashrate average record high of 144.29 exa hashes per second.
Market Sentiment
According to data from TheTie, an alternative data provider for digital assets, the daily sentiment score for bitcoin has reached 62.4. Their sentiment metric measures the tone of conversations in Twitter to determine whether it’s positive or negative. Any score above 50 implied that market sentiment is positive.
Strong DeFi Recovery
As mentioned before, DeFi has has a great run but had fundamental problems that prevented the space from expanding. Although we’ve seen a hype come to an end we see that its fundamentals stayed around. Data from DeFi Pulse shows that the total value locked (TVL) in DeFi is $10.9 billion and Uniswap holds $2.6 billion of that TVL.
According to Flipside Crypto, around $300 million worth of tokens are being sent to DeFi dApps every day which is outpacing centralized exchanges’ $156 million daily inflow. Uniswap alone is responsible for 70% of DeFi’s inflow with $211 million going into its liquidity pools every day.
Institutions
About 13 public companies have allocated nearly $6.8 billion in Bitcoin investments this year, according to data from Coin98 Analytics. This makes a total amount of only about 3.2% of the current market capitalization of Bitcoin but, the encouraging sign is that the investments have been rising consistently.
The reason for the accumulation craze is the weakening dollar. No significant institution wants to be caught dead with a large bag of cash. With real interest rates negative and speculation of a spike in inflation, companies are looking for an asset that will keep their wealth secure.
In the past month we have seen bitcoin diverge from both the U.S. dollar strength and VIX. This provided new opportunities for investors to diversify.
According to a comparison from Cointelegraph Markets and Digital Assets Data, it is stocks in the form of the S&P 500 and gold which now see increasing correlative patterns with BTC.
