After a passive first part of the trading week, Bitcoin resumes its upward movement and updates the yearly high above the $36.5k level. The reason for the growth was the optimism that formed during the Asian trading session and was related to the renewed expectations of approving a spot BTC ETF. The cryptocurrency made a significant upward impulse, making the $40k level even more noticeable in the short term.
Despite all the positive sentiment in the crypto market, there is no doubt that Bitcoin needs a local corrective movement. We see that fundamental and important news factors help the cryptocurrency navigate through challenging periods. On the one hand, it's an effective way to consolidate above tough resistance levels, but on the other hand, it proves the inconsistency of bullish volumes, which gradually dissipate among different crypto assets.
SEC may approve a spot BTC ETF?
Among the main reasons contributing to the upward movement of BTC above the $36k level are reports that the SEC has started negotiations with the company Grayscale. It is reported that the fund wants to convert its trust product GBTC into a spot Bitcoin ETF. The start of negotiations on a potential change in the trust's functionality became the cause of a bullish rally in BTC prices during the Asian session.
Also, today, the SEC begins an 8-day period of reviewing 12 applications for the approval of a spot BTC ETF. The deadline for the decision is November 17, but it is worth remembering that the regulator may postpone the decision, as it did last time. Considering deeper insights into SEC policy, one should not expect the continuation of the bullish rally during the European and American trading sessions.
In addition to this, during the American trading session, the long-awaited correction of Bitcoin may begin, as Bank of America stated that in December, there is a significant probability of an increase in the key interest rate. Analysts believe that the strong U.S. economy and the relative stability of the labor market give the Federal Reserve grounds for a final step in raising the key interest rate. If such a scenario is realized, a decrease in investment flows into cryptocurrencies and a clear correction of BTC should be expected.
Are investors starting to sell?
Over the past three weeks, Bitcoin has repeatedly updated its local price high, leading to short stages of capital redistribution due to profit-taking by some investors. Achieving $36k puts the market in a very challenging situation, as over 80% of cryptocurrency holders will be in profit. This may trigger an active profit-taking process, leading to a decline in the price of BTC.
In addition to this, miners have joined the sale of BTC coins, selling more BTC in the past few weeks than they mined during the October rally. Public mining companies reported the sale of reserves totaling over $160 million, which also affected the price of BTC in November. It is quite likely that the pace of profit-taking as Bitcoin remains above $36k will accelerate.
BTCUSD Analysis
As of November 9, Bitcoin updated its local price high above the $36.6k level with daily trading volumes around $23 billion. The rally was triggered by bullish activity during the Asian trading session, following positive news, but there have been no significant changes in the situation around Bitcoin. The cryptocurrency needs a local reset and capital redistribution through a correction.
As expected, the asset managed to make a final upward surge, allowing BTC to consolidate above the $36k level. Sellers' weakness is evident as they capitulated above $35.8k, indicating the possibility of continued consolidation above $36k. If the asset can maintain this level during local consolidation and narrow-range movement, the likelihood of reaching the $40k level in the short term significantly increases.
Bitcoin continues to form an upward channel since October 27, and until the sequence of rising lows is violated, new stages of the upward movement of BTC can be expected. However, if one believes the pessimistic sentiments of the Bank of America, today, the first signals regarding potential rate hikes in the December meeting are expected in Jerome Powell's speech.
Conclusion
Bitcoin experienced a powerful bullish rally in October–November, but 70% of its structure consisted of news-driven growth. This upward trend was built on local consolidation pauses without significant corrective pauses. Considering BTC's dependence on news, it is quite likely that a pessimistic statement from Powell or SEC Chairman Gary Gensler will be the trigger for the start of a BTC correction with the potential to decrease to $32k-33k.
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