Why Bitcoin Price Struggles to Break $64K Amid Market Uncertainty

Key Takeaways:

• Bitcoin Faces Resistance at $64,000: Despite several attempts, Bitcoin has consistently failed to break through the critical $64K resistance level, which is being influenced by a combination of global macroeconomic and geopolitical factors, keeping the price in check for the past few months.
• Strengthening US Dollar Adds Pressure on Bitcoin: The rising strength of the US dollar against major global currencies, including the euro and British pound, has created additional pressure on Bitcoin price, as investors prefer cash and other safe havens during times of economic uncertainty.
• Interest Rate Expectations Weigh on Bitcoin’s Appeal: Strong US job data reduced the likelihood of a recession and any immediate interest rate cuts, making traditional investments like cash and stocks more attractive than Bitcoin. The higher rates make investors more risk-averse, limiting Bitcoin’s potential growth.
• Optimism in Stock Markets Redirects Investor Focus: With global stock markets showing strong performance and optimism for corporate earnings, particularly in sectors like semiconductors, investors are increasingly moving towards traditional assets like stocks, diverting focus away from Bitcoin investments.
• Cautious Sentiment Among Bitcoin Derivatives Traders: Bitcoin futures markets reflect a neutral sentiment, as traders remain cautious. With no overwhelming bullish momentum and significant outflows from Bitcoin ETFs, the overall market shows a lack of strong conviction in Bitcoin’s near-term breakout potential.

Bitcoin price continues to face resistance at the $64,000 price level, leaving many traders and analysts questioning the factors behind this trend. Despite a modest gain between October 3 and October 7, Bitcoin price remains unable to break through the $66,000 mark, which has held firm since July 31. While some believe that the rising US federal debt has a long-term positive correlation with Bitcoin price, this relationship seems to have little impact on its short-term performance.

Macroeconomic Forces Holding Bitcoin Back

Rather than benefiting from the growing US debt, Bitcoin appears to be more heavily influenced by socio-political factors. In the broader economic context, the global monetary base (M2) grew from $104 trillion in June to $108 trillion in October, while Bitcoin repeatedly failed to surpass the $68,000 mark. This indicates that its recent rally to $64,000 is less a result of US fiscal conditions and more a product of global financial trends.

Read more: Crypto market bull run in 2024

Moreover, the US dollar’s strengthening against other major currencies further complicates Bitcoin’s upward movement. The DXY index, which measures the dollar against a basket of other currencies, rose from 100.4 on September 30 to 102.5 on October 7. This increase suggests that investors are finding refuge in traditional currencies like the US dollar, rather than in Bitcoin, as they brace for potential economic instability.

Recent US Data Affecting Investor Sentiment

Several macroeconomic indicators have played a role in Bitcoin’s recent price struggles. For example, the US jobs report for September, released on October 4, exceeded expectations and reduced the likelihood of an economic recession. However, this positive news for the economy also diminished the chances of an interest rate cut by the Federal Reserve, causing the probability of a 0.50% cut to drop from 40% to 0%. Higher interest rates tend to make riskier assets like Bitcoin less appealing, further pressuring its price.

At the same time, global market optimism has risen due to strong third-quarter corporate earnings expectations. Goldman Sachs recently revised its 2025 year-end target for the S&P 500 to 6,300, buoyed by a recovery in the semiconductor industry. This focus on traditional stocks and robust corporate earnings has shifted attention away from alternative assets like Bitcoin.

Geopolitical Uncertainty Impacting Bitcoin Demand

The global economic landscape is also heavily influenced by geopolitical factors. The escalating conflict in the Middle East, uncertainties surrounding the upcoming US Presidential election in November, and concerns over global economic growth are making investors more risk-averse. In turn, these factors are leading many to seek safety in cash and traditional investments, rather than digital assets like Bitcoin.

Additionally, China’s recent stimulus measures have injected further optimism into global markets, reducing the need for alternative hedges such as Bitcoin. For example, the Hong Kong stock market index reached a 32-month high on October 7th, with a 9.3% increase from its September 30th levels. Meanwhile, the S&P 500 is trading just 0.5% below its all-time high, further reducing the appeal of Bitcoin as a hedge against market uncertainty.

Bitcoin Derivatives and ETF Flows: Neutral Sentiment Prevails

Despite the bullish momentum in global markets, Bitcoin derivatives traders have maintained a neutral stance. The BTC futures market, often used to gauge market sentiment, has shown little indication of a strong bullish trend. In neutral markets, BTC futures contracts typically trade at a 5% to 10% premium. However, the annualized premium has remained at around 8%, suggesting a balance between bullish and bearish sentiment.

Furthermore, Bitcoin spot ETFs have seen significant outflows, totaling $335 million since October 1st. This lack of inflows into Bitcoin ETFs signals that institutional investors are not currently bullish on the asset, further limiting its price growth.

Conclusion

Bitcoin’s inability to break past the $64,000 resistance level is largely due to macroeconomic conditions that favor traditional assets like stocks and cash. With rising interest rates, geopolitical uncertainties, and a strengthening US dollar, investors are turning away from Bitcoin and seeking safety in more conventional investments. While Bitcoin remains a valuable asset in the long term, its short-term performance will likely continue to be influenced by broader economic and political events.

Source: CoinTelegraph