Bitcoin started another trading week with bears attempting to test the $16.7k support level. The catalyst for selling pressure on the price was the massive sale of digital assets on Monday morning in Asian markets.
At the moment, the price of Bitcoin reached $16.8k level, but subsequently the buyers managed to win back the initiative and absorb the bearish volumes. As a result, the main cryptocurrency ended the trading day above $17k, which confirmed the current bullish positions.
It is worth noting a significant increase in trading activity of bulls in the afternoon. This is due to the opening of U.S. markets and the growing relationship between the stock market and cryptocurrencies. At the end of yesterday, SPX and other stock indices showed a good increase, hitting the cryptocurrency market as well.
The Impact of the Stock Market on Bitcoin
The successful bullish Monday of the cryptocurrency market is closely related to the stock markets. And there is every reason to believe that in the near future, the correlation of the two industries will allow Bitcoin and other assets to conquer local highs.
There are two reasons for this: first, is that institutional investors and hedge funds have begun to actively invest in stocks . According to the WSJ, this is due to the gradual decline in inflation and the subsequent easing of the Fed's monetary policy.
The second reason is the Fed's balance sheets, which hit a 52-week low. The indicator fell by $383 billion from the peak levels recorded in April 2022. This means that the regulator is gradually approaching the maximum of the quantitative easing program.
Signals for growth
Given the favorable fundamental backdrop, this week could be a key in implementing Bitcoin's bullish trend. On November 13–14, statistics on the U.S. Core Consumer Price Index will be released, as well as a key rate decision from the Fed and the Powell conference.
On the 15th, a key indicator of initial jobless claims in the U.S. will be released. Some experts believe that data on the labor market may provoke an extension of the Fed's tight monetary policy.
However, in general, markets expect that as we approach the spring of 2023, Jerome Powell's rhetoric will become more liberal. Given this, investment flows into high-risk assets, including cryptocurrencies, will grow.
BTC/USD Analysis
Following the results of Monday, Bitcoin made a V-shaped reversal, absorbed bearish volumes and reached the level of $17k. Next, the price faced increased resistance from bears near the $17.3k–$17.4k level, which are the key resistance zone at the moment.
On the daily chart, the situation has not changed dramatically, as Bitcoin continues to move within the range of $16.7k–$17.4k. Yesterday's unsuccessful attempt to make a bearish breakout of $16.7k ended in failure, which indicates a movement in the opposite direction to $17.4k.
Given the high volatility due to the upcoming publication of U.S. reports, technical metrics will not play a significant role over the next two days. The market is still at the bottom, and investors are still scared, and therefore the news background is the best catalyst for price movement.
Results
The situation is favorable for the bulls, as the price moves to the upper limit of the range, and news events, with a high degree of probability, will have a positive impact on the price. Given this, we should expect a long-awaited exit beyond the triangle and an update of local highs.
After the breakdown of $17.4k, Bitcoin will continue moving towards the $17.8k–$18k level, where large volumes of BTC were sold. If the upward potential is maintained and the network metrics are growing, we can count on a retest of the $18.5k level. The further movement of BTC will depend on the reaction of sellers and the actions of buyers.
