Bitcoin witnessed a notable retracement following a surge that nearly reached its eight-month peak. Initially climbing close to $86,950 in early Asia trading, the cryptocurrency subsequently dipped by roughly $1,000 to below $86,000. Despite this pullback, it has registered a 1.3% increase over the last 24 hours.
Bitcoin’s Fluctuation Raises Market Sentiment Questions
The recent upward trend brought Bitcoin within $500 of the $87,400 mark reached at the end of September. However, Bitcoin’s inability to maintain rallies above this level twice in just one week has shifted market focus to whether it can achieve a daily close above the $87,000 threshold. Clearing this level might signal a breakout beyond last month’s highs. Previously, Bitcoin surged to $85,500 on weaker-than-expected U.S. inflation data but quickly ceded these gains.
Among major altcoins, Dogecoin led with gains exceeding 3%, while XRP, BNB, and Zcash rose by 1-2%. Ethereum and Hyperliquid saw increases under 1%, and Solana and Tron showed negligible changes.
Short-Term Bitcoin Accumulation Grows
According to CryptoQuant analyst Axel Adler Jr., the holdings of short-term Bitcoin investors surged by 87,000 BTC over the last 30 days, reaching a total of 3.94 million BTC by October 4. This marks the seventh consecutive week of increases from levels recorded a month earlier.
“The 30-day change indicator has remained positive since August 18, highlighting a growth in Bitcoin supply exchanged within the past six months. However, as prices rise, these investors face higher market entry costs, with average costs increasing by approximately $1,000 in a week to around $74,100.”
The unrealized profits for these short-term holders stand at approximately 15%, relatively unchanged from the previous week, yet below the peak of 19% observed on September 22. A fall of Bitcoin below the critical $74,100 level could transition this group into a net unrealized loss, potentially signaling a negative shift in market dynamics.
Interest Rate Outlook Softens Amid Global Stock Gains
U.S. employment data for September, released on October 2, fell short of expectations, slightly easing the Federal Reserve’s pressure to further hike interest rates. Although yields on the U.S. 10-year Treasury dipped by 2 basis points to 5.25%, they remain near the highest levels since 2002.
Global equities continued their ascent, with Nasdaq 100 closing October 2 at record levels. On October 5, the MSCI Asia Pacific Index rose by 1%, while Japan’s Nikkei 225 Index jumped by 2.5%. Brent crude oil prices declined by 0.7% to approximately $101.50 per barrel following Saudi Arabia’s decision to cut its Asian sales price.
Michael Saylor, co-founder of MicroStrategy, highlighted varying risk and return profiles of Bitcoin-related investment products through a post on October 5. Saylor explained that while owning bitcoin offers direct exposure, MicroStrategy’s common stock (MSTR) provides greater leverage to Bitcoin price movements. In contrast, preferred shares (STRC) offer returns with relatively lower volatility.
Saylor compared Bitcoin’s 30-day volatility at 39% to Nvidia’s, rating it below Meta’s 47% and Tesla’s 43% volatility. MSTR exhibited the highest volatility at 94% among the assets compared.
STRC’s volatility stood at 9%, below Apple’s 21%, Microsoft’s 22%, Alphabet’s 23%, and Amazon’s 24%. Saylor posited that products like MSTR and STRC, underpinned by Bitcoin, can cater to distinct investment goals and underline digital capital’s foundation in digital equity and credit.
