On Tuesday (October 1), Bitcoin was close to falling below $63,000, continuing the overnight plunge. 10x Research believes that speculative traders may have shifted from Bitcoin to Chinese stocks, and Bitcoin's short-term technical indicators may be overbought. Federal Reserve Chairman Powell released a hawkish tone, emphasizing that there is no rush and that interest rates will be gradually lowered, reiterating that interest rate policy does not follow a preset path.

10x Research said in its latest report that the cryptocurrency market is undergoing some major shifts. Although short-term concerns are evident, larger trends may soon overshadow them.

“Based on our analysis, we have accurately predicted various corrections over the past six months. However, we have maintained a bullish view over the past three weeks, starting with the rebound from $54,000. While Bitcoin has yet to break out of the downtrend, we believe it is only a matter of time.”

“Monday’s market correction may stem from weak Chinese economic data, which suggests the need for additional stimulus. As a result, opportunistic traders may have rotated out of Bitcoin and into Chinese stocks for higher beta exposure. There are also some concerns about the weakness at the beginning of the month, which we have observed after the release of US manufacturing data for the past three months. In addition, Bitcoin’s short-term technical indicators appear overbought.”

China's CSI 300 index posted its biggest gain since 2008 on Monday after Beijing introduced economic stimulus last week, with Chinese buyers trading frantically as fear of missing out (FOMO) fueled trading ahead of the National Day holiday. Shao Qifeng, chief investment officer at Ying An Asset Management in Beijing, said A-shares are in the second stage of a bull market cycle.

Powell said the Fed will "gradually" lower interest rates, while reiterating that the overall economy remains solid. Powell also reiterated his confidence that inflation will continue to move toward its 2% target, adding that economic conditions "lay the foundation" for further easing price pressures.

He still believes that the US economy will achieve a soft landing at the annual meeting of the National Association for Business Economics (NABE) in Nashville.

He mentioned that the rate cut process will be further "readjusted" based on the upcoming economic data.

“With appropriate adjustments to our policy stance, the labor market can remain resilient in an environment of moderate growth and inflation continuing to fall toward our target,” he said. “Overall, the economy is in good shape; we intend to use our tools to sustain this.”

Powell said he expects two more 25 basis point rate cuts this year if the economy continues on its current trajectory, and markets have been betting on a more aggressive rate cut cycle.

Futures market forecasts show that the Fed is more likely to act cautiously and approve a 25 basis point rate cut at its next meeting in November. However, traders believe that the move in December will be more aggressive. The CME Group's Fed Watch tool shows that the probability of a 50 basis point rate cut at the FOMC meeting on December 18 is about 48%.

Before Powell's speech, the market had expected the FOMC to cut interest rates by another 50 basis points at its next meeting.

Although Bitcoin has been hit by China's stock market frenzy and Powell's hawkish rhetoric, important progress has been reported in Hong Kong.

According to Hong Kong Financial News, a spokesperson for ZA Bank said that the bank has obtained approval from the Hong Kong Securities Regulatory Commission to allow the company to add virtual asset trading conditions to its Type 1 license, and the bank will actively prepare for relevant sandbox tests.

Bitcoin Technical Analysis

CoinGape noted that Bitcoin achieved a positive monthly close in September. Historically, whenever this happens, Bitcoin also closes higher in October, November, and December. Therefore, it is expected that the Bitcoin price will continue its upward trend in October. In addition, Bitcoin has only recorded negative returns twice in October.

QCP Capital believes that Bitcoin needs to break through $70,000 to hit a new high. Markus Thielen, founder of 10x Research, predicts that Bitcoin may reclaim $70,000 in the next two weeks. He also predicts that Bitcoin will hit a new all-time high (ATH) by the end of October.

Regardless of what happens in October, Bitcoin prices remain bullish in the long term. CryptoQuant CEO Ki Young Ju recently said that the cryptocurrency is still in the middle of a bull cycle. The accompanying chart shows that Bitcoin still has some upside before prices peak in this bull run.