Bitcoin (BTC) price is on track to post its highest daily close since July after hitting a new intraday high of $67,953 today. The rally set a new local high of $66,450, previously seen on September 27 (HH3).
With a 6.17% increase on October 15, market expectations are that the price will regain the $70,000 level for the first time in the second half of 2024.
Bitcoin clearly returns to first quarter levels
A key observation about the ongoing rally is the lack of retail demand for Bitcoin. Cryptosea founder Crypto Rover highlighted that Bitcoin is near all-time highs, but “retail interest is close to zero.”
CryptoQuant CEO Ki Young Ju mentioned that there is a clear demand for Bitcoin that is starting to increase.
According to Young-Ju, BTC apparent demand is a key metric determined by the difference between new supply (mining issuance) and changes in long-term holdings (supply that has been inactive for more than a year).
If the supply of Bitcoin shrinks more than production, it would indicate that demand is increasing as more Bitcoin enters circulation. Conversely, if production outstrips supply changes, demand could be weakening.
Historically, Bitcoin’s apparent demand has increased before every major rally since 2016. Current apparent demand reflects February 2024 levels, before BTC hit an all-time high of $73,800 in March.
Bitcoin purchasing demand increased by 3%
Axel Adler Jr, a Bitcoin on-chain researcher, highlighted a similar trend among investors. Adler mentioned this in the X post, saying:
“The demand for new investors to buy coins has recovered and has increased by 10% in the past 3 days. This is a positive sign for the market.
Coinbase (based in the United States) and Kimchi premium (South Korea) also saw positive increases, indicating that retail investors are starting to bid up BTC. The rising Coinbase premium indicates buying pressure from the U.S. retail market, while the Kimchi premium conveys how South Korean retail investors are feeling.
However, it is important to note that the overall premium for both indices is still negative. On-chain analyst Hansolar mentioned that when Bitcoin’s price is offered at a “discount” on exchanges before its value increases exponentially, it can be seen as an “incredible” rally.
Bitcoin leverage-driven rally ‘highly risky’
While BTC spot demand has improved over the past few days, the recent rally is largely due to the derivatives market. Last week, Bitcoin open interest increased by $800 million over the weekend as BTC prices rallied to $64,500. As the week progressed, prices quickly reversed and formed lows below $60,000.
A similar situation was seen this weekend. Since October 11, prices have risen by 10%, but at the same time, open interest has risen by nearly 18%. In light of this development, market analyst Maartunn expressed caution, saying that last week's drop was also "triggered by excess leverage."
Additionally, Capriole Investments’ Bitcoin Heater chart shows a similar outlook to the futures market.
As shown in the chart, the indicator is currently above the overheat threshold (red line) for the first time in 2024. High values indicate greed (bearish) and over-leveraged positions, which means that the leveraged market needs to reset soon.
Bitcoin faces critical resistance at $68,000
With just over five days left, Bitcoin could break above the psychological level of $70,000 by October 20.
However, the overhead resistance at $68,000 may take some time to turn into support. Bitcoin’s strong supply zone remains between $67,000 and $68,300, and a retest of this range will also test the descending trendline that has been active since March 2024.
The price of Bitcoin entered the supply zone on October 15 but is currently experiencing a sharp correction after testing the price range. The price rejection also occurred after the price tested the descending trendline.
Historically, since the first higher (HH1) was formed in August, each HH position has been followed by a period of correction. Therefore, depending on market behavior, Bitcoin may find it difficult to break through $70,000 this week unless it can close the daily position above $68,300 in the next few days.
