Bitcoin (BTC) price is on track to register its highest daily close since July. 31 after reaching a new intra-day high at $67,953. The rally chalked in a new higher high (HH3) with respect to its previous local top of $66,450 from Sep. 27.
Bitcoin 1-day chart. Source: Trading View
With a 6.17% uptick on Oct. 15, market expectations are building toward a reclaim of the $70,000 level the first time in H2, 2024.
Bitcoin's apparent returns to Q1 levels
One key observation of the ongoing rally is the lack of Bitcoin demand from retail. Crypto Rover, Founder of Cryptosea, highlights the fact that Bitcoin is near its all-time high, but “retail interest is close to zero.”
Ki Young Ju, CEO of CryptoQuant, mentions that Bitcoin's apparent demand is starting to increase.
According to Young-Ju, BTC apparent demand is a key metric that is determined by the difference between new supply (mining issuance) and changes in long-term holdings (supply inactive for over a year).
Bitcoin apparent demand. Source: CryptoQuant
If Bitcoin supply shrinks more than production, it signals rising demand as more Bitcoin is being drawn into circulation. Conversely, if production outpaces supply change, demand may be weakening.
Historically, Bitcoin’s apparent demand has increased before every significant rise since 2016. The current apparent demand mirrors February 2024 levels, after which BTC registered its all-time high of $73,800 in March.
Bitcoin purchasing demand rises by 3%
Axel Adler Jr, a Bitcoin on-chain researcher, underlines a similar trend from investors. Adler mentions that in an X post, stating,
“Demand for coin purchases from new investors has resumed, with a 3% increase over the last 10 days. This is a positive signal for the market.”
Bitcoin new investors’ coin purchase demand by Axel Adler Jr. Source: X.com
Related: Bitcoin to 'break loose' at $70K as 'Uptober' flips green
The Coinbase (US-based) and Kimchi premium (Korean) also illustrated a positive uptick, which indicates that retail investors are starting to bid on BTC. A rising Coinbase premium indicates buying pressure from the U.S. retail market, whereas Kimchi premium conveys Korea’s retail investors.
Bitcoin: Coinbase premium index. Source: CryptoQuant
However, it is important to note that the overall premium for both indexes remains negative. Hansolar, an on-chain analyst, mentions that such a particular period in the market could be considered a ‘disbelief’ rally when the price of Bitcoin is available at a ‘discounted rate’ on exchanges before the exponential rise in its value.
Bitcoin’s leverage-driven rally is “highly risky”
While BTC’s spot demand has improved over the past few days, the recent rally has been largely due to the derivatives market. Last week, Bitcoin witnessed a $800 million rise in open interest on the weekend, as BTC prices increased to $64,500. As the week progressed, prices quickly reversed, and a low below $60,000 was formed.
Bitcoin open interest and price chart. Source: Velo.data
A similar situation has panned out this weekend as well. Prices are up 10% since Oct. 11, but open interest is up almost 18% at the same time. In light of this development, Maartunn, a market analyst, has exhibited caution, suggesting that last week’s decline was also triggered ‘by an overdose of leverage’.
Additionally, the Bitcoin heater chart by Capriole Investments demonstrates a similar outlook with respect to the futures market.
As illustrated, the indicator is currently above the overheating threshold (red line) for the first time in 2024. A high value indicates greed (bearish) and overleveraged positions, which means the leverage market needs to reset very soon.
Bitcoin heater chart. Source: Capriole investments
Related: Is Bitcoin’s Uptober beginning, or will today’s BTC rally end with more of the same?
Bitcoin faces key resistance at $68,000
With more than five days to go, Bitcoin may breach the psychological level of $70,000 before Oct. 20.
However, the overhead resistance at $68,000 might take some time to flip into support. A strong supply zone remains between $67,000 and $68,300 for Bitcoin, and a re-test of that range will also test the descending trendline that has been active since March 2024.
Bitcoin 1-day chart. Source: Trading View
As observed in the chart, Bitcoin's price entered the supply zone on Oct. 15, but it is currently undergoing a sharp correction after testing the price range. The price rejection also took place after the price tested the descending trendline.
Historically, since forming its first higher (HH1) in August, each HH position has been followed by a period of correction. Therefore, based on market behaviour, Bitcoin may struggle to break above $70,000 this week unless it is able to close a daily position above $68,300 in the next couple of days.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.