5 Things to Watch About Bitcoin This Week

Bitcoin is off to a shaky start to a new week and month after its first monthly close above $60,000 — what's next?

After a much-anticipated October finish, bulls are looking to November to deliver the next phase of what they hope — and sometimes promise — an unprecedented surge in bitcoin prices.

Different times, different forecasts. BTC/USD could close the month near $100,000, but it could also drop closer to $50,000.

With everything underway and solid buyer support in positions above $50,000, Cointelegraph breaks down the factors that could influence Bitcoin’s price action in the week ahead.

October 2021 becomes Bitcoin's best month since 2020

Regardless of what happens next, market participants were in a celebratory mood this week as bitcoin posted its highest monthly close ever.

Bitcoin hits record high for monthly close

— Will Clemente (@WClementeIII) November 1, 2021

The November goal is not just $60,000, but $61,000.

However, Bitcoin is by no means "only going up and not down" in a short period of time. After the market closed on Sunday, there was a significant downward movement-it fell to $59,500, and it unexpectedly broke through $62,000 a few hours later. .

Perhaps fans of PlanB's "worst-case" price prediction, which calls for a price of at least $63,000 by the end of October, are a little nervous.

While still more or less on track with that forecast, a price of $98,000 would need to be reached by the end of the month for it to continue to be historically accurate.

However, for PlanB himself, the result is more satisfactory.

$47,000 in August ✅

September $43,000✅

New monthly closing price of $61,000 in October hit an all-time high! ✅

Well, 3% rounding error...close enough for me

Next targets: Nov > $98k, Dec > $135k

— PlanB (@100trillionUSD) November 1, 2021

Cointelegraph contributor Michaël van de Poppe meanwhile added: "Yes, Bitcoin probably won't close above $63,000 this month."

"However, PlanB's S2F model hits much better than your trade performance, so I wouldn't really bash him. $61K is also good, close enough."

BTC/USD is trading around $62,000 after an overnight correction from lows. October was Bitcoin's best month since December 2020, returning just under 40%.

BTC/USD 1-month candle chart (Bitstamp) Source: TradingView

The difficulty of mining has been raised for the 8th consecutive time

Those looking to truly be in "only up, not down" mode need only look at the fundamentals of the Bitcoin network.

This week, the mining difficulty will be raised for the eighth time in a row — something that hasn’t happened since 2018.

Due to the growing competition in the mining space, the mining difficulty has now fully compensated for the inevitable losses after China forced miners to shut down in May.

This week, the mining difficulty will increase to 21.89 trillion, which is only 3 trillion lower than the highest level in history.

Hashrate — a measure of mining processing power — is a similar story.

While it can’t be “measured” in exact terms, estimates show that hashrate is still heading towards new all-time highs.

Raw data tends to rise and fall, and different estimates tend to give quite different readings. However, the weekly average hash rate is now around 159 EH/s — closer than ever to April’s 180 EH/s.

Bitcoin 7-day average computing power map Source: Blockchain

Long-term holders continue to hold

September provided an opportunity for Bitcoin buyers to "buy the dip" in gold, and October is not without a brief pullback.

Have you bought the dip? If you do, you join an increasingly powerful ranks of long-term holders whose conviction will only grow stronger in October.

As research by major exchange Kraken pointed out last week, the rise in the price of bitcoin to an all-time high of $67,100 failed to entice holders to sell their coins.

The researchers concluded: "It is noteworthy that while long-term investors were unfazed by last month's pullback and viewed it as an opportunity to continue accumulating, the trend has not changed despite a sharp rally to nearly $67,000 record high."

“In other words, the supply shock that long-term holders bought last month will only get stronger this month.”

These entities, rather than short-term speculators, were driving price performance in the fourth quarter of this year, they added.

This is in line with analyst Willy Woo's previous analysis that so-called "holders of last resort" or "Rick Astley" investors remained committed to their investments. Since 2020, miners themselves have been among the long-term holders.

Woo pointed out this weekend: "Since 2020, miners have been long-term holders (and buyers) of Bitcoin. This is a huge change in behavior."

"From 2009 to 2014, there was no sustained accumulation by miners."

Bitcoin Miner Supply Map Source: Kraken

Exchange balances are lowest since October 2018

On the topic of supply shocks, the situation on exchanges is grim from the perspective of Bitcoin bears.

Bitcoin reserves on exchanges are now at their lowest level in three years, according to the latest data from on-chain analytics firm Glassnode.

At the time, at the end of 2018, Bitcoin was entering the abyss of the previous bear market, which bottomed out at $3,100 in December.

Price action has changed orders of magnitude since then, but balances are still falling — all of which suggests that the size of the potential shock would increase if demand increased significantly from here on out.

The exchange now controls 2.47 million bitcoins, compared with more than 3.1 million bitcoins on its order book at its peak in April 2020.

Exchange Bitcoin balance graph Source: Glassnode/Twitter

Balance changes can vary widely between different exchanges. For example, Coinbase Pro led the way with a loss of nearly 20,000 BTC over the past 24 hours, while some other exchanges saw slightly higher balances.

Market expects Fed to announce tapering of bond purchases

The week ahead could see some familiar trends in traditional markets, and their traditional knock-on effects on crypto markets.

That could come from the Fed's latest comments on coronavirus management on Tuesday and Wednesday, with markets expecting more clues about tapering asset purchases.

This comes at a time when global inflation is picking up, with Federal Reserve Chairman Jerome Powell acknowledging that the ensuing supply chain crisis is likely to persist "well into next year".

Kathy Jones, chief fixed-income strategist at Charles Schwab, told Yahoo Finance last week: "I think the Fed is determined to start tapering its bond purchases very soon. We expect them to announce next week and start very soon, so it's already It’s a done deal.”

"I think the big debate right now is how quickly the Fed actually raises rates. Market expectations have really shifted to two hikes in 2022 and 2023 ... that's a pretty aggressive pace of tightening," he said. .”

These circumstances help increase Bitcoin's appeal as an inherently deflationary asset class with a mathematically verifiable supply ceiling.

Institutional money has flowed into existing bitcoin investment products, as well as newly launched futures exchange-traded funds (ETFs), underscoring the growing demand.

Purpose Bitcoin ETF AUM vs. BTC/USD Chart Source: Bybt

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