Bitcoin Down 1% After Biggest Weekly Price Gain Since July
Bitcoin (BTC) has crossed into bullish territory with the biggest weekly gain in 2.5 months.
The top cryptocurrency by market value climbed nearly 6.6% in the seven days to Oct. 11, capping its biggest single-week percentage rise since the last week of July.
The flipping of the stiff resistance of $11,200 (Sept. 18) into support is bullish, according to Stack Funds research analyst Lennard Neo.
So far, however, the follow-through to the breakout has been poor: The cryptocurrency is currently trading in the red near $11,250, having printed highs near $11,500 over the weekend.
However, the pullback may be short-lived, miner outflows suggest.
Last week, bitcoin miners sold more than they generated and ran down inventory by around 1,000 BTC, according to data source Bytetree.com.
The miners’ rolling inventory (MRI) figure, which tracks the changes in how much bitcoin miners are holding, held well above 100% last week; the five- and 12-week MRIs are also above 100%.
Miners liquidate their holdings almost on a daily basis to cover operational costs but will offer more when they feel the market has the strength to absorb the additional coins without harming price.
As such, the increased miner outflow is sign of strength in the market, according to Charlie Morris, chief investment officer at ByteTree Asset Management.
Additionally, payment company Square's recent disclosure of major bitcoin investments has given market players a fresh shot of confidence, Philip Gradwell, chief economist at the blockchain analysis firm Chainalysis, told CoinDesk.
The major portion of the last week’s 6.6% rise happened after Square announced its bitcoin investment on Thursday.
While the path of least resistance for bitcoin appears to be on the higher side, a move to the next major resistance at $12,000 may remain elusive if the resurgence of the coronavirus cases across Europe, tanks global equities and boosts haven demand for the U.S. dollar.
“The macro-environment factors still play a strong factor in the direction of BTC as its correlation to the SPX [S&P 500] continues,” data analytics firm Santiment noted.
Disclosure: The author holds small positions in bitcoin and litecoin.
Also read: Bitcoin Nears $11.5K on US Stimulus Prospects, Seems to Confirm Bullish Trend
