(Bloomberg) — Bitcoin investors cheered as their favorite coin rebounded over the summer. With the turn of the season, they’ve been left with a nagging question: why did the rally fizzle out?
The original cryptocurrency, after advancing above $87,000 at one point, has reverted back to $80,000, dipping below it on a few occasions. Even the wisdom of the crowds — as measured by various bets taking place on prediction-markets exchange Polymarket — place the odds of Bitcoin hitting $100,000 by the end of the year at just 17%. The chances of a break to $110,000 look slimmer still, with traders assigning just 9% odds to that outcome.
Ask around and you’ll get various answers, key among them that investors have been selling into rallies as they looked to break even or take profits on their past purchases. Buyers of the past two years break even at around $87,000 and above, and “they have turned Bitcoin back twice this year,” say researchers at Glassnode. Subsequently, the coin tended to sell off by a quarter or more.
On Tuesday, Bitcoin hovered around $80,500.
Moreover, Bitcoin has been heavily swayed by macro forces, meaning that inflation prints and headlines around the Iran war have impacted its price. The token’s correlation to the stock market in mid-October reached its highest level since late May, underscoring the coin’s sensitivity to swings in the global macro market.
The AI trade, for one, has wavered of late, with a basket of artificial-intelligence beneficiaries down 15% so far this month, its worst stretch since July. Bitcoin, meanwhile, has lost almost 4% in October, its worst month since June.
The coin “remains a beta to the tech industry, so difficulty in AI valuations and debt concerns have pushed it back into the middle of its trading range,” said Jeff Anderson, head of US at STS Digital.
Researchers at Glassnode had been, for weeks, pointing out this sandwich of resistance layers, including $81,500, which the firm estimates represents the average cost basis for investors of ETFs based on the token. A close below it now has the average ETF holder at a loss and removes “the nearest on-chain support.”
“Now I’d be a little cautious. I’m not sure if this is the start of another bull run yet,” said Daniel Reis-Faria, chief executive officer of ZeroStack.
At least one crypto executive remains unconvinced that Bitcoin is in a bull market. Gracy Chen, the CEO of Bitget, doesn’t see a pure bull run just yet, citing the difficulty a lot of market-watchers are having in deciphering the token’s moves. For instance, an interest rate hike by the Federal Reserve didn’t derail Bitcoin, as it might have in the past, she said in a recent Bloomberg Television interview.
“It’s really hard to predict,” she said. “For it to be more valid, we need to see a more long-term trend instead of a wide range of changes or shifts.”
–With assistance from Sidhartha Shukla and Emily Nicolle.
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