Bitcoin Recovers from Halloween Slump: Bulls Eye Sustained Rally

Bitcoin Rebounds as Traders Shift from “Spooky Szn” to Cautious Optimism

Bitcoin experienced a notable rebound today, following a week that saw traders abandon “Uptober” memes for more somber “spooky szn” sentiment as the cryptocurrency halved its September gains.

The price of Bitcoin, which had dipped to $80,953.41 early Tuesday, extending a Monday sell-off, reversed course to trade at $83,591.79, marking a 2.24% increase on the day.

The Crypto Fear and Greed Index, a sentiment gauge ranging from 0 to 100 that incorporates momentum, volatility, options positioning, and social data, has fallen to 56 today, a neutral score. This contrasts sharply with the “extreme greed” reading of 82 recorded on August 26. The August euphoria has clearly dissipated, but traders are not yet succumbing to panic.

ETF Outflows and Inflation Concerns

Bitcoin ETFs have seen a net outflow of $386.3 million in October, forcing funds to sell actual Bitcoin. The upcoming Consumer Price Index (CPI) report on Wednesday, which is expected to show annual inflation rising to 3.6% from 3.4%, presents the next significant test. A hotter-than-expected inflation print would likely bolster bets on further interest rate hikes, potentially pressuring Bitcoin’s price. The Federal Reserve is scheduled to convene for its next meeting on October 27-28.

Market Sentiment and Price Targets

On Myriad, a prediction market developed by Dastan, the parent company of Decrypt, traders are giving Bitcoin a 54% probability of falling to $80,000 this month, a slight decrease from 56% on Monday. The market currently assigns a 45% chance for Bitcoin to reach $87,500 in October. Overall, market sentiment has seen a marginal improvement today.

Technical Indicators Signal a Potential Uptrend

Today’s low point stopped approximately $588 above $80,365.12, the swing low from which the current bounce originated. This higher low is a key indicator that traders look for in an uptrend. Bitcoin has also reclaimed the Fibonacci “golden zone” between $81,847.57 and $82,305.50, an area historically known to attract buyers during pullbacks in uptrends.

The Average Directional Index (ADX), which measures trend strength with readings above 25 confirming a trend, stands at 29.9, indicating buyers are in control. However, this is down from 42.8 on October 7, suggesting the uptrend is currently coasting rather than accelerating. The 50-day exponential moving average remains above the 200-day moving average, a “golden cross” that traders interpret as a sign of an intact long-term uptrend.

The Relative Strength Index (RSI), a momentum gauge from 0 to 100, is positioned at 53.4, just above the 50 line that separates bullish from bearish momentum. The Squeeze Momentum Indicator has been active for seven sessions, suggesting compressed volatility akin to a coiled spring, with its -0.52 reading leaning slightly bearish.

Key Levels to Watch

A daily close above $84,245.88 could pave the way for a move towards $86,644.19, and subsequently the recent high of $87,422.70, which is just shy of Myriad’s $87,500 target. Conversely, a loss of $81,603.02 would bring the upper edge of the daily trend band into play, just above the $80,000 mark. A close below this level could expose Bitcoin to a decline towards $77,500.

Until Wednesday’s CPI report, the active squeeze suggests a market that is building energy rather than decisively choosing a direction. Short-term catalysts to monitor include headlines related to oil and Iran, Treasury yields, and daily ETF flows.