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October 16 REX Wire Market Outlook
Bitcoin puts in a strong recovery on renewed ETF hopes.
Uncertainty should be covering the markets at present. A looming Gaza ground offensive threatens to draw other regional powers into the conflict, potentially including Iran. This would, needless to say, have global consequences for various reasons, layered as it is on top of the existing Russia-Ukraine war.
In the US, the world's largest economy, there is still no clear path to a new House Speaker. This means that, at a time of multiple global crises, the country cannot pass new legislation. On the domestic front, there are still serious budget issues, which will come into focus very sharply in around a month.
Then there's the situation in China, which recently experienced a bank run. The country is facing systemic problems, with shrinking exports and deflation.
Yet for now, none of this really seems to be denting the markets. The dollar is hovering around its local high. Stocks are putting in decent performance, with the S&P500 potentially having finished its August-September correction, remaining less than 10% from its all-time high.
And then there's crypto.
Bitcoin ETF Hopes Renewed?
Until the end of last week, Uptober appeared to be turning to Rektober. Having lost support a week ago, bitcoin plunged from $28,000 to $26,500, threatening to drop through the next support level. Alts have been bleeding as BTC is treated as a relative safe haven in a falling market.
Yesterday, though, the situation changed. BTC picked up steam, and as the new week rolled around put in an impressive candle, touching $28,000 (so far): An important resistance line and the current level of the critical 200 DMA and 200 WMA moving averages.
With BTC overbought on the 4h (RSI is almost 80), a pullback from resistance is expected. Bitcoin will need to overcome this key level to continue its rise, and for the latest move to be anything other than a flash in the pan.
We're wary of attributing neat causes to price movements. As investor Bernard Baruch said, "Show me the charts and I'll tell you the news." However, BTC's recovery coincided with news that the SEC would not be appealing the court's decision on the Grayscale ETF. This was taken as an indication that the regulator has run out of road, and realistically cannot delay approving a spot Bitcoin ETF much longer.
Likely, this "news" is just the catalyst or excuse that traders need to pile back into a market that was characterized by exhausted sellers, but the effect is the same.
We'll be digging into the latest developments with the Bitcoin ETF in another article today.
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