Bitcoin Week Ahead Ep35: BlackRock’s BTC Purchase Could Easily Refresh 2023 High

Key Takeaways:

• BlackRock will buy Bitcoin this week to seed its ETF.
• BTC price has rallied toward its year-to-date high on the news.
• Expect a period of consolidation above $30,000 next.

YEREVAN (CoinChapter.com) — The next spot Bitcoin ETF decision will come on Jan. 10, 2024, but the market is already celebrating a win this week.

BlackRock is Buying Bitcoin for Its ETF

On Oct. 23, Bitcoin (BTC) rose nearly 4.5% to over $31,700, its second-highest level in 2023.

Traders flocked to purchase the cryptocurrency as BlackRock declared it would start seeding its Bitcoin ETF in October. Simply put, BlackRock will buy Bitcoin to ensure it can offer its ETF shares for trading in the open market.

Of course, an investment fund seeding its investment product before launch is a normal practice.

As Eric Balchunas, senior ETF analyst at Bloomberg, notes:

“Seeding is typically not a lot of money, just enough to get ETF going. So I wouldn’t read this as ‘omg, Blackrock is buying a ton of Bitcoin’ at all, but more the fact they are doing it and disclosing it shows another step in the process of launching.”

But, in the Bitcoin world, even the hints of major firms purchasing cryptocurrencies amplify the underlying buying demand. The Oct. 23 price rally attests to the same viewpoint, with crypto influencers treating the BlackRock news as a hint of a potential approval.

Their hopes emerge from the listing of BlackRock’s iShares Bitcoin Trust under the ticker $IBTC on the Depository Trust & Clearing Corporation (DTCC), which clears NASDAQ trades. Lest, it shows BlackRock’s readiness for ETF approval, not the US Securities and Exchange Commission’s willingness.

The jury is still out. So, let’s bring the focus back to ‘real fundamentals’ as Bitcoin heads into another profitable week.

Dollar’s Weakness is the Key

Bitcoin’s renewed strength coincides with a bout of volatility across bond markets.

Notably, the benchmark 10-year US Treasury slumped after hitting 5% as traders digested the Federal Reserve’s ‘higher-for-longer’ interest rate stance. In other words, the market does not anticipate the Fed to increase rates in the near term, thus reducing investors’ appetite for safer assets.

The trajectory of yields typically impacts the dollar’s performance. The absence of a sustained uptrend suggests the dollar may be approaching its peak. Unless a significant catalyst emerges, such as the upcoming US Q3 GDP data on Thursday, it’s unlikely we’ll see a major surge in upward momentum.

In turn, that could further benefit Bitcoin, which has traded inversely to the dollar throughout 2023.

Major Events This Week

Central banks, including the Bank of Canada and ECB, will likely update their monetary policies with no expected changes in interest rates.

Upcoming US data includes the first look at Q3 GDP, which is expected to show further economic growth. US PCE on Friday will be closely watched after robust CPI data for September.

Keep an eye out for Q3 earnings reports from mega-cap companies like Alphabet, Microsoft, Amazon, and Meta, which could introduce volatility. Market attention will also be on the forward guidance provided by company leaders regarding the current and future operating environment.

Bitcoin Technical Analysis: Is $32K Next?

Bitcoin’s ongoing price rally has taken its daily relative strength index (RSI) to its most overbought levels since July 2023. In other words, the BTC price eyes a correction or consolidation period ahead.

From a technical perspective, BTC could stabilize above $30,000 this week, given its historical significance as support and resistance. Thereafter, one may expect the price to consolidate between $30,000 and $32,000 unless further bias is confirmed.

On the flip side, a break below $30,000 could have BTC’s price eye a run-down toward its 50-day EMA (the red wave) near $27,750.