Bitcoin’s October Surge: A Roller Coaster Ride, Maybe A Correction Soon

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coinspy
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Bitcoin’s October Surge: A Roller Coaster Ride, Maybe A Correction Soon

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The Upswing

October has been quite the ride for Bitcoin (BTC). After starting the month on a somewhat lackluster note, BTC has made a remarkable comeback, outshining its previous losses. From a low of $58,867, it has soared to July levels, currently trading at an impressive $69,028. That’s a robust 7.96% gain over the past week and a notable 9.52% increase on the monthly charts.

The Analyst Dilemma: Optimism vs. Pessimism

As the crypto community watches this surge with bated breath, analysts find themselves caught between optimism and pessimism. One voice in the crowd is that of Burak Kesmeci, an analyst at CryptoQuant. He suggests that Bitcoin might be due for a market correction, pointing to the NVT (Network Value to Transaction) golden cross.

The NVT Golden Cross: A Hot Zone Indicator

For those new to the concept, the NVT Golden Cross entering the hot zone implies that BTC’s current valuation exceeds what its network activity justifies. In other words, it’s overvalued relative to the actual value being transferred on the blockchain. This situation often precedes a price correction, where the market adjusts to align with fundamental network usage.

What the Charts Reveal

Let’s take a closer look at some key indicators:

  1. NVT Ratio: CryptoQuant data shows that the NVT ratio has been steadily rising over the past week. This increase suggests that BTC’s price is currently unsustainably high compared to its actual utility and network activity. In other words, it’s overpriced.
  2. Stock-to-Flow Ratio: Over the same period, Bitcoin’s Stock-to-Flow Ratio has declined. This decline hints at increased supply, which tends to turn the market bearish if demand doesn’t keep pace.
  3. Price DAA Divergence: The Price DAA (Price to Daily Active Addresses) divergence has remained negative throughout the week. This signals an unsustainable price increase driven more by speculation than genuine demand.

Conclusion: Brace for Impact

In summary, while BTC has soared to recent highs, the underlying fundamentals suggest caution. The rally appears speculative, lacking strong support from network usage. Brace yourselves—Bitcoin may soon correct, potentially dropping to the $65,872 support level. As always, the crypto roller coaster keeps us on our toes! 🎢📉

 

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