On October 21, Bitfinex released a report stating that "Bitcoin continued to maintain an upward momentum in the past week, reaching a high of $69,586 in early trading on October 21. As Bitcoin approaches the $70,000 mark, it will face its first real resistance test, which is the highest level since the Bitcoin conference in Nashville in July. The trend of Bitcoin prices is strongly correlated with the probability of Donald Trump's victory, and the cryptocurrency market has become more sensitive to the US election as investors assess the potential impact of a Republican victory on future cryptocurrency regulation.
The open interest (OI) of Bitcoin perpetual contracts and futures contracts has soared to a record high of over $40 billion, reflecting an increase in market speculative activity. While the increase in OI indicates strong market participation, there are concerns about the gap between the rise in OI and the new highs in Bitcoin, suggesting that the current price volatility is mainly driven by leveraged futures positions rather than spot market demand. However, this time is different, as the funding rate remains neutral, indicating that the long positions in the perpetual market are not excessively imbalanced.
Although there may be a pullback to reset the OI, the overall outlook remains bullish, supported by macroeconomic factors such as the potential for the Federal Reserve to cut interest rates, increased liquidity, and the potential for an improved US cryptocurrency regulatory environment. Therefore, Bitcoin may continue its upward trend, and if it breaks through the $70,000 resistance level and its eight-month consolidation range, it may repeat the strong performance seen in October 2023, when Bitcoin soared after breaking through $30,000."
