The cryptocurrency market is currently showing unprecedented strength, with notable developments recorded in the latest crypto demand report. However, in contrast to the bullish sentiment in the market, Bitcoin is running in the opposite direction. As inflation targets remain unmet and unemployment rises, most members of the Federal Reserve are avoiding major interest rate cuts, impacting market trends. Today’s decline has sparked numerous analyses, illuminating the crypto market‘s current state and future outlook.
The Surging Demand for Cryptocurrencies
Yesterday, the entry of BTC ETFs surpassed $1.2 billion in a single day. Transactions of this scale during the popular periods of 2021 could have resulted in significant market fluctuations. This massive entry is not just a one-time occurrence. According to the latest CoinShares report, nearly $6 billion in net entries were observed last week, marking a significant uptick in institutional interest and involvement in the cryptocurrency market.
If the upward trend of BTC continues, it could break entry records for a second consecutive week, though currently, a downward move accelerates.
“Crypto funds recorded a record net inflow of $5.95 billion last week. This figure exceeded the previous record by over $1 billion. Investors allocated the most funds to Bitcoin, totaling $3.55 billion, followed by Ethereum at $1.48 billion. Year-to-date, Ethereum has seen a record inflow of $13.7 billion, nearly three times last year’s total. Solana and XRP also posted record inflows last week, with $706.5 million and $219.4 million respectively. The demand for crypto among investors has never been stronger.”
Despite short-term fluctuations, these data indicating the inclination of institutional and professional investors promise a stable rise. Moreover, as many financial giants are set to start offering cryptocurrency services next year and ETF approvals approach, investors have ample reasons to remain hopeful.
The October 7th Cryptocurrency Decline
The practice among short-term investors is to sell their assets once satisfactory profits are achieved. Thus, they earn the title of short-term investors, and today, we observed a drop catalyzed by profit-taking from short-term investors. Just as an upward trend is normal, so too is a temporary decline. Looking back, if you review the charts on a daily period, despite the monumental rise thus far, it hasn’t been linear, with declines and pauses preceding subsequent rises, leading Bitcoin to sky‑high values today.
Yesterday, many analysts highlighted the divergence in the RSI, and Scott Melker reiterated that one should not be surprised by the drop.
An analyst under the pseudonym DaanCrypto commented:
“October is already proving to be an interesting month. The market increased immediately after the new monthly candle. Though not unseen before, it’s wise to follow how it develops closely. Past two months showcased multiple divergences in the initial week. I think the bulls need to make a higher low and should not lose ~$118,000. Everything above this point is acceptable.”