Bitcoin Forecast: Is Buying Demand Making a Comeback?

Recent trading sessions have once again highlighted a meaningful improvement in demand dynamics around Bitcoin. In fact, over the last two sessions the leading cryptocurrency has gained nearly 3.0%, bringing buying momentum back into focus after losing strength in previous weeks.

For now, this move appears to be driven by a combination of factors. On one hand, demand activity within the crypto market has begun to pick up again, while on the other, some more stable alternative markets have lost part of their appeal in recent sessions. As long as these conditions remain in place, buying pressure around BTC could continue to gain relevance in the short term.

Are Alternative Markets Losing Relevance?

Over previous weeks, it became increasingly evident that Bitcoin's performance was being affected by the strength observed in more stable markets such as 10-year U.S. Treasury bonds. As yields moved toward recent highs, the relative attractiveness of risk assets like Bitcoin declined significantly.

However, this dynamic has started to change. During recent sessions, Treasury yields have shown a consistent moderation and are now trading closer to the 5.1% area, moving away from the highs seen weeks ago. This slowdown is important because it reduces part of the appeal of more conservative markets and could begin to free up capital flows toward higher-risk assets.

In this environment, Bitcoin appears to be benefiting from a backdrop in which some competing markets are losing momentum, a situation that may be supporting a gradual return of demand toward the crypto market.

Source: TradingEconomics

What stands out is that this shift has coincided with a visible increase in market activity. This can be observed through Bitcoin's Open Interest, which measures the total number of open positions in the derivatives market and has recently climbed back above the $27 billion mark.

A simultaneous increase in both Open Interest and price is often interpreted as a sign that new positions are entering the market and supporting the bullish move. This suggests that the recent recovery is being accompanied by a genuine increase in investor participation, a dynamic that may be benefiting from the declining attractiveness of some more stable alternative markets.

Source: CryptoQuant

Another factor that has started to gain importance is the behavior of short-position liquidations. As Bitcoin's price has recovered over recent sessions, part of the market holding bearish positions has been forced to close those trades, generating additional demand.

This can be observed in the volume of short liquidations, which has risen steadily since the lows recorded on October 17 and has now reached levels not seen since the beginning of the month. This suggests that buying demand is not only increasing, but that selling pressure is also being reduced, a dynamic that had not been clearly visible for several weeks.

Source: CryptoQuant

With all this in mind, demand around Bitcoin appears to be regaining momentum in the short term. The loss of attractiveness in some competing markets is being combined with stronger activity in the derivatives market and a larger exit of bearish positions. If these conditions remain in place, the buying pressure observed recently could continue to be relevant in the sessions ahead.

Bitcoin Technical Forecast

Source: StoneX, Tradingview

• The neutral phase has not completely disappeared: Although Bitcoin managed to develop an increasingly relevant bullish structure over recent months, recent price action continues to reflect an important consolidation phase. The market remains trapped within a relatively consistent trading range between $81,000 and $87,000. As long as price remains within these boundaries, the lack of direction could continue to be an important characteristic of the chart and limit the ability of the broader uptrend to gain stronger momentum.
   
• RSI: The RSI continues to trade above the 50 neutral level, a reading that reflects strengthening buying momentum within the market. As long as this dynamic remains intact, buying pressure could continue to be relevant on the daily chart.
   
• TRIX: The situation is somewhat different in the TRIX indicator, whose line remains close to the 0 neutral level. This reading suggests that a relatively balanced environment still exists within longer-term exponential moving averages and indicates that the broader phase of indecision has not completely disappeared from the market.

Key Levels:

• $86,800 – Key Resistance: A recent high that remains the most important upside barrier on the chart. A sustained move above this level could reaffirm the bullish bias and support a more consistent extension of the current uptrend in the weeks ahead.
   
• $81,000 – Near-Term Barrier: A level that coincides with recent retracement zones and is also developing near the 50-period simple moving average. This could become the main reference to monitor in the event of short-term bearish corrections.
   
• $76,500 – Key Support: The most important low observed over recent months and the primary downside barrier on the chart. A move back toward this level could restore relevance to a broader neutral phase and begin to place the current bullish structure at risk.

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25