Reasons behind Bitcoin price’s falling down at $64K

Bitcoin price struggles to overcome the $64,000 resistance as investors choose to invest in stocks and seek shelter in cash options amid socio-political uncertainty.

Bitcoin prices faltered

Bitcoin (BTC) is currently priced at $62,294.36 and has struggled to maintain levels above $66,000 since July 31, despite a 5.2% increase between October 3 and October 7. Some analysts believe that Bitcoin benefits from the rising U.S. federal debt, but while this correlation seems plausible, it has minimal impact on short-term price movements.

In reality, socio-political events appear to be the main factor limiting Bitcoin’s upside potential. The global monetary base (M2) has increased from $104 trillion in June to $108 trillion in October, yet Bitcoin has faced multiple rejections at the $68,000 resistance level. This indicates that the recent rally to $64,000 is unlikely to be influenced by the U.S. fiscal situation.

Key factors that influence bitcoin prices

Recent U.S. macroeconomic data has not been favorable for Bitcoin's price. To understand why Bitcoin has consistently struggled to maintain levels above $66,000 in the past eight weeks, it's essential to examine the factors limiting investor sentiment. Key issues include uncertainties surrounding global economic growth, the escalating conflict in the Middle East, and the potential impact of the upcoming November U.S. Presidential elections.

The stronger-than-expected U.S. jobs data released on October 4 reduced the likelihood of an economic recession. However, it also led to a decline in the implied probability of a 0.50% interest rate cut, dropping from 40% two weeks prior to 0%, according to the CME FedWatch tool. Prolonged higher interest rates make investors more risk-averse, which negatively affects Bitcoin's price.

Moreover, current macroeconomic data has led investors to raise their expectations for positive third-quarter corporate earnings, prompting global investment bank Goldman Sachs to increase its year-end 2025 S&P 500 target to 6,300, according to Reuters. Goldman noted that a “recovery in the semiconductor industry cycle” will further support earnings momentum.

Regardless of Bitcoin bulls’ views on how BTC price will react to a potential global economic recession, the latest stimulus measures announced by China significantly reduce the need for alternative hedges. The Hong Kong stock market index reached a 32-month high on Oct. 7, closing 9.3% above levels from Sept. 30, while the S&P 500 is trading 0.5% below its all-time high.

Bitcoin Derivatives Metrics and Spot ETF Outflows

Despite the overall optimism in global stock markets, Bitcoin's price has struggled to hold above $66,000, and notably, sentiment among derivatives traders remains neutral. One key indicator of bullish sentiment is the monthly BTC futures market's annualized premium.

In neutral markets, these derivative contracts typically trade at an annualized premium of 5% to 10% to account for the longer settlement period. However, if demand for leveraged long positions (buying) increases, this premium can easily rise above 15% or 20%. In contrast, during bearish periods, negative premiums, known as backwardation, occur.

Notice that the BTC futures annualized premium has remained at 8%, indicating that demand for leverage is relatively balanced between bulls and bears. Part of traders’ lack of conviction stems from recent flows in Bitcoin spot exchange-traded funds (ETFs), which have seen $335 million in net outflows since Oct. 1, according to Farside Investors data.

Ultimately, the reasons for Bitcoin being pinned below $64,000 are primarily due to a macroeconomic environment that has favored the stock market and investors seeking protection in cash positions ahead of socio-political uncertainties.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients.