The Bitcoin price ($BTC) started the final week of October with a welcome rebound, returning to levels above $115,000. Following a period of market nervousness, while traditional stock markets were rallying, the question is whether the recent dip from the all-time highs can be permanently erased. This recovery offers hope for the 'Uptober' designation and is being reinforced by a number of significant macro-economic and technical developments.

Price Action: Bitcoin Recaptures Key Support Levels

Following the recent dip, the bulls succeeded in pushing Bitcoin to a weekly closing price of approximately $114,500. This not only provided a much-needed comeback but also saw the important 21-week Exponential Moving Average (EMA) recaptured. Analysts view maintaining this level as crucial for the continuation. The market is still in a 'Macro Consolidation' within a monthly range. The focus is now on converting the recent September records into new support by the end of the month.

Nevertheless, some scepticism prevails. Some traders point to weakness on higher time frames, low trading volume and bearish divergences on the Relative Strength Index (RSI), keeping a potential "Head & Shoulders" bearish reversal pattern in view should the price drop below the $109,000 neckline. Despite this, the recent volatility — with price movements through liquidation levels — has breathed new life into the market.

Macro-economic Catalysts: Interest Rate Decision and Trade Deal

This week is largely dominated by macro-economic news that influences both traditional and crypto markets.

Focus on the Fed and Interest Rate Cuts

On Wednesday, the Federal Reserve (Fed) will announce its interest rate decision. Markets are anticipating a 0.25% rate cut with high probability (over 95% according to the CME Group‘s FedWatch Tool).

According to some research, continued interest rate cuts could boost Bitcoin price action, as it creates an environment in which 'risk assets' flourish. The recent Consumer Price Index (CPI) report, which showed inflation to be lower than expectations, has further strengthened the 'bull case' for risk assets.

US-China Trade Deal Provides Relief

Another key factor for the crypto market is the approaching trade agreement between the US and China. Earlier this month, the threat of increased tariffs caused a decline in both stocks and crypto. Now that Washington deems a deal close to completion, stock futures reacted with a sharp rise at the start of the week. This removes a major macro-economic hurdle and is indirectly positive for market sentiment surrounding Bitcoin.

Structural Growth According to Metcalfe's Law

For the more optimistic investors, there is additional support to be found in analyses that emphasise the structural growth of Bitcoin.

Network economist Timothy Peterson argues that the Bitcoin cycle is directly influenced by rate policy. Rate-cutting cycles are historically an impetus for the 'bull case' and could point towards future quantitative easing (QE).

His research, which links the growth of the Bitcoin network to Metcalfe‘s Law, suggests that the long-term trend is upwards. According to this view, there is no bubble; all dips are temporary and a further rise is inevitable.

An AI simulation also predicts that $115,000 is the new focal point and that a target of $125,000 is a credible possibility before the end of October.

Uptober Returns: All Figures Back in the Green

Despite the volatility, the current recovery is crucial for monthly performance. At $115,000, the BTC/USD rate is about 1% higher than its October opening level, helping it avoid the infamous title of 'worst October ever'. The market is now focused on a possible record monthly close should the price settle above $115,750.

Short-Term Holders Back in Profit

Analysts state that the total 'Supply in Profit' is currently around 83.6%. This level is interpreted as encouraging, suggesting that investors are once again willing to hold their BTC while anticipating further upside.

In summary, despite lingering technical doubts, the Bitcoin price has shown a strong comeback, driven by positive expectations regarding the Fed rate decision and relief over global trade. Attention is now focused on a strong month-end close and the greater volatility expected towards the end of the year.

Disclaimer: This is not financial advice. Always consider conducting your own research and consulting professional advice before investing.