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(Kitco News) - The cryptocurrency market traded in a holding pattern on Wednesday as the world's attention remains focused on the escalating conflict in Israel following the bombing of the Al Ahli Arab Hospital in Gaza.

Stocks fell into the red at the market open and proceeded to drift lower throughout the trading day after a series of disappointing earnings left investors with little to be excited about. The 10-year Treasury made matters worse for risk assets as its yield climbed to a fresh 2023 high of 4.928%, its highest level since July 2007.

Oil prices increased more than 1% in response to the rising Middle East tensions, including a statement from Iran's foreign minister calling for an embargo against Israel.

At the closing bell, the S&P, Dow, and Nasdaq all finished lower, down 1.34%, 0.98%, and 1.62%, respectively.

Data provided by TradingView shows that Bitcoin (BTC) bulls made an early morning attempt to push its price toward $30,000, but ran into a wall of bearish resistance at $29,000 that resulted in BTC’s price sliding to a daily low of $28,155. At the time of writing, Bitcoin is trading at $28,280 for a loss of 0.8% on the 24-hour chart.

BTC/USD Chart by TradingView

The early morning push higher and subsequent price reversal resulted in “October Bitcoin futures prices [trading] a bit weaker in early U.S. trading Wednesday,” according to Kitco senior technical analyst Jim Wyckoff, who noted that the futures price hit a two-month high on Monday.

Bitcoin futures 1-day chart. Source: Kitco

“The BTC bulls have the near-term technical advantage amid a price uptrend in place on the daily bar chart,” Wyckoff said. “The path of least resistance for prices is sideways to higher in the near term.”

Bloomberg Intelligence senior macro strategist Mike McGlone highlighted that Bitcoin has been trading in a “narrowing cage” between $25,000 and $29,000 since mid-August, saying the coiling price action has “breakout ramifications.”

“Stuck between its 50- and 100-week moving averages with annual volatility falling to a new low, Bitcoin is about as coiled to move as it gets,” McGlone said. “It’s a question of direction, and my bias is downward along with a top measure of liquidity: Fed fund futures in one year (FF13).”

BTC vs. FF13. Source: X

“What’s typically been a prerequisite for this liquidity indicator to turn positive is Bitcoin falling first,” he said. “If the 24/7-traded, highly speculative crypto leading indicator can sustain above its downward sloping 100-week mean, it might portend risk-on, inflation and more central bank restraint.”

“This may be part of the lose-lose for risk assets with the Fed bias still tightening amid late-stage economic cycle leanings,” McGlone added. “Showing broad market complacency, Bitcoin volatility vs. the S&P 500 is about 2.8x to Oct. 13 and above the 1.9x low from Q4 2020.”

During a recent interview with Scott Melker, McGlone reiterated his outlook that Bitcoin will head lower to finish out 2023.

“Bitcoin goes up in the liquidity and does well when the stock market’s doing well, and then it goes down the other way,” he said. “So here’s what I think’s going to happen: they’re both going to go down.”

Market analyst Rekt Capital also sees the price of BTC heading lower in the near future and pointed to similar moves in 2015 and 2019 that occurred less than 190 days before the next Bitcoin halving.

— Rekt Capital (@rektcapital) October 12, 2023

“The Bearish Bitcoin Fractal assumes price could still rally to even as high as ~$29,000 before additional downside,” Rekt Capital said.

BTC/USD 1-week chart. Source: X

Multiple altcoins see double-digit declines

The majority of tokens in the top 200 traded in the red on Wednesday as crypto traders continued to take profits following Bitcoin’s price breakout on Monday in an attempt to book their gains ahead of a potential market-wide pullback.

Daily cryptocurrency market performance. Source: Coin360

Blur (BLUR) was the standout token of the day with a gain of 34.57%, followed by an increase of 8.9% for Sei (SEI). Loom Network (LOOM) led the losers with a decline of 42.9%, while Orbs (ORBS) fell 37.7%, and Stratis (STRAX) lost 32%.

The overall cryptocurrency market cap now stands at $1.08 trillion, and Bitcoin’s dominance rate is 51%.