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(Kitco News) - Crypto traders are in high spirits on Tuesday after Bitcoin (BTC) climbed to its highest level in 2023 on the back of increasing evidence that the first spot BTC exchange-traded fund (ETF) will launch in the relatively near future, opening the door for trillions of dollars worth of institutional money to enter the digital assets arena.

Stocks also climbed higher as some of Wall Street's biggest tech firms reported their earnings, but analysts continue to caution against overexposure while watching for signs that the inverted yield curve has started to reverse course and spreads are returning to normal – a development that has preceded the last four recessions.

The S&P, Dow, and Nasdaq all traded in the green at the closing bell, up 0.73%, 0.62%, and 0.93%, respectively.

Data provided by TradingView shows that the rally for Bitcoin extended to a second day, with the top crypto hitting a high near $35,155 in the early morning hours on Tuesday, its highest level since early May 2022. At the time of writing, BTC has pulled back to support at $33,875, an increase of 7% on the 24-hour chart.

BTC/USD Chart by TradingView

Kitco senior technical analyst Jim Wyckoff said October Bitcoin futures prices were “strongly higher and hit a contract high in early U.S. trading Tuesday.”

Bitcoin futures 1-day chart. Source: Kitco

“The BTC bulls have the strong near-term technical advantage and have momentum on their side, amid an accelerating price uptrend in place on the daily bar chart,” Wyckoff said. “The path of least resistance for prices remains sideways to higher in the near term.”

Julius de Kempenaer, senior technical analyst at StockCharts.com, told Kitco Crypto “After months of going back and forth in a trading range between 25k and 31k, BTC finally managed to break from that sideways movement. And it is doing that with a vengeance.”

“From its recent low near 26.5k on October 12, BTC jumped to 30k in a few days,” he said. “After taking a slight breather, BTC then jumped over the 32k fence and briefly touched 35k.

This is a very significant move as it clears a heavy overhead resistance level and frees up the way to the next major resistance level and target near 47-48k.”

BTC/USD 1-day chart. Source: Stockcharts

“On the daily chart, the range between 25 and 30.5-31.5 is clearly visible, as well as the recent jump, taking out that overhead barrier,” de Kempenaer said. “In technical terms, this means that all selling activity in the 31k area has now been exhausted, there is no supply left, and buyers are getting very aggressive, which is pushing the price up.”

BTC/USD 1-week chart. Source: Stockcharts

“When a market breaks a significant resistance level, that same level usually comes back as support after the upward break,” he said. “Translating that to BTC means we are going to see a pause or setback in the rally. The former resistance area around 31k may now be expected to start catching any declines as it starts to work as support.”

“With the next major resistance level near 47-48k and support nearby around 31k, the tables have now turned, and risk/reward is getting back in favor of BTC,” he concluded.

MN Trading founder Michaël van de Poppe also highlighted the importance of support at $31,000 and recommended traders focus on buying during dips as BTC heads toward $38,000.

Clearly, #Bitcoin is currently in an upwards trend.

Does that mean, you'll need to buy here? Probably not the best ROI as upside is relatively capped and -EV to take the long.

Bitcoin at $31,100-31,800 is a must-hold and probably 4-8% dips are entries towards $38K. pic.twitter.com/E9O35z3vw5

— Michaël van de Poppe (@CryptoMichNL) October 24, 2023

Market analyst Rekt Capital also suggested waiting for pullbacks to enter the market as things currently look overheated.

“When retracement presents itself in the coming months - it should be treated as an opportunity for re-accumulation,” he said. “It can be easy to think you've missed out on the entire bull market and that BTC will never pullback, but a market cycle lasts a long time, there will always be breakout rallies, and there will always be pullbacks. Another opportunity will always present itself.”

Double-digit gains in the altcoin market

It was a positive day for the altcoin market as most tokens recorded gains, while only two tokens in the top 200 declined by more than 3%.

Daily cryptocurrency market performance. Source: Coin360

Mina’s (MINA) price surged 50.2% to trade at $0.694, Conflux (CFX) gained 38%, and Powerledger (POWR) and Polymesh (POLYX) increased by 27%. Monday’s biggest gainer – Dogelon Mars (ELON) – led the losers on Tuesday with a decline of 13.6%, and Orbs (ORBS) fell 9%.

The overall cryptocurrency market cap now stands at $1.25 trillion, and Bitcoin’s dominance rate is 53%.