Bitcoin started the last week of “Uptober” with a stable average sentiment, and the trading range continued to remain unchanged.
After an attempt to break through, the BTC/USD pair is still subject to a narrow channel, which has been going on for several weeks now.
Some historically low volatility means that Bitcoin has found a temporary function as a “stablecoin” – and even some major fiat currencies are currently more volatile.
However, the longer the status quo drags on, the more convinced commentators are that a major trend will change.
They believe that this week, as in any previous week – macroeconomic data, geopolitical instability and typical fluctuations around the close of the month are all factors that shake the bitcoin market.
Bulls need to work hard to ensure that this breakout is to the upside – weeks of trading ranges provide strong resistance, while behind the scenes, miners hint that capitulation may surprise everyone sooner or later.
Cointelegraph took a closer look at the current market conditions and highlighted five things to keep in mind when tracking Bitcoin price movements this week.
The highest closing price since the beginning of September
Bitcoin showed some interesting price action at the weekly close on October 23, with the BTC/USD pair showing its biggest hourly “gain” in several days, and then peaking at $19,700.
Data from Cointelegraph Markets Pro and TradingView show that bitcoin has already seen a pullback at the close, but nevertheless, this became the highest level since the beginning of September, at about $19,580.
BTC/USD one-week candlestick chart (Bitstamp) Source: TradingView
On October 24, this optimism had dissipated, and bitcoin more or less returned to its previous levels.
Michaël van de Poppe, founder and CEO of trading firm Eight, said it was time to say goodbye to range-bound BTC.
“Bitcoin is still stuck in this range,” he told fans on Twitter the day before.
The order data reflects a similar situation. Maartunn, a contributor to on-chain analytics platform CryptoQuant, analyzed trader behavior on major exchange Binance, noting that whales suck liquidity out of established price channels.
He concluded: “Liquidity in this range has been removed, or at least significantly reduced. He added, “Whales (users holding $100,000 to $1 million in Bitcoin) are reducing their holdings.” ”
BTC/USD Order Book (Binance) Annotated Chart Source: Maartunn/Twitter
Material Indicators, which tracks changes in order book liquidity, further noted that the resistance levels corresponding to Bitcoin’s old all-time highs of 2017 have softened.
BTC/USD Order Book (Binance) Annotated Chart Source: Material Indicators/Twitter
Popular trader and analyst Jackis also predicts a “crazy” November for bitcoin, but he does not know whether bitcoin will go up or down.
“The Bitcoin price has found an equilibrium point around 19K. After a long period of balance, there is always a move,” he wrote over the weekend.
The Fed and the European Central Bank are in the spotlight ahead of the decision to raise interest rates
Van de Poppe’s commitment to a “big” week of macroeconomic events may yield results on October 28, when the US personal consumption expenditure (PCE) price index for September is released.
While traditionally PCE has not had as much impact on the crypto market as the Consumer Price Index (CPI), this time PCE comes at a pivotal moment.
Next week the Fed will meet to decide whether to raise interest rates, which will be based on specific data such as PCE and CPI.
Currently, the market expects the Fed to raise the rate by another 75 basis points, which will continue to put pressure on risky assets, including bitcoin, but last week there were already rumors that the Fed will soften its stance.
Any relaxation of policy would be positive for the stock market, and the crypto market, which is highly correlated with the stock market, would naturally benefit from it.
“The Bitcoin bear market lasts an average of 12.5 months. This is known as the gold bull cycle ratio,” hopeful developer James Bull commented over the weekend.
“It’s now the 11th month and the Fed is considering stopping rate hikes.”
Bitcoin Price Cycle Comparison Chart Source: James Bull/Twitter
Meanwhile, Charlie Bilello, founder and CEO of Compound Capital Advisors, summed up expectations for the Fed, confirmed that no further 75 basis point rate hikes are expected after the beginning of November.
“The rate cut will begin in December 2023 and will continue into 2024,” he added. ”
At the time of writing, CME Group’s FedWatch Tool puts a 90.5% chance of a 75 basis point rate hike in November.
Fed Target Rate Probability Chart Source: CME Group
Outside the United States, on October 27, the ECB will hold a press conference where ECB President Christine Lagarde will speak.
The eurozone is currently dealing with record inflation, which has already exceeded 20% in some EU member states. However, the ECB has been significantly slower to respond to rate hikes than the Fed.
Economist Daniel Lacalle tweeted about the current situation: “The ECB is expected to raise interest rates by 75 basis points on Thursday. However, balance sheet reduction will be delayed until the neutral rate comes from 1.5 to 2% instead of the current 0.75% (at least in the second half of 2023). ”
“The ECB is still behind the curve. It has neither fulfilled its task nor stabilized the market. ”
“Amazing” computing power points to doubts about Russia
Back inside Bitcoin, a sense of unease about the fundamentals of the network and the health of the mining space is brewing.
Observations of the data lead to an unusual but not entirely welcome conclusion – hash power may be at an all-time high, but this increase may be unsustainable and will come at a cost.
Despite the overall downward spot price movement, miners are putting more and more computing power into the blockchain.
This means that already thin profit margins are being squeezed further, and small miners risk having to abandon ship due to the loss of financial incentives.
Entities that increase hash power can also be considered to have sufficiently large capital, although the current state of the network can still be profitable.
William Clemente, co-founder of research firm Reflexivity Research, wrote over the weekend: “Think about which entities think mining is advantageous with Bitcoin prices falling 70 percent, energy prices high, and hash prices at all-time lows. It is not known if it is a large enterprise with excess energy or able to obtain very cheap energy. ”
With that in mind, commentator Steve Barbour came to an unusual conclusion.
“Friends, it’s Russia. Russia is where hashrate power goes,” he said.
While these entities remain a mystery, the numbers speak for themselves. According to the monitoring resource MiningPoolStats, the hashrate is currently over 270 EH/s, while the valuation offered by BTC.com is 259 EH/s.
Due to the increase in computing power, the mining difficulty was increased by 3.44% on October 24, reaching another all-time high of 36.84 trillion.
So far, however, as concerns about sustainability have intensified, the old adage “price follows hash rate” has not been proven.
Overview of Bitcoin network fundamentals (screenshot) Source: BTC.com
Loss-making supply surges
One analyst believes that if miners have not surrendered deeply, then for ordinary bitcoin holders, capitulation has “arrived”.
Trading resource Game of Trades concludes based on data covering BTC’s loss-making supply that the pain of the bear market has entered.
Excluding lost or long-held bitcoins, the 30-day moving average of loss-making bitcoins is currently at an almost all-time high.
“Surrender is coming,” Game of Trades concluded on Twitter.
A side chart from on-chain analytics firm Glassnode shows a loss-making supply of more than 8 million bitcoins.
Bitcoin Loss Supply (30-Day Moving Average) Annotated Chart Source: Games of Trades/Twitter
The response stressed that the figure would be lower if circulating supplies were used, and Game of Trades also acknowledged that the June low of $17,600 still constituted a “major capitulation event”.
Supply issues are becoming increasingly predictable – Glassnode also confirmed that the supply of BTC currently dormant for at least 5 years is higher than ever, at 25.47%.
Last active Bitcoin supply chart more than 5 years ago Source: Glassnode/Twitter
Uptober？ What Uptober?
Compared to October 2021, there is little interest in the “Uptober” that failed to materialize this year.
At the current price, the BTC/USD pair is only 0.36% away from the beginning of the month — this indicates that bitcoin has become quite stable.
Data from data resource Coinglass shows that October 2022 was the flattest on record in percentage terms, compared to a 40% increase last year.
Those hoping for a dramatic turnaround in November have a difficult task – last year it hit an all-time high, but the month ended with a 7.1% decline.
On the other hand, in November 2020, the BTC/USD pair grew by 43%, and in November 2017, it increased by 53.5%.
Bitcoin Historical Return Chart (screenshot) Source: Coinglass
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-least-volatile-uptober-ever-5-things-to-know-about-bitcoin-this-week/
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