The bottom may not have been reached, but a report by Arcane Research describes how the crypto market could perform in the short, medium and long term.
As November begins, analysts are busy analyzing the major market moves that occurred in October. while bitcoin
remained relatively unchanged with only 5.89% growth in October, Arcane Research Senior Analyst Vetle Lunde grasped the direction the market could take in the coming months.
“Uptober”, a reference to Bitcoin’s historic bullish performance in the month of October, was a common theme in many threads on Crypto Twitter, and according to Lunde, this performance seems to have happened again. The data shows that BTC and exchange tokens outperformed the large-cap index until October 26.
Elon Musk’s takeover of Twitter helped propel the major-cap index above Bitcoin with a staggering 20% monthly gain. doecoin
for 0.12 US dollars
helped cement the strength of the large cap by producing a 144% gain in the last seven days.
Index performance weighted for October 2022 performance. Source: Arcane Research
The October Bitcoin spot market was boosted by higher volume and lower volatility, while also benefiting from a brief contraction that the market briefly experienced. According to Lunde, the last week of October saw the largest cryptocurrency short liquidation volume since July 26, 2021.
While this activity helped Bitcoin rise 6%, Ether
saw more substantial gains at 18% and 19% respectively.
7-day average BTC USD daily volume with and without Binance. Source: Arcane Research
The brief contraction helped provide an overall boost, but Lunde concluded that the boost did not create a significant change in BTC’s price. BTC spot volume is up 46% in the past seven days, and the 30-day volatility index is at a two-year low. In addition, the seven-day volatility index is at 2.2%, while the annual average is 3%.
30 and 7 day volatility for BTC. Source: Arcane Research
Comparing the volatility of a previous short to the most recent short, Lunde said:
“The July 26 contraction saw a daily high-low change of 15% as markets quickly rallied, while the October 25 and 26 move saw daily high-low changes of 5% and 6% .In addition, the momentum has stalled, indicating that traders should set themselves up for a longer consolidation.
While bitcoin is attractively priced, the best approach to this market is short-term dollar cost averaging rather than the use of leverage, according to Lunde. Bitcoin has experienced exceptionally low volatility and is closely following the US stock market, so it’s important to keep an eye on Q3 earnings reports.
Fed policy will continue to dictate the price of Bitcoin
Federal Reserve Chairman Jerome Powell speaks after the November 2 meeting of the Federal Open Market Committee on US monetary policy, inflation and the next interest rate hike.
According to Lunde, there are two scenarios to consider:
“Scenario 1: Jerome Powell stays smart in the fight against inflation and prepares the market for further gains. This is the most plausible scenario in my opinion. In this environment, I expect the correlations between BTC and other asset classes to remain elevated in the now 4, 5 month trading range remains firm, with activity subdued, leading to a longer lasting opportune environment to accumulate. sats”.
“Scenario 2 – Jerome Powell offers subtle pivot suggestions. In this scenario, I see the correlated market environment softening. Last week we saw how unique crypto-related market structural activity caused correlations by a significant decline. Pivot expectations will lead to similar reactions lead and restore the BTC digital gold narrative.
In the second scenario, some analysts believe that cryptocurrencies could decouple from US stocks. This reaction could mirror the crypto market reaction in mid-2020, which pushed the price of Bitcoin above $20,000.
What to expect in the long run
In the longer term, Lunde predicts that the adoption of Bitcoin and digital assets will continue to be an emerging trend. Point to a Fidelity survey that showed an increase in market interest