As November begins, analysts are busy dissecting the major market moves that occurred in October. While Bitcoin
BTC
pointers down
20209 dollars
Staying relatively unchanged with only 5.89% growth in October, senior analyst at Arcane Research, Vetle Lunde, has charted the direction the market may take in the next few months.
“Uptober,” referring to Bitcoin’s historical bullish performance in October, has been a trending topic across several Crypto Twitter threads, and according to Lunde, that performance appears to have taken place again. Data shows that BTC and exchange coins outperformed the caps index as of October 26.
Elon Musk’s acquisition of Twitter helped push the caps index big above Bitcoin with a staggering 20% monthly gain. Dogecoin
dog
pointers down
$0.13
Help boost the power of large caps with a 144% gain in the past 7 days.
Performance of the Weighted Index for October 2022 performance. Source: Arcane Research
The October spot bitcoin market was driven by increased volume and lower volatility, with the benefit of short squeezes that briefly energized the market. According to Lunde, the last week of October saw the largest cryptocurrency short liquidation volume since July 26, 2021.
While this activity helped push Bitcoin up 6%, Ether
ETH
pointers down
1,532 USD
and BNB
BNB
pointers down
$333
It saw larger gains of 18% and 19%, respectively.
Average daily BTC volume in USD over 7 days with and without Binance. Source: Arcane Research
The short squeeze helped provide an overall boost, but Lunde concluded that the momentum did not create a fundamental change in the price of BTC. Spot BTC trading volume is up 46% in the past seven days, with the 30-day volatility index at its lowest level in two years. Moreover, the seven-day volatility index stands at 2.2%, while the annual average is 3%.
30-day and 7-day fluctuations for Bitcoin. Source: Arcane Research
When comparing the swings of the previous short pressure to the last short pressure, Lund said:
The pressure of July 26 saw daily high-low variance of 15% as markets moved hastily, while October 25th and October 26th movements saw daily high-low variations of 5% and 6% respectively. Moreover, the momentum has stalled, which indicates that traders should prepare 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 been experiencing uniquely low volatility and follows the US stock market closely, so it is important to track third-quarter earnings reports.
Fed policy will continue to dictate the price of bitcoin
Federal Reserve Chairman Jerome Powell is scheduled to speak after the November 2 FOMC meeting on US monetary policy, inflation and the upcoming rate hike.
According to Lunde, there are two scenarios to watch out for:
Scenario one: Jerome Powell remains good at fighting inflation and prepares the market for further gains. This, in my opinion, is the most logical scenario. In this environment, I expect correlations between BTC and other asset classes to remain elevated and the now 4.5-month trading range to remain flat, with little activity, resulting in a favorable environment that lasts for a longer period.”
“Scenario 2: Jerome Powell provides accurate pivotal hints. In this scenario, I see the correlates market environment declining. Last week, we saw how unique market activity associated with cryptocurrencies caused correlations to decline through significant short pressure. Pivotal expectations will drive similar reactions. and revitalizing the digital BTC listing for gold.”
Under the second scenario, some analysts believe that the cryptocurrency could begin to decouple from US stocks. This reaction could mirror the reaction of the cryptocurrency market in mid-2020 which pushed the bitcoin price above $20,000.
