The Bitcoin price has returned to its highs since mid-September, and BTC bulls have staged another attack at $21,000. Here are three reasons why crypto markets are rising.
jumped to new seven-week highs and confidence returned to the global macro outlook.
The more definitive charge of $21,000 saw BTC/USD reach its highest levels since September 13, data from Cointelegraph Markets Pro and TradingView confirm.
After the volatility caused by the US Federal Reserve interest rate hike, Bitcoin made up for lost time and days later left bears and shorts in the dust.
BTC/USD 1-day candlestick (bit stamp). Source: TradingView
With sentiment divided on what the Fed will decide next month, there is still a sense of doom among crypto commentators, with predictions of a $30,000 comeback in November.
The outlook for the rest of Q4 remains hazy with some still expecting 2022 to copy the 2018 bear market. At the same time, there is hope that this bear trend will die down by the New Year.
The total crypto market capitalization has already crossed the $1 trillion mark once, according to data from CoinMarketCap.
Crypto Market Capitalization Source: CoinMarketCap
Cointelegraph looks at three main factors influencing the strength of the crypto market in the current environment.
The Fed could change its tune on rate hikes
When Cointelegraph reported on why the crypto market saw further losses last month, the US Federal Reserve was at the top of the list.
Concerns centered on unlikely policies to keep the US dollar strong and rates rising for the foreseeable future, the worst-case scenario for risk assets.
At the same time, rumors are piling up about the prospects for rate hikes as the Fed runs out of room to maneuver. After November’s 75 basis point increase, policy is suspected to begin reversing direction, making smaller increases in the following months before being fully reversed in 2023.
As such, any signs that the Fed is preparing to ease its hawkish stance are being embraced by markets weary of a year of quantitative easing (QT).
The December Federal Open Market Committee (FOMC) meeting is currently expected to return a 50, not 75, basis point gain, according to CME Group’s FedWatch tool.
Fed Target Rate Probabilities Chart. Source: CME Group
The unemployment data released on November 4 boosted bear confidence. By coming in higher than expected, the implication may be that interest rate hikes are having the desired effect and thus a pivot may occur sooner rather than later.
Bitcoin volatility hits record low
Analyzing data from Cointelegraph Markets Pro and TradingView, it is clear that BTC/USD has been too quiet for too long.
This is especially visible in the Bollinger Bands volatility indicator, which has rarely been closer in Bitcoin history and has been demanding a breakout for weeks.
BTC/USD (Bitstamp) 1-day candlestick chart with Bollinger Bands. Source: TradingView
Last month, Bitcoin’s volatility even dropped below that of some major fiat currencies, making BTC look more like a stablecoin than a risky asset.
Analysts, however, had long expected the trend to make a violent reversal; and to form correctly, the crypto markets did not disappoint.
A look at Bitcoin’s Historical Volatility Index (BVOL), recently seen at multi-year lows only a few times, shows that Bitcoin still has a way to go to give up this feature.
“It’s pretty funny that volatility is so compressed and we’ve become so conditioned as market participants that the slightest 3% move feels like a 15-20% move,” said William Clemente, co-founder of the trading firm. cryptographic research reflexivity research.
Bitcoin Historical Volatility Index (BVOL) 1-week candlestick chart. Source: TradingView
Dollar contemplates a new chapter
After a parabolic uptrend throughout 2022, the US dollar is just starting to show signs of weakness.
Related: Bitcoin Seller Exhaustion Hits 4-Year Low in ‘Typical’ Bear Move
The US Dollar Index (DXY) recently reached its n