Bitcoin (BTC) Starts a New Week Keeping the World Waiting while maintaining a small trading range.
A non-volatile weekend continues a familiar status quo for the pair BTC/USD, which is holding just above $19,000.
Despite calls for a rally and a race to lower macro lows, the pair still has to make a decision about a pathor even the signal that a breakout to the upside or downside is imminent.
After a brief period of enthusiasm following last week’s US economic data, bitcoin is back to square one, literally, as the price is at exactly the same point as last week.
As the market wonders what it takes to break out of the range, Cointelegraph takes a look at this week’s potential catalysts.
Spot Price Action Has Traders Dreaming of a Breakout to the Upside
For bitcoin traders, it’s a case of is “almost too calm” when it comes to the weekly chart of the BTC/USD pair.
After falling significantly under volatile conditions during the first half of 2022, recent months have seen an almost mysterious lack of volatility.
Data from Cointelegraph Markets Pro and TradingView proves it: on one week timeframes, bitcoin still printing almost flat candles.
Such is the stickiness of the current range that, as Cointelegraph reported, Bitcoin’s historical volatility index (BVOL) is at lows only seen a handful of times.
“Equity volatility (VIX) relative to bitcoin volatility (BVOL) is approaching all-time highs,” added William Clementco-founder of digital asset trading and research firm Reflexivity Research, in comments last week:
“This illustrates the compression of volatility that bitcoin is currently experiencing.”
An attached graph clearly showed that bitcoin is a curiously stable currency in the current climate, and Clemente hinted that it should return to the more volatile classical paradigm.
The week before, the economist, trader and businessman alex kruger he pointed that an “explosive move” had followed all previous trips to the macro lows in BVOL.
He argued that US macroeconomic data that missed expectations “would” in terms of reigniting volatility, but in the event, the numbers stayed just below the trigger range.
Cryptocurrency research firm Delphi Digital agreed..
“Historically speaking, when BVOL falls below a value of 25, a large spike in volatility tends to follow soon after,” he claimed in comments on Twitter.
This week, popular crypto investor and analyst Miles Deutscher told them Traders to “brace themselves” by giving feedback on the Delphi data.
The question for everyone remained the direction volatility would take in the market.
For Il Capo of Cryptothe trader who predicted bitcoin’s decline to $20,000 levels from its all-time highs, expectations remained the same.
$21,000 should come as part of a relief bounce, only to be overshadowed by a further drop to multi-year lows for BTC/USD.. Potentially reach USD 14,000-16,000.
“Some shitcoins experienced scam hikes during these days, while BTC was on its way to $21,000. This could give the illusion that the bull market is back.” warned during the weekend:
“My advice: don’t be greedy. Take profit if this happens. Protect your capital.”
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New Macroeconomic Factors Line Up for Cryptocurrencies
Although little is expected from the Federal Reserve in terms of direct policy changes this week, there is still plenty of fuel for cryptocurrency volatility to be provided by external forces.
In the United States, business results will be plentiful and rapid, and tech stocks are particularly apt to move markets should earnings fall short of expectations.
Reporting companies account for more than 20% of the S&P 500, which like other US indices is showing rare weakness this year..
“I think that the odds of a decline in the next week or two are pretty high,” Raoul Pal predicted overnight.founder and CEO of RealVision, along with an accompanying graphic:
“SPX Weekly DeMark comes in next week, near channel bottom and 50% retracement, with RECORD bearish sentiment.”
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When plotting the graph of the week ahead, the financial commentary resource Kobeissi Letter also told them to his subscribers to “prepare for more volatility”.
More US data will be added to the gains this week, he explained.while Fed officials will comment on general policy.
“Median recession bear market dating back to 1929 is down 39%”, wrote on the strength of the stock market in one of several posts from the weekend:
“Also, the average bear market with recession lasts 16 months. We are currently only 10 months in and the S&P 500 is only down 28%. History continues to suggest that more pain awaits us.”
Beyond the actions the US dollar index (DXY) was mercifully still in the new week, thus far avoiding another attack on previously seen twenty-year highs.
Echoing the Il Capo of Crypto theory, Michaël van de Poppe, founder and CEO of trading firm Eight, hinted that it could be this week or next when “some relief” comes in for risk assets in general..
“It is a crucial area for bitcoin as it has been hovering around the range for over a month now,” summarized that day:
“Needs to break above $19,400-19,600 clearly. If that happens, volatility may finally kick in. Given the DXY structure and returns, I expect this to happen in 1-2 weeks.”
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RSI Breakout Risk Echoes 2018
Beyond, the outlook for bitcoin gets murkier, and those guessing bearish scenarios from current chart data are busy funneling comparisons to the bottom of the 2018 bear market.
Among them is the popular analyst Matthew Hyland, who even in his trademark bull market views has little to celebrate when it comes to BTC price action in the coming months.
In a tweet this weekend, Hyland ticked off Bitcoin’s Relative Strength Index (RSI) repeating the behavior seen in the accumulation of the floor of 2018.
An accompanying chart clearly demonstrated the familiar bear market forces at play.adding to suspicions that the fourth quarter of 2022 could closely mirror the scenes of four years ago.
The trading account Stockmoney Lizards confirmed that it was “100% on board” with the idea, which uses the 3-day chart.
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The 2018 RSI breakout structure involved a dive from $5,500 to $3,100 for the BTC/USD pairor about 40%.
“Obviously, we are still waiting for this huge movement to arrive,” added Hyland in a video related to the idea.
Additionally, it showed that the classic Bollinger Bands volatility indicator was still predicting an incoming storm; bands tightened, demanding a break in volatility.
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The hodlers remain as determined as ever
If you take a look at the behavior of the hodlers, it becomes clear that long-term average holder (LTH) determination remains firm.
The latest data from on-chain analytics company Glassnode confirm a maximum of five years on the number of bitcoins lost or out of circulation in cold storage.
The “hodled or lost coins” metric puts the count at 7,554,982.124 BTC -or 40% of the current supply- as of October 17, meaning that there is more BTC out of the market than at any time since the end of 2017.
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Also, the distribution follow an accelerated trend visible throughout 2022. The number of wallets with a balance of at least one whole bitcoin is now at an all-time high of over 908,000.
Although it has generally increased during the second half of 2021, the trend has gained noticeable momentum this yearas shown by Glassnode.
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Analyzing the lost coins as part of its weekly newsletter, “The Week On-Chain,” Glassnode concluded that the current bear market has yet to match others in terms of intensity when it comes to hodlers.
“Network profitability has not reached the same level of severe financial pain as it has in past cycles; however, adjusting for lost and HODLed coins may explain a reasonable part of this divergence,” he explained last week.
Nevertheless, when it comes to people used to riding through bear markets, there seems to be little appetite to capitulate from current price levels.
Fear enters its second month in a row
It seems that there is no way to shake the fear when it comes to cryptocurrency market sentiment.
In a sign that has captured the industry this year, the Cryptocurrency Fear and Greed Index has now had sentiment in its “fear” or “extreme fear” for two months running.
The Fear and Greed Index uses a basket of factors to calculate a normalized market sentiment score, and the year 2022 has given different results than most years.
Previously, the Index recorded the longest period in its history in “extreme fear”, a feat that is currently a month away from being repeated.
On October 17, the index measured 20/100, which is about 10 points higher than classic bear market lows, but 14 points higher than this year’s low.
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Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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