Bitcoin (Bitcoin) kicks off a significant week of internal and macroeconomic events still trading above $20,000.
After finishing the best weekly trading since mid-September, BTC/USD remains higher within the macro trading range.
Bulls are keen to change the trend once and for all, but warnings from more conservative market participants continue to call for the next macro low to be entered.
So far, tug-of-war between the two parties has characterized BTC’s price action, and internal or external triggers have only temporary effects. What could change that?
The first week of November includes a key event that could shape future price action: the US Federal Reserve’s decision to raise interest rates.
Along with other macroeconomic data, this forms the backdrop for overall market sentiment beyond crypto.
Despite October 2022 being one of the quietest months on record, Bitcoin could also close on a monthly basis that week.
Cointelegraph examines these and several other factors impacting BTC/USD over the next few days.
FOMC countdown enters final day
This week’s headline story is courtesy of the Fed and its Federal Open Market Committee (FOMC) meeting.
On November 1-2, the authorities will make a decision on the November benchmark interest rate hike.
This coincides with the Fed’s previous two rate hikes in September and July, respectively, but the market is watching for subtle signs of a change in something else: quantitative tightening (QT). increase.
The interest rate decision is scheduled for Wednesday at 2:00 pm ET, along with accompanying statements and economic forecasts.
Fed Chairman Jerome Powell will then deliver a speech at 2:30 p.m. to complete the background to the market’s reaction.
as Cointelegraph reportThere is already talk that subsequent rate hikes will tend toward neutrality, signaling the end of the aggressive policy enacted almost a year ago.
For Bitcoin and risk assets in general, this could ultimately provide serious fuel for growth as the situation eases.
However, in the short term, commentators expect a standard reaction to the upcoming FOMC announcement.
“I think we’re going to see a bit of a setback that’s pretty typical when the Fed announces rates this week,” said popular trading account IncomeSharks. wrap up to Twitter followers.
“4h showing a double top and a downtrend break.”
The attached chart shows that there may be more upside going forward following the expected retracement.
Ann another point of view Analyst Kevin Svensson warned last weekend that there was little reason to expect a reduction in rate hikes in the near term as inflation expectations were “rising”.
“A Fed pivot was expected every time the stock market rose in this current downtrend,” he noted.
“The recent surge in inflation expectations has made a Fed pivot less likely. Is trend your friend? If so, stocks will find another low after the FOMC.”
Svenson continued that bullish momentum should “take over” if the Fed surprises with a rate hike below 0.75%.
“Obviously, if the Fed does a ‘soft pivot’ and goes for 50 basis points, this could be wrong,” he added.
“If that happens, the market will be pumped and bullish speculation will reign for the foreseeable future.”
According to CME Group FedWatch Toolsthe chance of a price increase lower than 0.75% is now 19%.
and summary Meanwhile, popular analyst @Tedtalksmacro noted similarities to Svenson’s view of the FOMC event.
“There’s a lot of talk of ‘pivot’ and ‘The Fed is breaking things up and we need to stop hiking’. But the data shows otherwise and this week is nothing short of hawkish,” he said. rice field.
‘Clear Double Top’ Ignites BTC Fall Stories
Notable in itself, it marked the highest weekly candlestick in 6 weeks for BTC/USD.
Meanwhile, the daily chart holds the 100-day moving average as current resistance.
Nonetheless, the long-established trading range in which the pair has been behaving for months on end remains firmly held, and even last week’s rally failed to produce a major paradigm shift.
So for analyst Mark Cullen, it’s a matter of “wait and see” when it comes to Bitcoin’s next move.
of fresh analysis On Oct. 31, he said that BTC/USD has returned to familiar Fibonacci levels based on last week’s gains, but continues to range.
“Bitcoin returned to the 20.4k level at 61.8 on the last pushup and has held it so far,” he explained.
“I wonder if BTC is in the range between here and 21k until the catalyst pushes it either way at this week’s FOMC meeting.
Tedtalksmacro draws similar conclusions for macro markets in general. They expect the Fed to remain “as hard as it used to be,” so even the absence of surprises at the FOMC should be enough to continue last week’s bullish tone.
“Nothing new is bullish as the market looks ready for all the hawks we’ve heard so far,” he said. Conclusion.
“We expect volatility this week and if all goes well, it will be a much-hated rally,” he said.
Meanwhile, Crypto Trader and Analyst Il Capo at Crypto called The two recent surges above $21,000 are Bitcoin’s “clear double tops”.
his Target A return to new macro lows and a lower low that could reach $14,000 remain possible.
bottom too early
The comparison between this year and Bitcoin’s last bear market, 2018, is plentiful now, but it may be a case of too much, too soon.
of analysis Released late last week, on-chain analytics platform CryptoQuant claimed that the pieces of the puzzle were in place for Bitcoin to hit bottom, but the market hadn’t gotten there yet.
“Bitcoin’s price has been trading in a narrow range (between $18,000 and $20,000 for almost two months), similar to the 2015 and 2018-2019 lows,” it began.
“Price volatility has also dropped to one of its lowest levels ever and has spiked. When price volatility has been this low in the past, it usually indicates that a downtrend is coming to an end. However, in 2018, low price volatility was followed by a 50% drop in price from $6.5k to $3.2k in just one month.”
CryptoQuant has flagged two key on-chain metrics, MVRV and UTXO’s realization upper bound, supporting the theory that the bottom of the next bear market is still far away.
MVRV divides the market cap of Bitcoin by the realized cap, words Popular analyst Willie Woo for detecting overbought, oversold conditions, and macro tops and bottoms.
The UTXO Realized Cap is the price at which various cohorts of Bitcoin have transferred compared to the last time, providing insight into gains and losses.
“The MVRV and UTXO realization cap age groups of 6+ months indicate that the Bitcoin price is in the range of values,” continued CryptoQuant.
“But a reasonable period of one to three months will have to pass for the realized price of the UTXO age band to catch up with the lingering growth trend. Currently, this level is at $21,264.”
As such, levels above $21,000 should be held until the trend changes, and so far the sand line has proven impossible to sustain for hours, let alone weeks.
“We have confirmed that market troughs may be correlated with the unusually low volatility of the Bitcoin price,” CryptoQuant concluded.
“Nevertheless, many of the on-chain measures we examined still do not support the conclusion that prices have bottomed out and are rising.”
Highest supply shock risk since 2017
After being dormant for up to 10 years, bitcoin has recently started to move, but overall the bitcoin supply is becoming increasingly illiquid.
latest data This week we provide the latest hints that increased buyer interest could cause significant supply pressure and associated price increases.
Highlighting data from on-chain analytics firm Coin Metrics, Fidelity Digital Assets researcher Jack Neureuter revealed that the percentage of supply that has moved over the past year is now at an all-time low.
Since the end of October 2021, 33.7% of all available BTC has left wallets, which also explains the volume increase in November to an all-time high around $69,000.
“In other words, two-thirds of the $BTC supply has not moved in the last 365 days,” Neureuter added in a comment.
“In the short run, marginal trade drives prices, but in the long run, the imbalance between demand and supply tends to grow.”
Separating data from on-chain analytics companies glass node On the other hand, it points to a growing probability of a supply shock.
The illiquid supply shock rate metric, which models this phenomenon, has been trending upwards throughout 2022 and is currently at a level not seen since Bitcoin’s all-time high from the last halving in 2017.
Sentiment hits 6-week high in price
Perhaps unsurprisingly, crypto market sentiment has improved thanks to last week’s price gains.
As a sign of how long, or how little, it takes to reverse your emotions, Cryptosphere & Greed Index It hit a six-week high over the weekend.
Fear & Greed uses a series of factors to determine whether the mood in cryptocurrencies is bullish or bearish, and whether the market will rebound or correct as a result.
At 34/100, the sentiment even managed to escape the “extreme fear” zone that has become commonplace in 2022.
Additionally, data from analytics firm Santiment suggests that long-term holders plan to hold through volatility.
“Traders seem content to hold for the long term as the coin continues to shy away from exchanges as bitcoin rises above $27,000.” I have written Weekend tweet.
Santiment also showed that the percentage of BTC supply on exchanges is at its lowest since 2018.
“$BTC on exchanges fell to 8.3%, the lowest level in four years. October was a month of massive outflows,” the post said.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.