Bitcoin started the new week, fueling speculation as a tiny trading range was in play.
The BTC/USD trend maintained a familiar status quo over the weekend, still just above $19,000.
Despite calls for a bounce and calls for lower macro lows to follow, the pair is yet to make a decision on where to go – or even signal that a breakout or breakdown is imminent.
After a short-lived euphoria over last week’s U.S. economic data, Bitcoin is back to square one — and on the face of it, price action is now exactly in line with what it was at the same time last week.
As the market wonders what it takes to break out of this range, Cointelegraph breaks down the week's potential catalysts.
Spot price action has traders dreaming of a breakout
The weekly BTC/USD chart is "almost too calm" for bitcoin traders.
After falling sharply during the volatile first half of 2022, bitcoin has barely moved in recent months.
Data from Cointelegraph Markets Pro and TradingView bears this out – on a one-week time frame, Bitcoin continues to move flat.
As Cointelegraph reported , the current range is so sticky that the Bitcoin Historical Volatility Index (BVOL) is currently trading at rarely seen lows.
“Equity volatility (VIX) is approaching all-time highs relative to Bitcoin volatility (BVOL),” William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, added in a commentary last week.
An accompanying chart neatly captures Bitcoin as an odd stablecoin-like choice in the current environment, with Clemente suggesting that a return to the classic, more volatile paradigm should follow.
The week before, economist, trader and entrepreneur Alex Krueger also noted that all previous BVOL macro lows had been followed by "explosive volatility."
He believes that the failure of U.S. macroeconomic data to meet expectations "could create that" in terms of re-igniting market volatility, but in terms of reality, the data is still slightly below the trigger range.
Cryptocurrency research firm Delphi Digital agrees.
“Historically, when BVOL dips below the 25 value, volatility tends to be quickly followed by a large spike,” the agency said in some tweeted comments.
Meanwhile, this week, noted cryptocurrency investor and analyst Miles Deutscher told traders to "get ready" when commenting on Delphi's data.
Bitcoin Historical Volatility Index (BVOL) Annotated Chart Source: Delphi Digital/Twitter
The question for all remains where volatility will lead the market.
Trader Il Capo of Crypto had predicted that Bitcoin would fall from its all-time high to the $20,000 level, and his forecast remains unchanged.
$21,000 should be part of a relief rally, only to be overshadowed by BTC/USD's fresh plunge to multi-year lows ($14,000-16,000).
“During this period, some of the shitcoins will get scam pumped up, and Bitcoin will go up to $21,000. This may give you the illusion that the bull market is back,” he warned over the weekend.
"My advice: don't get greedy. If this happens, take profits. Protect your capital."
BTC/USD Annotated Chart Source: Il Capo of Crypto/Twitter
Impact of new macro triggers on cryptocurrencies
While no immediate policy changes from the Federal Reserve are expected this week, outside forces will still provide plenty of fuel for cryptocurrency volatility.
Financial reports of US companies will be released one after another, and technology stocks are especially prone to affect the market when their performance falls short of expectations.
More than 20 percent of companies in the S&P 500 report earnings, and the S&P 500, like other U.S. indexes, has shown rare weakness this year.
RealVision founder and CEO Raoul Pal predicted in an accompanying chart: "The probability of a low in the next week or two is quite high in my view."
S&P 500 Futures Chart Source: Raoul Pal/Twitter
Looking at the charts for the week ahead, financial commentary resource The Kobeissi Letter similarly told subscribers to "prepare for more volatility."
It explained that more U.S. data will be released this week, while Fed officials will comment on overall policy.
Aside from stocks, the U.S. dollar index (DXY) was unchanged heading into the new week, so far avoiding another attack on the 20-year highs seen earlier.
Echoing Il Capo of Crypto's theory, Michaël van de Poppe, founder and chief executive of trading firm Eight, hinted that there could be "some relief" in risk assets more broadly, possibly this week or next.
US Dollar Index (DXY) 1-Day Candle Chart Source: TradingView
RSI crash risk similar to 2018
The long-term outlook for Bitcoin has become murkier, with those forecasting a bearish scenario based on current chart data busy comparing Bitcoin to the 2018 bear market bottom.
Among them is the popular analyst Matthew Hyland, who, even with his generally bullish views on the market, has little to celebrate about the Bitcoin price trend in the coming months.
In a tweet over the weekend, Hyland pointed out that Bitcoin’s Relative Strength Index (RSI) is repeating the behavior it did when it bottomed out in 2018.
An accompanying chart clearly shows familiar bear market forces at play, raising suspicions that the fourth quarter of 2022 could be very similar to what happened four years ago.
BTC/USD Relative Strength Index Comparison Chart Source: Matthew Hyland/Twitter
The 2018 RSI breakout structure involved BTC/USD crashing from $5,500 to $3,100, a drop of around 40%.
"Obviously, we're still waiting for this big move to come," Hyland added in a related video on the idea.
He also said that the classic Bollinger Bands volatility indicator is still predicting an approaching storm, with narrowing Bollinger Bands calling for a breakout in volatility.
BTC/USD 1-day candlestick chart (Bitstamp), Bollinger Range Source: TradingView
Holder is as steadfast as ever
Looking at the behavior of the holders, it can be seen that the determination of the long-term holders (LTH) remains steadfast.
New data from on-chain analytics firm Glassnode confirms that the number of bitcoins lost or out of circulation in cold storage is at a five-year high.
As of October 17th, the "Bitcoins Held or Lost" metric shows a total of 7,554,982.124 BTC, or 40% of the current supply, meaning that more Bitcoin has been withdrawn from the market than at any time since late 2017 many.
Graph of the number of bitcoins held or lost Source: Glassnode/Twitter
Likewise, the distribution is continuing the accelerated trend seen throughout 2022. Currently, the number of wallets with at least one full bitcoin balance is at a record 908,000.
Glassnode shows that while there is an overall increase in the second half of 2021, the momentum has clearly increased this year.
Figure of the number of Bitcoin addresses holding 1+BTC Source: Glassnode/Twitter
Glassnode analyzed the lost bitcoins in its weekly newsletter, “Chain Weekly,” while concluding that the current bear market is not yet comparable in intensity to other bear markets in terms of holders.
Glassnode explained last week: “Network profitability has not reached the same level of severe financial pain as in past cycles, but changes in lost and long-held bitcoins could explain the difference.”
Still, for those investors who are used to holding on in bear markets, they seem less willing to capitulate from current price levels.
Market sentiment at fear level for second month in a row
As far as crypto market sentiment is concerned, the fear does not appear to have wavered a bit.
The Crypto Fear and Greed Index has been at "fear" or "extreme fear" levels for two consecutive months.
The Fear and Greed Index uses a basket of factors to calculate a normalized score for market sentiment, and the results for 2022 differ from most years.
Earlier, the index experienced the longest period of "extreme fear" on record and is now a month away from repeating that record.
As of Oct. 17, the index read 20/100, about 10 points above a classic bear market bottom but a full 14 points above this year's low.
Cryptocurrency Fear and Greed Index (screenshot) Source: Alternative.me
Golden Weekly is a weekly blockchain industry summary column launched by Golden Finance. Its content covers the week's key news, market and contract data, mining information, project dynamics, technological progress and other industry dynamics.
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