Minimal Volatility 'Uptober' Ever - 5 Things You Need to Know About Bitcoin This Week

Bitcoin kicked off the final week of "Uptober" with steady average sentiment, and the trading range continues to hold.

After attempting a breakout, BTC/USD remains captive to a narrow channel that has been in place for weeks now.

Some of the lowest volatility in history means Bitcoin has found a temporary function as a “stablecoin” — and even some major fiat currencies are currently more volatile.

However, the longer the status quo drags on, the more commentators become convinced that a major trend is about to change.

They argue that this week is like any previous one — macroeconomic data, geopolitical instability and the typical volatility around the end of the month are all factors shaking the bitcoin market.

Bulls need to work hard to ensure that this breakout is to the upside - weeks of trading ranges provide strong resistance, and behind the scenes, miners are hinting that a capitulation may surprise everyone sooner or later.

Cointelegraph takes a closer look at current market conditions and highlights five things to keep in mind when tracking bitcoin price action this week.

Highest closing price since early September

Bitcoin saw some interesting price action at the close of the week on October 23, with BTC/USD posting its biggest hourly "gain" in days before topping out at $19,700.

According to data from Cointelegraph Markets Pro and TradingView, Bitcoin has corrected by the closing bell, which nonetheless made it the highest level since early September, around $19,580.

BTC/USD weekly candle chart (Bitstamp) Source: TradingView

On October 24, this bullish move had dissipated, and Bitcoin was more or less back where it was before.

Michaël van de Poppe, founder and CEO of trading firm Eight, said it was time to say goodbye to range-bound BTC.

“Bitcoin is still stuck in this range,” he told followers on Twitter the day before.

Order data also reflects a similar situation. Maartunn, a contributor to on-chain analytics platform CryptoQuant, analyzed trader behavior on major exchange Binance, noting that whales siphoned liquidity from established price channels.

He concluded: “Liquidity in this range has been removed, or at least significantly reduced.” He added, “Whales (users holding $100,000 to $1 million in Bitcoin) are reducing their holdings.”

BTC/USD Order Book (Binance) Annotated Chart Source: Maartunn/Twitter

Material Indicators, which tracks changes in order book liquidity, further noted that the resistance level corresponding to Bitcoin’s old all-time high in 2017 has softened.

BTC/USD Order Book (Binance) Annotated Chart Source: Material Indicators/Twitter

Popular trader and analyst Jackis also predicts a "crazy" November for Bitcoin, but he doesn't know if it will go up or down.

“Bitcoin price found an equilibrium around 19K. After a long period of equilibrium, there will always be a move,” he wrote over the weekend.

Fed, ECB in focus ahead of rate hike decision

Van de Poppe's promise of a "big" week of macroeconomic events could bear fruit on Oct. 28 when the U.S. personal consumption expenditures (PCE) price index for September is released.

While the PCE has traditionally not had as much of an impact on the crypto market as the Consumer Price Index (CPI), this time the PCE comes at a pivotal moment.

The Fed will meet next week to decide whether to raise interest rates, which will be based on specific data such as PCE and CPI.

At present, the market expects the Fed to raise interest rates by 75 basis points, which will continue to put pressure on risk assets, including Bitcoin, but there were already rumors last week that the Fed would soften its stance.

Any easing of policy will be good for the stock market, and the crypto market, which is highly correlated with the stock market, will naturally benefit from it.

“Bitcoin bear markets last an average of 12.5 months. This is known as the gold bull cycle ratio,” commented hopeful developer James Bull over the weekend.

"We are now in the 11th month that the Fed is considering a pause in rate hikes."

Bitcoin price cycle comparison chart Source: James Bull/Twitter

Meanwhile, Charlie Bilello, founder and CEO of Compound Capital Advisors, summing up his expectations for the Fed, confirmed that no further 75 basis point hikes are expected after early November.

"Rate cuts will start in December 2023 and will continue until 2024," he added.

As of this writing, the CME Group's FedWatch Tool shows a 90.5% chance of a 75 basis point hike in November.

Fed Target Rate Probability Map Source: CME Group

Outside the US, on October 27, the European Central Bank will hold a press conference and ECB President Christine Lagarde will speak.

The euro zone is currently dealing with record inflation, which has exceeded 20% in some EU member states. However, the ECB has been significantly slower than the Fed in raising interest rates.

Economist Daniel Lacalle tweeted about the status quo : "The ECB is expected to raise interest rates by 75 basis points on Thursday. However, the balance sheet reduction will be delayed until the neutral rate from 1.5 to 2% instead of the current rate 0.75% (at least in the second half of 2023)."

"The ECB is still behind the curve. It has neither done its job nor stabilized markets."

"Amazing" computing power points to doubts about Russia

Back inside Bitcoin, a sense of unease is brewing about the fundamentals of the network and the health of the mining sector .

Observations of the data lead to an unusual but not entirely welcome conclusion — hashrate may be at all-time highs, but this growth may not be sustainable and will come at a cost.

Despite the overall downward trend in spot prices, miners are putting more and more computing power into the blockchain.

This means that already thin margins are being squeezed further, and small miners risk losing their financial incentive to abandon ship.

Entities that add hashrate can also be considered to have large enough capital to be profitable despite the current state of the network.

William Clemente, co-founder of research firm Reflexivity Research, wrote over the weekend: "Think about which entities believe mining is profitable with bitcoin prices down 70%, energy prices high, and hash prices at all-time lows. . Don’t know if it’s a big business with excess energy or access to very cheap energy.”

With this in mind, commentator Steve Barbour has come to an unusual conclusion.

“My friends, it’s Russia. Russia is where the computing power goes,” he said .

While these entities remain a mystery, the numbers speak for themselves. According to data from the monitoring resource MiningPoolStats , the computing power currently exceeds 270 EH/s, while the valuation provided by BTC.com is 259 EH/s.

Due to the increase in computing power, the mining difficulty was raised by 3.44% on October 24, reaching another historical high of 36.84 trillion.

So far, however, the old adage “price follows hashrate” has not been proven as concerns over sustainability intensify.

An overview of Bitcoin network fundamentals (screenshot) Source: BTC.com

Loss supply surges

An analysis agency believes that if the miners have not yet surrendered deeply, then for ordinary Bitcoin holders , the surrender has "arrived".

Trading resource Game of Trades has concluded based on data covering BTC’s loss-making supply that the pain of the bear market has set in.

Excluding lost or long-held bitcoins, the 30-day moving average of bitcoins held at a loss is currently at near all-time highs.

"Surrender is coming," Game of Trades concluded on Twitter .

An accompanying chart from on-chain analytics firm Glassnode shows a loss supply of more than 8 million bitcoins.

Bitcoin Loss Supply (30-Day Moving Average) Annotated Chart Source: Games of Trades/Twitter

The response highlighted that the figure would be lower if circulating supply was used, and Game of Trades also acknowledged that the June low of $17,600 still constituted a “major capitulation event.”

Supply issues are becoming more predictable - Glassnode also confirmed that the current supply of BTC that has been dormant for at least 5 years is higher than ever at 25.47%.

Bitcoin supply chart last active over 5 years ago Source: Glassnode/Twitter

Uptober? What Uptober?

Compared with October 2021, there is little interest in "Uptober" that failed to materialize this year.

At current prices, BTC/USD is only 0.36% away from the start of the month – a sign that Bitcoin has become quite stable.

In percentage terms, October 2022 will be the flattest October on record, compared with a 40% rise last year, according to data resource Coinglass .

Those hoping for a dramatic November turnaround for bitcoin had a tough job -- last year it hit record highs, but ended the month down 7.1 percent.

On the other hand, in November 2020, BTC/USD rose by 43%, and in November 2017, the increase was 53.5%.

Bitcoin historical return chart (screenshot) Source: Coinglass