Macro forces are brewing, while Bitcoin network fundamentals defy the bears — which side will win out when i
Macro forces are brewing, while Bitcoin network fundamentals defy the bears — which side will win out when it comes to BTC price action?
Bitcoin (BTC) begins a new week still under $20,000 — one which promises to give traders the excitement they have been looking for.
After another very similar weekly close, BTC/USD is still waiting for the breakout from its multi-week trading range.
The move has been long in the making, but so far, the market has lacked the catalyst to make it happen — support and resistance zones have remained unchallenged.
This week, that might all change — the list of economic data prints due in the coming days is impressive, while geopolitical instability is gathering momentum in Europe as the conflict between Russia and Ukraine escalates.
At the same time, Bitcoin is due to show its bear market intentions as the time nears where, historically, macro price bottoms are formed.
A silver lining for bulls, meanwhile, comes from internal sources, with network fundamentals due to make a giant leap higher on the first Wall Street trading day of the week.
With so much to take in, Cointelegraph takes a look at the key issues to keep in mind when planning your Bitcoin trading strategy in the coming week.
Volatility pointers say rare price action due
The weekend was plain sailing for crypto market participants, data from Cointelegraph Markets Pro and TradingView shows.
Despite the added potential for fakeouts thanks to reduced liquidity, the “out-of-hours” status quo remained similar to that of previous days — limited movement within a familiar trading range.
The weekly candle close, coming in at just above $19,400, was also no surprise, although Bitcoin’s highest since mid-September.
On one-week timeframes, BTC/USD thus continued to form a cluster of candles in which the market hardly moved up or down at all — a classic sign that volatility will result.
That breakout event has already been forecast on lower timeframes, these coming true on Friday as United States jobs data sparked a brief sell-off, which cost bulls the $20,000 mark.
Now, analysts are looking for a repeat performance over more significant periods.
“Very unusual to see Bitcoin squeezed at historical low volatility levels on rising volume,” trader and entrepreneur, Jordan Lindsey, told Twitter followers as the week ended.
“A big move up or down is incoming.”
Lindsey referred to a narrowing of Bitcoin’s trading range coming in tandem with trade volume rising — the latter a key component of sustained breakouts.
That thesis is currently being supported by the Bitcoin historical volatility index (BVOL), a dedicated indicator for tracking volatility within its historical context.
Currently, BVOL is at lows seen only a handful of times over Bitcoin’s existence. A notable comparison is October 2018, just two months before the previous cycle’s bear market bottom of $3,100.
“It has been below 36 level 2 times in the past and after which we saw a very big movement in market,” trading account Crypto Vikings commented.
“Currently it’s below 36 level again and it indicates a very big movement is coming soon this month or most probably in november.”
William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, described the BVOL data as “worth noting.”
As such, any violent exit of the range could equally be down as well as up.
Fellow account Livecoin nonetheless noted that BTC/USD has a historical habit of consolidating longer than the market wishes for when volatility is so low.
“Bitcoin hit levels of low volatility not seen in two years,” the trader and investor told Twitter followers on Oct. 9.
“While it’s reasonable to expect a large move now more than ever, It’s also important to note that there were two periods in the past when Bitcoin spent more than 40 days consolidating after hitting these levels.”
In the meantime, however, an eerie calm is perhaps the best description of the atmosphere on Bitcoin.
As summarized by popular trader Matthew Hyland on the day, “Does this market have a pulse?”
September CPI inbound in hectic macro week
Turning to the wider economy, there are more than enough potential BTC price triggers in the making this week.
Economic data releases will come thick and fast from Oct. 12 onward, and with tensions reaching new levels in the Russia-Ukraine war, shocks to commodities markets remain as a curveball.
“This upcoming week is gonna be a fun one: PPI, FOMC minutes, CPI, Initial jobless claims, and retail sales,” Clemente summarized.
Of particular interest, he added, was the U.S. Consumer Price Index (CPI) print for September, due on Oct. 13, which will form a major reference point for the Federal Reserve as it approaches a fresh interest rate…
cointelegraph.com