$82,500 has been suggested as bitcoin’s near-term defensive line.
On Oct. 20, blockchain media outlet U.Today reported that crypto market maker Wintermute said the current price compression phase is unlikely to last long. It pointed to whether bitcoin holds this zone as a key variable that will determine market direction.
Wintermute said the current range is unlikely to hold ahead of a U.S. Federal Reserve policy meeting, the midterm elections and the earnings season. It said the market is likely to end the stagnation that lasted through the fall and move into a period of high volatility. It singled out the Oct. 28 Federal Open Market Committee (FOMC) meeting as a likely point of volatility.
U.S. inflation data was cited as a factor that triggered market anxiety. U.S. inflation accelerated to 3.7%, and the core index rose 0.3% from the previous month, confirming that rising energy prices have begun to spread into underlying prices. The Nasdaq technology index tumbled 5.52% as a result. Defensive funds shifted to Brent crude and U.S. Treasuries, and digital assets also wavered as the correlation between macro factors and the crypto market rose again.
Bitcoin’s decline was limited. It fell 1.99% over a week and held near $82,500. Net outflows of $679 million from exchange-traded funds (ETFs) briefly pushed it down to $80,400, but buying demand ultimately held.
The upper and lower bounds were also presented as relatively clear. If bitcoin breaks above $87,000, it could head back toward its peak zone. If it clearly falls below $82,500, it could test the low $70,000s again.
By contrast, the altcoin market saw a marked liquidity squeeze. The altcoin sector fell 5.69% on a weekly basis, and fund flows became concentrated to one side except for some top-tier altcoins. Funds moved out of altcoins and focused on bitcoin and ether, but ether also fell 7.0% over the week.
Wintermute said bitcoin must move first into a higher range for altcoins to resume a broad rebound. It said a view has formed across the market that it will be difficult for alternative tokens, including XRP, to show independent strength for the time being.
Internal market indicators also supported the defensive flow. Correlations among the top 50, 100 and 250 assets rose together again to high levels, strengthening a synchronized market rather than a market driven by individual tokens. This shows the market is responding more sensitively to macro factors than to token-specific differentiation.
The remaining variable is ultimately the Fed’s message. Wintermute said hawkish remarks could put pressure on bitcoin along with further declines in the Nasdaq. It said a dovish tone coupled with strong corporate earnings could give buying demand the momentum to test the psychological peak again.
https://t.co/2g4VQnJCXp