The least volatile "Uptober" ever: 5 things to know about Bitcoin this week

Bitcoin kicked off the final week of “Uptober” with solid average sentiment, as the trading range continues to hold.

After the attempted breakout, BTC//USD remains confined to a narrow channel, which has persisted for several weeks now.

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

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

They believe that this week was like any other — with macroeconomic data, geopolitical instability, and the typical volatility around the month’s close all factors shaking up the Bitcoin market.

Bulls need to work hard to ensure that this breakout is to the upside - the multi-week trading range provides strong resistance, while behind the scenes, miners are suggesting that capitulation may surprise everyone sooner or later.

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

Highest close since early September

Bitcoin saw some interesting price action on the weekly close on Oct. 23, with BTC/USD seeing its largest intra-hour “momentum” in days before topping out at $19,700.

Data from Cointelegraph Markets Pro and TradingView showed that Bitcoin had pulled back at the close, but nonetheless reached its highest level since early September, around $19,580.

BTC/USD one-week candlestick chart (Bitstamp) Source: TradingView

By October 24, that bullish move had dissipated, with Bitcoin more or less returning to its previous levels.

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

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

Order book data also reflects a similar situation. Maartunn, a contributor to the on-chain analysis platform CryptoQuant, analyzed the behavior of traders on the major exchange Binance and pointed out that whales drained liquidity from established price channels.

“Liquidity in that range has been removed, or at least significantly reduced,” he concluded, adding that “whales (users holding $100,000 to $1 million in Bitcoin) are selling off.”

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 2017 all-time high has softened.

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

Popular trader and analyst Jackis also predicted that Bitcoin will have a "crazy" November, but he doesn't know whether Bitcoin will rise or fall.

“Bitcoin price found an equilibrium point around 19K. After a long period of equilibrium, it always moves,” he wrote over the weekend.

Fed and ECB in focus ahead of rate hike decisions

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

While PCE traditionally hasn’t had as big an impact on crypto markets as the Consumer Price Index (CPI), this time around PCE comes at a critical time.

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

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

Any relaxation in policy will be good for the stock market, and the crypto market, which is highly correlated to the stock market, will naturally benefit from it.

“Bitcoin bear markets last 12.5 months on average. This is known as the Golden Bull Cycle Ratio,” hopeful developer James Bull commented over the weekend.

“It’s the 11th month now and the Fed is considering stopping raising rates.”

Bitcoin price cycle comparison chart Source: James Bull/Twitter

Meanwhile, Charlie Bilello, founder and CEO of Compound Capital Advisors, in summarizing his expectations for the Federal Reserve, confirmed that no further 75 basis point rate hikes are expected after early November.

"The 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 rate hike in November.

Source: CME Group

Outside of the U.S., on October 27, the European Central Bank will hold a press conference where ECB President Christine Lagarde will give a speech.

The eurozone 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 terms of raising interest rates.

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

“The ECB is still behind the curve. It is neither fulfilling its mandate nor stabilizing markets.”

"Amazing" computing power points to suspicion of Russia

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

A look at the data leads to an unusual and not entirely welcome conclusion – hashrate may be at an all-time high, but this growth is likely unsustainable and will come at a cost.

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

This means that already slim profit margins are being squeezed further, with small miners at risk of having to abandon ship due to a loss of financial incentive.

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

“Think about which entities would find mining profitable with Bitcoin down 70% and energy prices high and hash rates at all-time lows,” William Clemente, co-founder of research firm Reflexivity Research, wrote over the weekend. “Not sure if it’s a large enterprise with excess energy or access to very cheap energy.”

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

“It’s Russia, folks. Russia is where the computing power is,” he said.

While these entities remain a mystery, the numbers speak for themselves. According to monitoring resource MiningPoolStats, the hashrate is currently over 270 EH/s, while BTC.com provides an estimate of 259 EH/s.

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

However, so far, the old adage that “price follows hashrate” has yet to be proven true as concerns over sustainability grow.

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

Loss-making supply surges

One analysis firm believes that if miners are not yet deep into capitulation, then for ordinary Bitcoin holders, capitulation has "arrived."

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

Excluding lost or long-term held Bitcoin, the 30-day moving average of Bitcoin held at a loss is currently at nearly an all-time high.

“Capitulation is here,” Game of Trades summarized on Twitter.

An accompanying chart from on-chain analytics firm Glassnode shows that the loss supply exceeds 8 million Bitcoins.

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

The response stressed that the number 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 and more foreseeable - Glassnode also confirmed that the current BTC supply dormant for at least 5 years is higher than ever before, reaching 25.47%.

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

Uptober? What Uptober?

Compared to October 2021, there was little interest in Uptober, which failed to materialize this year.

At current prices, BTC/USD is only 0.36% from the beginning of the month — a sign of how stable Bitcoin has become.

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

Those hoping for a dramatic turnaround in November have their work cut out for them - the cryptocurrency hit an all-time high last year but ended the month down 7.1%.

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

Bitcoin historical return rate chart (screenshot) Source: Coinglass