Bitcoin ended the third quarter in a row on a bearish note. The cryptocurrency spent most of the time in the $18.5k–$20.4k range. Rare moments of upward movement were inextricably linked with the behavior of macroeconomic factors.
Bitcoin and October
Historically, Bitcoin has been spending October positively. Analysts at Santiment have confirmed the presence of an upward trend in BTC trading volumes since mid-June. Interest in Bitcoin is growing despite the general decline in trading activity in the market.
Most analysts tend to believe that the US dollar index will begin a correction in October. The asset reached the upper limit of the ascending channel and met a powerful resistance. Now the price of DXY will go to retest the lower border of the channel in the area of 98–100.
Given the inverse correlation of Bitcoin and stock indices with DXY, we can expect a local thaw in the cryptocurrency market. And this completely fits into the historical context of BTC in October and the growing trading volumes.
The other side of October
However, there are several factors that can aggravate the current situation and negatively affect the prospects of Bitcoin. The Fed announced an emergency meeting on October 3. The announcement does not say for what purpose the meeting was convened, but it is likely that it is related to inflation. Given this, volatility may increase in the market.
The second factor that can negatively affect the prospects for the upward movement of Bitcoin is the stock market. Cryptocurrencies have been closely correlated with stock indices throughout the crypto winter. Over the past two weeks, we have seen that this codependency has a negative impact on Bitcoin quotes.
Bitcoin continues to fluctuate in a narrow range of $18.5k–$19.4k, despite attempts to break through these levels. The main problem with the cryptocurrency was that the trading volumes on the BTC network were not backed up by large purchases on the stock market.
As a result, a situation has developed where Bitcoin is trying to realize bullish momentum, and the S&P 500 continues to decline and forms a double bottom. In this case, the correlation of BTC and SPX played a cruel joke and did not allow the cryptocurrency to climb to the $20k level.
A similar situation should be expected in October, which has historically been a month of serious falls in the stock market. Given the current macroeconomic situation and a new round of nuclear escalation, there are plenty of triggers for a stock market crash.
BTC/USD Technical analysis
Bitcoin continues to move within a narrow range of $18.5k–$19.4k. The cryptocurrency has made several unsuccessful attempts to break out of the area and gain a foothold above $20k. The main limiting factor in the growth of BTC/USD quotes is the correlation with stock indices.
On the daily chart, for the second week, a contraction has formed, which gradually turns into a "descending triangle" pattern. Despite the growth in trading volumes, hesitant doji candles continue to appear on the daily timeframe.
Technical indicators hint at another attempt of an upward movement. The RSI index and the stochastic oscillator are acquiring an upward direction. However, one should not expect a significant change in the situation. MACD continues to move flat below zero, confirming the absence of a strong bullish momentum.
Conclusions
In the short term, we should expect the completion of the formation of the "triangle" figure and going beyond its limits. It could be argued that the direction of price movement will be downward, but given the growing volumes of BTC on exchanges and the DXY correction, a local price reversal is possible.
In the long term, we should expect Bitcoin to go beyond the $18.5k–$19.4k range. A drop in demand for DXY will lead to an increase in high-risk assets. Therefore, we should expect BTC impulse movements above $20k in October.
Relevance up to 10:00 2022-10-04 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
