Schrodinger’s Uptober
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
It’s now been 11 months since BTC reached its November ATHs of $69k. Hard to believe, right?
Since then, we’ve weathered storm after storm of macro fragility – which remains as fragile as ever – and borne witness to four months of volatile consolidation constrained within the $18k-$24k range.
As we’ve discussed previously, crypto has found itself listless to some extent, desperately searching for new narratives to fill the void left by Ethereum’s anticlimactic Merge. And so, October's historical bullishness has ignited fresh optimism for market participants.
BTC monthly returns, 2013 - August 2022
The proof is in the profit
The week began promisingly, with BTC surging from sub-$19k lows to a high of $20,4k. This could be attributed to a combination of three factors – BTC reverting toward range highs after tagging lows; pervasive optimism surrounding October’s price action; and a relatively slow week for macro news.
BTC has been off to a promising start this month (... while still skirting range lows)
A curious divergence
Traders have been watching the overarching downtrend from November’s ATHs with bated breath, and it seems that they may finally have a reason to be optimistic. The surge recorded in October’s first few days seems to have finally broken above the long term resistance that’s governed price action since 2021’s dreamy highs began to retrace.
While this may seem inconsequential at first glance, it’s important to note that on the 1D timeframe, resistance has been broken and retested – for the moment.
Forward Focus
As much as I hate to put a damper on the optimism pervading the space right now, it’s worth assessing current dynamics through more pragmatic lenses.
Could October bring much-awaited relief? Certainly, at least to some extent. However, we’re no longer in a world where crypto acts independently of other major markets. The present situation remains the same, with the EU recording 10% inflation for the first time ever, and rumours swirling of major banking crises that would make Lehman Brothers seem like a success story.
Geopolitical tension continues to escalate, with Ukrainian President Volodymyr Zelensky further escalating the conflict following Russia’s annexation of four Ukrainian regions.
There could likely be significant gains this month in amongst the turmoil, perhaps until the upcoming FOMC meeting, which from the sentiments of Fed members is shaping up to be a larger hike than many crying for a pivot would like to see.
Enter with confidence, take profits aggressively, and prioritise preservation over potential gains. The world is teetering on a knife’s edge, and surges in volatility are one of many natural consequences.
Stay safe out there
