- Bitcoin sees heightened volatility in early October, reflecting broader market apprehensions.
- Major equity indices traditionally exhibit turbulence before such effects hit risk assets like Bitcoin.
- Upcoming U.S. CPI reading and recent oil price spikes may compound the volatility in the cryptocurrency market.
Amidst global geopolitical uncertainties and a rebounding volatility index for major equities, Bitcoin prepares for a turbulent October, as per recent financial analyses.
Bitcoin’s Unprecedented October Volatility
In the first week of October, Bitcoin experienced an increased level of volatility. The Bitfinex Alpha report on Monday revealed that Bitcoin’s recent turbulence surpasses its average volatility over the past 200 days. Historically, as major equity indices show signs of volatility, it eventually overflows to risk assets like Bitcoin. Notably, the volatility index for the S&P 500 has picked up from its multi-year low on September 15. Bitfinex analysts indicate that given the pattern of isolated high volatility events in the crypto space and the sustained historical volatility above key averages, this trend is set to persist.
Options Market Anticipates More Shaking
Bitfinex further notes a significant observation from the Bitcoin options market. While the historical volatility rate stands at 32.4%, implied volatility for October surpasses it, recorded at 37.8%. Such an anomaly indicates that the options market predicts even more turbulence for Bitcoin in comparison to its past.
U.S. CPI and Global Events: Catalysts for Crypto Volatility
CoinShares Ethereum Research Associate, Luke Nolan, underscores an upcoming event that could further influence the cryptocurrency market: this week’s U.S. Consumer Price Index (CPI) reading. Anticipations suggest that the CPI might come in slightly below expectations, with projections hovering around 3.7%, a decline from the previously estimated 3.8%. Nolan’s remarks in CoinShares Crypto Monday update allude to a potential market shakeup in response to these inflationary numbers.
Compounding these financial dynamics are geopolitical events. Oil prices witnessed a significant surge post-Hamas’ attack in southern Israel. This geopolitical upheaval saw traders appending a risk premium to commodities, causing the major crude oil benchmarks to elevate by almost 4%. Such spikes in oil prices might challenge the Federal Reserve’s aspiration of maintaining a 2% inflation target.
Bitcoin Price Stability: A Duel Between Short and Long-Term Holders
Bitcoin’s price, currently hovering above the $27,000 benchmark, is maintained by an interplay between short and long-term coin holders. Bitfinex’s analysis elucidates this dynamic, noting a decrease of approximately one million coins from BTC’s short-term holder supply since April 13. Conversely, the long-term holder supply witnessed an increase of over one million BTC in the same time frame. As of 1:30 p.m. ET, the premier digital asset, when gauged by market capitalization, was traded at $27,450, marking a 1.6% decrease over the previous day, as per data from COINOTAG Markets.
Conclusion
Bitcoin’s October journey is marked by intensified volatility, driven by a confluence of global financial and geopolitical events. As the world grapples with these uncertainties, market stakeholders should brace for potential price swings in the crypto realm. It remains crucial for investors to stay informed and exercise due diligence in these tumultuous times.
