Bitcoin Dropping Price Halted by US News?
Bitcoin dropping in price has become a familiar feature of the cryptocurrency markets in 2022, but news from the US may indicate a reversal of fortune.
BTC is the most traded crypto in the world, accounting for a sizeable portion of the crypto market. The birth of Bitcoin marked the beginning of an entirely new asset class and a significant shift away from forms of centralised control.
Bitcoin dropping in price has been regular since it reached its all-time high on 10 November 2021. The crypto winter resulted in Bitcoin dropping below $19k last week.
However, with US equities rising at the opening of Wall Street on 17 October, Bitcoin moved closer to $20,000.
Stocks rise as the US dollar falls
The pair rose alongside stocks, with the S&P 500 and Nasdaq Composite Index gaining 2.7% and 3.2%, respectively, within the first thirty minutes of trading.
The action was combined with weak US economic data in the form of the Empire State Manufacturing Index, which fell to -9.1 in October, well below the -4.3 forecast and the -1.5 reading in September.
"According to the October survey, manufacturing activity in New York State decreased," the New York Federal Reserve summarised in a commentary on the data.
An eight-point decline brought the general business conditions index to -9.1. Michal van de Poppe, the founder and CEO of the trading company Eight, responded by stating that the outcomes were "way worse than expected".
He predicted, "Top on Yields & $DXY on the horizon. Bitcoin to rally".
As a result, the US dollar index (DXY) continued to retrace its day's gains, targeting 112 and falling 0.65%.
Research reinforces approaching volatility
While traders were already predicting some relief to hit crypto markets on weekly timeframes, other perspectives emphasised that nothing had changed for Bitcoin.
"It is very unusual for BTC markets to reach such low realised volatility, with almost all prior instances preceding a highly volatile move," on-chain analytics firm Glassnode explained in the latest edition of its weekly newsletter, The Week On-Chain.
Researchers, including lead analyst Checkmate, argued that the market had reached a tipping point alongside a chart of Bitcoin's realised volatility.
Glassnode concluded that, while the fuel for a potential price breakout was present, such as BTC-denominated futures open interest reaching new all-time highs, there was "little discernible directional bias in futures markets".
"Volatility is likely on the horizon, and Bitcoin prices are not known to remain static for long," according to the newsletter.
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.