Summary

  • Bitcoin trades around $83,000, reflecting a 1.8% decrease over the past 24 hours, amid a general cooldown in the top 10 cryptocurrencies.
  • President Trump's dismissal of Iran's seven-day ceasefire proposal has driven Brent crude oil prices back above $100 per barrel, contributing to an increase in the dollar and Treasury yields.
  • Market participants are preparing for the upcoming PCE inflation report on Wednesday and Friday's jobs data, with CME FedWatch indicating a 64% probability of another rate hike by the Federal Reserve on October 28.

The recent Bitcoin surge that propelled prices upward in August has hit a snag due to external factors beyond the cryptocurrency market's influence. Currently, Bitcoin is valued at approximately $83,000, down 1.8% over the last 24 hours, following a quiet weekend that transitioned into a challenging Monday.

The trading activity on Monday illustrates this shift: Bitcoin began the week at $84,455, peaked at $84,972 early on while attempting to surpass the $85,000 threshold, then fell to a low of $82,580 before stabilizing around $82,933, resulting in a daily drop of about $1,523, or 1.8%.

Myriad: Predict Bitcoin's future price Click here to share your prediction.

However, when considering the broader context, this decline appears minor compared to the substantial gains Bitcoin made last month. After enduring a prolonged bear market for most of the year, August and early September brought a notable breakout that saw Bitcoin's price surge from the mid-$70,000s to over $80,000 within days, culminating in a peak of nearly $87,354 before the market entered its current consolidation phase.

Bitcoin price chart. Image: Tradingview

Looking at the technical indicators, the outlook remains positive. The 50-day moving average is significantly above the 200-day moving average, forming a pattern known as a golden cross, which has persisted since the breakout in September. The Relative Strength Index (RSI), which gauges market momentum on a scale from 0 to 100, currently stands at 58.7, indicating a bullish trend without reaching overbought levels.

A golden cross suggests a reliable upward trend, attracting more buyers. Additionally, the Average Directional Index (ADX) shows a robust trend strength at 43.2, well above the 25 threshold that signifies a trend. As volatility begins to increase rather than diminish, Monday's price pullback seems more like a period of consolidation rather than a reversal.

Market Influences: Iran Conflict and Fed Policy

Key factors affecting the market include President Donald Trump's rejection of Iran's ceasefire proposal and its implications for oil prices. This decision has led Brent crude to surge back above $100 per barrel, which, combined with a stronger dollar and rising Treasury yields, poses challenges for non-yielding assets like Bitcoin and gold.

Crude oil prices. Image: Tradingview

Consequently, many of the leading cryptocurrencies are experiencing a downturn. BNB has decreased by 1.98% in the past 24 hours and 4.28% over the week. Hyperliquid's HYPE has fared worse, dropping nearly 4% today and over 6% weekly. In contrast, Zcash and XRP have shown some resilience, rising 3.61% and 1.26%, respectively, although both are also down today.

The total market capitalization for cryptocurrencies now stands at approximately $2.86 trillion, representing a 1.7% decline for the day. The Crypto Fear and Greed Index remains at 70, indicating a state of "greed," while the Altcoin Season Index is at 63, suggesting a tilt towards altcoins but not fully there yet.

In contrast, the derivatives market remains robust, with open interest rising to $382.29 billion, an increase of 8.17%. Moreover, the 24-hour derivatives volume has surged by 66.28% to $838.18 billion. Liquidations in the past 24 hours reached $478 million, predominantly affecting long positions, illustrating that leveraged traders have been under pressure as the market has shifted.

On the institutional front, spot Bitcoin ETFs continue to see net positive inflows, maintaining a trend that began in mid-September, which helps sustain institutional interest despite the current price fluctuations.

Looking ahead, although there is no Federal Reserve meeting scheduled soon, the upcoming week is packed with crucial data that will inform future decisions. Tuesday will feature JOLTS job openings, followed by the Fed's preferred inflation measure on Wednesday, and the September jobs report on Friday.

This data arrives three weeks after the Fed's initial rate hike of 2023, a unanimous decision on September 16 that raised the benchmark rate to a range of 3.75% to 4%. Fed Governor Michael Barr has indicated that additional tightening may be necessary to bring inflation back to the target level, a sentiment noted by traders. Higher interest rates increase returns on cash and bonds, drawing investment away from non-yielding assets like Bitcoin, while also strengthening the dollar and raising the costs associated with leveraged trading, creating a challenging environment for risk appetite.

CME's FedWatch tool currently suggests about a 64% chance of another quarter-point rate hike during the next Federal Open Market Committee meeting on October 27-28, a decrease from the 75% probability noted earlier in the week, but still significant enough to limit risk appetite as the market awaits this week's economic indicators.

Disclaimer

The views expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice.

Daily Debrief Newsletter

Stay updated with the leading news stories, along with original features, podcasts, videos, and more.