CoinLoan Weekly: Range-bound BTC, institutional adoption, resistance to macro turmoil

Price dynamics

BTC price

After a jump to $19,600, BTC topped out at $19,660.63 on Tuesday, October 18. The ensuing choppy descent led to a 7-day low of $18,788.33 on Friday, October 21. Over the weekend, BTC teetered around $19,200. Monday, October 24, pushed it back above $19,600.

The Fear and Greed Index has remained in the extreme fear range, barely moving since late September. BTC is still range-bound, trading close to its June levels. According to Simon Peters, a market analyst at eToro, "there appears to be a growing sense of anticipation among crypto-asset watchers as prices have held firm now for multiple weeks."  

As of this writing, BTC is trading at $19,340.01, with a 24-hour shift of -0.7% and a 7-day uptick of +0.3%.

BTC price chart. Source: CoinGecko
BTC price chart. Source: CoinGecko

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ETH price

ETH diverged slightly from BTC as its final peak eclipsed the previous gains. After a rise above $1,325 on Tuesday, October 18, the price dropped and bottomed out at $1,264.48 on Friday, October 21. However, in contrast to BTC, it kept rising through the weekend, reaching a 7-day high of $1,368.42 on Monday, October 24.

The dip on Friday, October 21, coincided with a sharp rise in the value of the US dollar. ETH is now 7% down since the Merge, and its deflationary effect may not make much difference due to the pace of liquidation. Rising US government treasury bond yields, regulatory pressure, and recession cause short-term investors to show caution.

As of now, ETH is trading at $1,348.67, with a 24-hour climb of +1.3% and a 7-day gain of +3.2%.

ETH price chart. Source: CoinGecko
ETH price chart. Source: CoinGecko

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XRP price

XRP's descent slowed down without any bullish outcomes. Following a 7-day high of $0.482418 on Tuesday, October 18, the price resumed sinking in unison with BTC and hit a low of $0.437909 on Friday, October 21. However, XRP regained buoyancy quickly as it touched $0.47 the next day and rose higher in the early hours of Monday, October 24.

Recently, whales have seemed dormant despite another Ripple's win against the SEC — the regulator submitted the proposed redactions to Bill Hinman's speech drafts for review. Another favorable ruling ahead of the crucial November 15 court date could produce some bullish price momentum.

As of now, XRP is trading at $0.458413, with a 24-hour drop of -1.2% and a 7-day decline of -3.8%.

XRP price chart. Source: CoinGecko
XRP price chart. Source: CoinGecko

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Cryptocurrency news

Institutional adoption continues despite crypto winter

According to Bernstein's research, the prolonged bearish sentiment has not eroded asset managers' commitment to crypto. The brokerage firm notes that investors who actively supported the industry during the bull market of 2020-2021 are still interested. Moreover, some of them are going to allocate more capital to digital assets.

Those who were on the fence about crypto in late 2021 have postponed their plans. Meanwhile, "crypto converts" remain active, albeit "way more valuation sensitive." Despite the crypto winter, these private market investors are on the lookout for new opportunities.

Some large asset managers have also stuck to their cryptocurrency strategies. Bernstein expects "actual direct digital assets allocations 12-18 months down the line."

The firm is actively communicating with investment managers at various stages of interest. Analysts Gautam Chhugani and Manas Agrawal have described this as "probably the most encouraging part of the institutional adoption cycle while recognizing that the actual impact on the market is probably 12 months away."

Last year, investment was dominated by crypto-native and venture-capital players, some of whom raised over $1 billion. In contrast, fundraising for "liquid crypto strategies" or tokens did not exceed $100 million. Private valuations aren't showing as much correction as crypto valuations — there is intent to "deploy this dry powder in private rounds."

Finally, the Ethereum Merge, which happened on September 15, surprised many investors. First, they were impressed by the seamless transition to Proof-of-stake (PoS). Secondly, the sell-the-news effect on the ETH price was equally unexpected.

BTC moves sideways, resisting macro turmoil

Over the past two weeks, Bitcoin has been trading comfortably above $19,000, while Ether has held below $1,300. The trading volume remains moderate, in line with flat dynamics contrasting with a flurry of macro woes.

The CoinDesk Market Index (CMI), which gauges the performance of a crypto basket, has lost 1.01% month-to-date. BTC has seen little change over the past quarter — it has remained range-bound just below $20,000, almost matching the June levels. According to Clara Medalie, Kaiko's director of research, volatility started easing in early July, when the industry started grappling with shrinking liquidity due to Terra's collapse.

BTC becomes less volatile

The weakening of daily swings is prominent, as the coin looks firmly entrenched along the support line. The current price — $19,359 — is close to October's opening point ($19,400). While BTC has lost 9.5% over the past 60 days, it has barely moved over the past 30 days, gaining a mere 0.3%.

This month, for the first time since 2020, BTC's 20-day realized volatility has descended below that of the Nasdaq and the S&P 500. Before that period, both markets were at a 40-year high. BTC's 30-day price volatility now closely resembles that of the British pound.

Stocks, in comparison, have seen dramatic spikes due to macroeconomics. "The divergence in market activity for the two asset classes suggests cryptocurrencies are more resistant to the recent volatility-inducing macro events," Medalie commented.

Using the Volume Profile Visible Range (VPVR) tool, CoinDesk analyst Glenn C. Williams Jr. has found an area of solid price agreement at $19,300. This "high volume node" has existed since the beginning of 2022. This analysis shows that BTC is likely to stay between roughly $18,600 and $20,200, with a possible, albeit slight, bullish divergence.

Macro backdrop

Traditional markets saw a positive close last week, with the Nasdaq, Dow Jones Industrial Average, and S&P 500 gaining around 2.5%. Other notable macro developments included:

  • Better-than-expected Q3 earnings, despite dismal economic forecasts
  • Persistently high inflation
  • The UK government in turmoil
  • The US dollar’s strongest reading since early 2002
  • The Japanese yen at a 32-year low
  • Brent crude oil settling at $93.50 per barrel after gaining over 15% year-to-date

Looking ahead

Most market participants — 91%, according to CME FedWatch — expect another 75-bps hike after the Fed's Federal Open Market Committee (FOMC) meeting on November 2. This change would raise the rate to 375-400 basis points.

The December meeting has a 52% chance of resulting in 450-475 basis points. However, San Francisco Fed President Mary Daly raised hopes for moderation when she stated that "the time is now to start planning for stepping down."