October 18, 2022: -On Monday, Cryptocurrencies were higher after recovering from a sharp drop in the previous week.
Bitcoin increase 1% to $19,457.00, according to Coin Metrics, while ether traded 1.5% higher at $1,317.01.
Prices are holding steady since rebounding from a significant drop that followed the release of the recent reading on the consumer price index, a critical inflation meter. Yuya Hasegawa, the crypto market analyst at Japanese crypto exchange Bitbank, said the dip wasn’t deep enough to induce panic.
“It had been another tough week for the stock market till the CPI, so Thursday’s rebound will likely trigger an unwinding of the recent risk-off sentiment, which could positively affect the price of bitcoin,” he said. “If the price recovers the $20,000 psychological level with a substantial trading volume in the coming few days, bitcoin could test $23,000 next week.”
Despite recent volatility, bitcoin and ether trading activity is primarily tied to risk assets. While October is typically a strong month for crypto trading, crypto was never in such a strongly macro-driven bear market.
“Hovering around yearly lows in trade volumes, bitcoin and ether are crying out for the coming up crypto-specific catalyst that will kickstart another bull run and a decoupling from equities,” Conor Ryder, an analyst at Kaiko, said. “The Merge proved yet again that macro is king; we saw that last week with a volatile reaction to CPI.”
Last week, bitcoin climbed as high as about $19,900 in its big rebound. Ryder agreed that a substantial break above $20,000 could usher in a new level higher.
“Crypto markets have staged a respectable recovery since the initial reaction to the inflation reading, and investors are now eyeing up the psychologically the $20,000 level for bitcoin, which should result in a climb higher if breached,” he said.
However, “it looks as if crypto and stocks will move in tandem for the rest of the year, both likely tracking sideways until there is a hint that the Fed will start to reverse the recent regime of monetary tightening,” he added.
