Bitcoin (BTC) and other top cryptocurrencies exhibited an uncharacteristic lack of volatility in October.
Following a month that was mostly bereft of wild market action, crypto finished off October a bit higher, ahead of what may be an action-packed November. The bullish late-month trading action in Bitcoin and Ethereum (ETH) may have been driven in part by a short squeeze in the market.
Adding to the recent rally, a pullback in U.S. Treasury bond yields in the closing week of October also helped Bitcoin and other cryptos rally ahead of a likely Federal Reserve rate hike in early November.
October Crypto Market Performance
Bitcoin prices spent most of September and October trading in a narrow range of between $19,000 and $20,000.
BTC’s 20-day rolling volatility dipped below the volatility of both the Nasdaq Composite and the S&P 500 for the first time since 2020. This could be a bullish sign for crypto investors, says Anthony Rousseau, senior director of product strategy for crypto at TradeStation.
“History shows Bitcoin’s depressed volatility could indicate it is closer to a bottom than the equity markets. Right now, we’re seeing Bitcoin’s volatility beginning to slow as its range shrinks weekly, like previous bear markets,” says Rousseau.
Bitcoin, Ethereum and other cryptos broke out to the upside in the final full week of October, with Bitcoin surging to above $20,900 and Ethereum jumping to above $1,580.
Bitcoin and Ethereum were on track to finish the month up 6% and 20%, respectively. Unfortunately, both cryptos remain down more than 57% year to date.
A Bullish Dollar: Bad For Bitcoin?
Investor concerns about inflation and rising interest rates appear to be easing heading into November. The bond market is currently pricing an 89% chance of a fourth consecutive 75 basis point (bps) federal fund rate hike in November.dhaka
While crypto prices seem to be gaining some momentum, the strong U.S. dollar may limit crypto upside. Investors worried about a potential global economic downturn have sought shelter in the dollar throughout 2022, driving its value higher against most international currencies.
Bitcoin prices are inversely correlated to the U.S. dollar. So a strong dollar is generally bad news for crypto prices.
In terms of what’s next for the big “B,” the greenback is likely to stay strong for a while.
Goldman Sachs analyst Kamakshya Trivedi wrote in an October note to the bank’s clients that the peak in the U.S. dollar still “feels several quarters away” and does not expect the Fed to begin easing interest rates until 2024.bangladesh
The hiring spree is just the latest in a series of moves suggesting Fidelity is becoming more bullish on crypto, GlobalBlock analyst Marcus Sotiriou says. “This action from Fidelity defies the bearish trend of significant layoffs amongst many crypto firms.”
Institutional Crypto Sentiment
While things remained somewhat tepid in the crypto market, there have been several notable moves among institutional players in the space.
The head of Fidelity Digital Asset Management announced in late October that the investment giant, which manages $9.9 trillion in assets, plans to hire another 100 new staff members for its digital assets unit, bringing its total number of employees up to around 500 people.
In other news, crypto exchange Coinbase, crypto market maker GSR and crypto trading firm NYDIG are among the latest firms to add to the more than 11,000 crypto layoffs announced this year.
Sotiriou says opportunistic investments by Fidelity and other large institutions are reassuring.
“This suggests that the bigger companies with larger balance sheets, who can weather through the storm, will capitalize on the downfall of others,” he says.
SEC Gets Aggressive With Crypto
The Securities and Exchange Commission (SEC) has been cracking down on cryptocurrency this year.
While the crypto market has a reputation for decentralization, SEC Chair Gary Gensler says it’s not immune to the negative impact of intermediaries, such as market makers and exchanges.
“We’ve even seen centralization in the crypto market, which was founded on the idea of decentralization. This field has significant concentration among intermediaries in the middle of the market,” Gensler said on Monday before the annual meeting of the Securities Industry and Financial Markets Association.
Gensler argues that the vast majority of cryptocurrencies are securities, and said in June that crypto exchanges that don’t cooperate with the SEC are “operating outside of the law,” putting them at risk of enforcement action.
The SEC made an example of billionaire TV star Kim Kardashian. The social media influencer agreed to pay a $1.26 million settlement in early October related to charges she failed to disclose $250,000 in compensation for promoting the crypto asset EthereumMax on Instagram.
Kardashian’s settlement should “serve as a reminder to celebrities and others,” Gensler said in an Oct. 3 news statement.
Crypto Regulatory Protection
The election itself may be an under-the-radar crypto market catalyst in November. The Republican Party is generally considered pro-crypto and anti-regulation so that a big GOP election win could prompt a crypto market rally.
A new Republican-backed Senate bill could provide at least temporary regulatory protection for crypto exchanges.
The Digital Trading Clarity Act of 2022 would in part create a temporary compliance period during which exchanges would not be subject to enforcement actions related to listing a digital asset security or failing to register as a securities exchange or broker-dealer.
But the sentiment to go easy on crypto may not be shared among voters.
A new survey by the Crypto Council for Innovation reports that among the 1,200 likely voters, 52% of respondents want more cryptocurrency regulation compared to 7% who want less.