Bitfinex Alpha | Bitcoin volatility has arrived as US interest rates are expected to be higher for longer

October 23 Bitfinex Alpha | Bitcoin volatility has arrived as US interest rates are expected to be higher for longer

For more than two months, Bitfinex Alpha It predicted increased volatility, and recent events have confirmed the validity of this prediction. Bitcoin's 24-hour volatility saw a staggering 1,200% rise in just nine hours on October 16, driven by the asset crossing the $30,000 threshold. On-chain metrics, such as the Production Age Range for Consumers (SOAB), support the notion of continued volatility in the coming months.

Bitcoin's price surge from $28,000 to $30,000 on October 16 was fueled by unverified rumors about the SEC's approval of BlackRock's iShares Bitcoin ETF. However, this rally was short-lived, as assets fell to the $28,000 mark, resulting in the largest short-term liquidations since August 17, amounting to more than $136 million. The initial price surge was due to a wave of buying trades in the futures markets, with more than $5.5 billion added within an hour. However, this momentum was temporary, as subsequent volatile swings caused a total of $187 million to be liquidated across long and short positions. Last week's movements underscore the sensitivity of the cryptocurrency market to high-volume trades, especially during periods of low liquidity. The rapid price movements were not only the result of a short squeeze, but were also greatly influenced by the market's immediate response to exchange-traded fund (ETF) news. This highlights the market's susceptibility to major news narratives. Post the $30,000 breakout and subsequent decline below $28,000,

Bitcoin has already made two successive attempts to reclaim the $30,000 mark, finally succeeding on Monday, October 23.

In last week's economic narrative, it is clear that while certain sectors of the US economy have flexed their resilience, others have sent subtle cautious signals.

Last week, the yield on the 10-year Treasury note approached the five percent mark — a psychologically significant level not seen in 16 years. With higher Treasury yields linked to higher interest rates, last week's rise in yields confirms our expectations that interest rates will be higher for longer.

In the consumer landscape, US retail sales exceeded market expectations. Not only did strong consumer spending end the third quarter on a high, but it also fueled expectations that third-quarter GDP could eclipse the previous quarter. The labor market also continued to show strength, with unemployment claims for the week ending October 14 falling to their lowest level in nine months. Despite the strong unemployment numbers, signs of a slowing labor market continue to appear.

On the housing front, after August's troubling slump, September brought with it a breath of fresh air. The rally, led by the multifamily homebuilding sector, offers a glimmer of hope, although there are still cautionary notes among market watchers.

In a sign of the growing acceptance of cryptocurrencies, luxury car giant Ferrari has teamed up with BitPay to facilitate cryptocurrency payments. However, it is not a smooth ride in the world of cryptocurrencies. The New York Attorney General has launched a lawsuit against industry leaders Gemini Trust, Genesis Global Capital, and Digitalcurrency Group (DCG), alleging massive fraud of more than $1 billion through the Gemini Earn program.

Finally, we discuss the transition in El Salvador, two years after Bitcoin was adopted as legal tender.

Happy trading!