Bitcoin (BTC) experienced a significant drop in October, reaching new lows after the Wall Street open on October 11. This decline led one analyst to declare that the cryptocurrency bear market had entered its “final stage.” The price weakness in BTC was evident as it lost support at $27,000, and at the time of writing, it was approaching $26,600.
The drop in BTC prices can be attributed to the release of United States inflation data, specifically the Producer Price Index (PPI) for September, which came in above expectations at 2.2% year-on-year (YoY) compared to the predicted 1.6%. This heightened concern about ongoing inflation pressures in the United States and led to a strengthening of the dollar and a decrease in risk assets.
As a result of the inflation data release, Michaël van de Poppe, the founder and CEO of MN Trading, noted that the Dollar Index ($DXY) would likely see an upward bounce, leading to downward corrections in Bitcoin prices. This prediction was in line with the market trend, as BTC had already experienced a $1,000 loss since the completion of a “death cross” on its daily chart at the beginning of the week. This drop brought BTC to its lowest levels since September 29 and erased the gains it had made earlier in October.
Van de Poppe further suggested that October could mark the reversal point for BTC, signaling the start of an uptrend in November, with the potential for a retest of the $26,800 area. Alternatively, he proposed that the reversal might occur at the end of December, leading to a pre-halving and ETF rally. In either case, he expressed optimism for the future of Bitcoin.
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Other traders also highlighted the significance of the $26,800 level. Skew, a popular trader, emphasized that it was a crucial level within the current range and that it would be important to observe the market’s close. Additionally, Daan Crypto Trades noted that open interest in BTC was at multi-month highs, which had contributed to the volatility observed during the first week of October. Typically, such high levels of open interest lead to a squeeze in the market.
Before the release of the PPI data, the BTC/USD order book on Binance, the largest global exchange, showed a lack of bid support around $26,650. This indicated a potential downward pressure on BTC prices.
Keith Alan, co-founder of monitoring resource Material Indicators, commented on the upward trend in the YoY Core PPI since July. He suggested that interest rates may remain high for a longer period, which could have a negative impact on risk assets.
The drop in BTC prices and the factors contributing to it serve as a reminder that investing in cryptocurrencies involves risks. Readers are advised to conduct their own research and exercise caution when making investment decisions.
In conclusion, Bitcoin experienced a drop in October, reaching new lows as it lost support at $27,000. The release of higher-than-expected inflation data in the United States contributed to this decline. Analysts and traders are closely monitoring the $26,800 level as a crucial point within the current range, with some suggesting that it could mark a reversal and the beginning of an uptrend for Bitcoin. However, the market’s response and potential risks, such as high interest rates and inflation pressures, should be considered when making investment decisions.
