Crypto volatility is back

TL;DR:

• Our market view (mid-August):
  • Short-term: Negative
  • Long-term: Negative
• Bitcoin was trading in a sideways trend most of October, with a modestly positive trend at the end of the month.
• Contrary to September and October, November started with increased volatility.
• One of the largest crypto exchanges, FTX, filed for Chapter 11 in November.

Market overview

In October, crypto markets noticed another sideways price action with few short-term pumps and dumps.

Bitcoin’s price action was tighter than in September. It ranged between $18k and $21.5k. The period of extremely low volatility was over with FTX and Alameda event in early November. The price of Bitcoin collapsed below a crucial support at $18k, more precisely to the $15-16k level. This means a new trend is established after a long consolidation period (June-November).

The chart shows more considerable support at a $12-13k level (red color). If this level doesn’t hold, the next support is at $10k (green color).

On the other hand, we mentioned many times that a 100-day exponential moving average (white – currently at $20.5k) is crucial resistance. Before the last drop, its level was tested at $21k. The Bitcoin price was denied at that level, which confirmed the trendline as a reliable trendsetter in the previous months.

In October, Crypto Total Market Cap gained 7.3%, but the long term crypto market trend was still negative, year to date return is standing at – 55,5%

We still recommend investors stay defensive and wait for more signs that we reached the bottom or at least a period of accumulation. Until Bitcoin price exceeds long-term moving averages (red and white in the chart) and those averages start turning the curve upside, there is no favorable risk/reward ratio.

Our market model is on both time frames negative.