Daily News | Crypto Volatility Rises As Big Tech Earnings Are Around The Corner

Fundamental & Technical Outlook

👓 Macro

As of this writing, Bitcoin (BTC) and Ether (ETH) were changing hands at $19,345 and $1,348, or up 0.18% and 0.28% in a 24hr period, respectively**.**

During the initial hours of the U.S. trading session**, both major L1 networks slumped following underwhelmed PMI data in the service sector** which showed a drop to 46.6 in October from 49.3 in September, indicating recent Fed rate hikes are beginning to see its effects in the rising cost of living and tightening financial conditions in the U.S. economy.

But around mid-day in New York, all three indices have seen a turnaround fueled by optimism for this week’s upcoming earnings reports from big tech companies such as Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Apple (AAPL) and Amazon (AMZN), which in turn boosted the prices of Bitcoin and Ether.

The correlation of Ether to the Nasdaq tech-led index now stands at 0.53, up from 0.47 Sunday. The DJIA (+1.34%), SPX (+1.19%), and Nasdaq (+0.86%) all closed higher, continuing their Friday gains.

In the U.K., Rishi Sunak is set to become the next UK prime minister Tuesday, amid a political and financial crisis that has roiled markets in recent weeks.

In China, Hong Kong and mainland shares swung back to gains Tuesday after seeing the former suffer an alarming plunge of 6.36% Monday as investors reacted to President Xi Jinping's tightening control of the government. In a separate report by Bloomberg, China’s richest tycoons lost more than $35 billion in the market selloff.

The offshore yuan also extended its decline after China’s central bank set the official fixing rate for the currency at the lowest level in 14 years.

To avoid (or embrace) volatility, traders this week should look out for:

• Tuesday: US Consumer Confidence, Earnings reports from Alphabet and Microsoft
• Wednesday: Bank of Canada Interest Rate Decision
• Thursday: US Q3 GDP, ECB Interest Rate Decision, Earnings reports from Apple, Meta and Amazon
• Friday: Bank of Japan policy decision, University of Michigan consumer sentiment

🟠 BTC Weekly Timeframe

Key Level: Monthly resistance level of 19,858 (Monthly High of Dec. 2017)

As of Oct. 25 Asian session, Bitcoin (BTC) was trading above the 23.6% (19,144) weekly Fibonacci Retracement level measured from Sep. 12 - 19.

The bullish engulfing candle indicates there’s a higher probability we’ll see a retest of the 38.2% (19,792) weekly Fibonacci Retracement level this week.

Notably, the monthly resistance level of 19,858 (Monthly High of Dec. 2017) sits slightly above the 38.2% level.

BTC Weekly Resistance zones

1. 19,667 - 19,858
2. 19,991 - 20,356
3. 20,516 - 20,885

BTC Weekly Support zones

1. 19,144 - 18,648
2. 18,472 - 18,143
3. 17,974 - 17,700

BTC Daily Timeframe:

Key Note: Despite seeing a bearish daily candle Monday, the bulls should be delighted to know that BTC now has an anchor point to trend up. The bulls will now have to break and close above the 23.6% (19,441) level to draw in more buyers.

As of this writing on Oct. 25 03:36 UTC, Bitcoin (BTC) was trading at $19,350, or down 0.21% in a 24hr period.

BTC’s 3-day ascent has broken the opening price of the previous bearish rally from Oct. 18 - 20, which implies this week's outlook has turned to the upside.

But before the bulls should have any hopes of seeing BTC trend higher, first BTC will have to find more solid support between the 23.6% (19,441) and 38.2% (19,287) Fibonacci Retracement levels measured from the bullish rally.

Notably, the 78.6% (19,369) Fibonacci level derived from the bullish rally between Sep. 7 - 12 is sandwiched between the aforementioned levels and serves as an anchor point to break away from the low volatility accumulation period seen between September and October.

Oct. 25 Update: BTC rebounded from the 50% (19,163) Fibonacci Retracement level measured from Oct. 18 - 20, and found support above the 38.2% (19,287) level before making a new candle. Despite being a bearish daily candle, the bulls should be delighted to know that BTC now has an anchor point to trend up. The bulls will now have to break and close above the 23.6% (19,441) level to draw in more buyers.

BTC Daily Resistance zones

1. 19,619 - 19,700
2. 19,700 - 19,858
3. 19,977 - 20,125

BTC Daily Support zones

1. 19,441 - 19,287
2. 19,287 - 19,163
3. 19,163 - 19,040

🔵 ETH Weekly Timeframe

Key Level - Monthly resistance level of 1,428 (Monthly High of Jan. 2018)

As of Oct. 25, Ether (ETH) was trading above the monthly support level of 1,313 but testing the 61.8% (1,346) weekly Fibonacci retracement level measured from Jul. 4 - Aug. 8.

Likewise to BTC, the engulfing candle of last week indicates there is a higher probability of a retest of previous resistance levels. In the case of Ether, an important level to pay attention to is 1,428 (Monthly High of Jan. 2018).

Notably, the monthly resistance level is sandwiched between the Fibonacci Extension levels (1,402 - 1,443) measured from last week.

There’s also the weekly resistance level of 1,391 (Weekly Close of Jan. 18, 2021) to set up an alert to, although the strength of this level is relatively weaker.

ETH Weekly Resistance zones

1. 1,379 - 1,391
2. 1,402 - 1,428
3. 1,433 - 1,456

ETH Weekly Support zones

1. 1,313 - 1,305
2. 1,276 - 1,264
3. 1,263 - 1,241

ETH Daily Timeframe

Key Note: By closing above the 23.6% (1,342) level Monday, an anchor point for an uptrend continuation has been set. ETH bulls will now have to make a “higher-high” price action formation by closing a daily candle above Sunday’s close of 1,363, or within the resistance zone (1,367 - 1,379) to draw in more buying interest.

ETH paints a much clearer path than BTC in terms of breaking the previous bearish rally from Oct. 18 - 20, implying a continuation of the uptrend is to be expected this week.

Likewise to BTC, ETH bulls should be wary of a short-term decline to within the 23.6% (1,342) and 38.2% (1,324) Fibonacci Retracement levels measured from the 3-day ascent, in order to find support before a continuation to the upside.

A key resistance level to watch out for is 1,375 which was also the closing price of the Sep. 19 daily candle.

Oct. 25 Update: Likewise to BTC, Ether rebounded from the 38.2% (1,324) Fibonacci Retracement level before settling above the 23.6% (1,342) level on Monday, implying an anchor point for an uptrend continuation has been set. ETH bulls will now have to make a “higher-high” price action formation by closing a daily candle above Sunday’s close of 1,363, or within the resistance zone (1,367 - 1,379) to draw in more buying interest.

ETH Daily Resistance zones

1. 1,367 - 1,379
2. 1,385 - 1,391
3. 1,392 - 1,402

ETH Daily Support zones

1. 1,342 - 1,334
2. 1,324 - 1,313
3. 1,310 - 1,297

📌 The topic of the Day: UK’s New Crypto Bull PM Rishi Sunak

Rishi Sunak, a multimillionaire, former hedge fund manager at Goldman Sachs, former Chancellor of the Exchequer, and an outspoken crypto bull is set to become the youngest prime minister of the United Kingdom, succeeding Liz Truss after her ambitious plan to slash taxes on the nation’s highest earner quickly backfired.

Back in April, Sunak advocated for turning Britain into a full-blown crypto hub, and among many notable moves to boost the U.K.’s competitive status in the decentralized sector, he had asked the Royal Mint to create an NFT that will act as an “emblem” of the “forward-looking approach” he intended to take.

In another move, Sunak showed enthusiasm over possibly issuing a central bank digital currency (CBDC) at the Bank of England, which he said could “offer businesses and consumers new ways to pay.”

However, Sunak’s first task is to repair the damage of Truss’s short spell in charge, after her massive package of unfunded tax cuts roiled financial markets and drove up mortgage costs, and tanked the pound sterling for millions of Britons.

Why this matters:

While ****it’s good to know that the new PM is a crypto bull who campaigned extensively to boost UK’s status in the space, it might be too soon to expect him to even touch on the issues, particularly the confusion around crypto regulation conducted through the Financial Conduct Authority (FCA).

But it’s never too soon to start making bets, or hedges, about what he might do based on his previous statements, so if you’re looking to invest start looking into UK-based crypto projects.

🗒 Happenings of The Week (Oct. 21 - 24):

Notables This Week:

• 📣 The European Commission announced a DeFi-focused report to be released this week. This is a supplementary finding to EU’s comprehensive Markets in Crypto-Assets regulation (MiCA) which focuses on centralized entities, namely service providers and stablecoin issuers.

• 📣 New amendments have been added to the UK’s Financial Services and Markets bill that raises the bar for the nation’s crypto regulatory framework which gives the authority to government agencies to ban unauthorized service providers on top of stablecoin regulation provisions.

• 📣 Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam said he thinks Ether is a commodity while Securities and Exchange Commission (SEC) Chair Gary Gensler last month suggested that proof-of-stake cryptocurrencies could fall under the definition of a security.

• 📣 Securities and Exchange Commission (SEC) Chair Gary Gensler said most crypto exchanges violate securities law by listing unregistered securities and that centralization still tends to reemerge in the sector in the name of decentralization.

Oct. 24

• 📣 Two Chinese intelligence officers were charged with bribing an undercover FBI agent with $61K in Bitcoin in an attempt to disrupt the prosecution of a Chinese telecommunications firm. The Associated Press reports it is likely Huawei, though US attorney general Merrick Garland did not name the company during the announcement.

• 📣 Apple updated its App Store policy to restrict apps from using NFTs. Recently, the tech giant has been criticized for charging 30% by NFT startups when the general commission was 3%.

• 📣 The Tel Aviv Stock Exchange announced a five-year strategy to develop a new platform for digital assets. Last week, in an ongoing effort to institutionalize crypto in Israel, the Israeli Ministry of Finance's Office of the Accountant General and the Tel Aviv Stock Exchange said that they will cooperate to test out digital state bonds.

Oct. 22 - 23

• 📣 NFT project Azuki auctioned eight Golden Skateboard NFTs which will be redeemable for physical skateboards ranging between bids of 200 ETH ($271K) to 309 ETH ($420K). The floor price for Azuki’s anime-inspired NFT avatars was 11.5 ETH ($15.6K) as of Sunday.

• 📣 Brokerage app Robinhood is looking to expand its compliance team ahead of its release of a self-custody wallet. The platform was fined $30 million in August for failing to comply with anti-money laundering (AML) and cybersecurity regulations.

Oct. 21

• 📣 MakerDAO is set to move forward to transfer 1.1 billion (33%) USDC into Coinbase Custody to earn 15 million USDC in annual institutional rewards. Recently ****MakerDAO partnered with Monetalis to allocate $500 million of its stablecoin reserves into short-term US treasury and investment-grade corporate bonds.

• 📣 Argentina's national tax authority (AFIP) crackdown on an underground crypto mining farm led to 40 arrests. ONG Bitcoin Argentina, a non-profit organization that works closely with the agency, issued a statement declaring that “crypto mining in itself is not a crime when it adheres to local laws.”

• 📣 Polkadot co-founder Gavin Wood steps down as CEO of Parity Technologies Ltd. Back in June, Governance version 2 (or Gov2) went live to further decentralize the blockchain's decision-making.

• 📣 Interpol announced it will offer online police training in its own metaverse bureau. The initiative may be linked to technology research firm Gartner which estimated that one in every four people will spend at least an hour a day in the metaverse to work, study, shop and socialize by 2026.

• 📣 Messaging app Telegram is soon to launch a username marketplace on The Open Network (TON) blockchain. The username auction platform will be akin to Ethereum Name Service. TON is developed by open-source developers and is a continuation of the abandoned Telegram Open Network due to pressures from the SEC.

• 📣 Y Combinator members-only OrangeDAO launched an accelerator program that features a $25,000 grant and mentorship with web3 venture capital firm Press Start Capital. OrangeDAO raised $80 million in funding led by NEAR and Algorand in August.

• 📣 This week’s fundraising activities include but are not limited to:

  • 🔹 Web3 publishing platform Paragraph raised $1.7 million in a pre-seed funding round led by Lemniscap. The platform aims to help web3 writers, DAOs and NFT communities monetize their content through an all-in-one newsletter service.

• 📣 This week’s onchain criminal activities include but are not limited to:

  • 🔹 Decentralized exchange QuickSwap was exploited for $200K through the use of flash loans on the XYZ lending market. The exploiter has since bridged the funds back to Ethereum, before depositing them on Tornado Cash.