Daily News | Bitcoin and Ether May Be Rising Now But Be Wary Of Volatility Once Wall Street Wakes Up

Fundamental & Technical Outlook

👓 Macro

As of this writing, Bitcoin (BTC) and Ether (ETH) were changing hands at $20,195 and $1,482, or up 4.33% and 9.92% in a 24hr period, respectively.

The bullish rally was fueled by optimism coming from Wall Street, in particularly the Nasdaq composite index, in anticipation of earnings reports coming in from Tech Giants such as Microsoft (MSFT), Alphabet (GOOG), Meta (META), Apple (AAPL), and Amazon (AMZN).

The DJIA (+1.07%), SPX (+1.63%), and Nasdaq (+2.25%) all closed higher, marking a three-day consecutive ascension. As they now stand, the correlation between Bitcoin and Nasdaq, and Ether and Nasdaq, are now 0.48 and 0.6, up from 0.38 and 0.49 a day ago.

So far, around 28% of companies in the S&P 500 have reported Q3 results in the first two weeks of earnings season, with around 70% outperforming estimates.

However, Alphabet dropped as much as 7% in after-market trading on revenue that came in below expectations and Microsoft lost 8% following a disappointing revenue forecast.

As a result, the Nasdaq e-mini futures is now trading downward by 1.93%. This matters because once the US trading session begins, effects will be seen on the spot exchange, which in turn will affect Bitcoin and Ether, potentially erasing some of the gains we saw yesterday.

Going forward, traders now anticipate US’s Q3 GDP report, and earnings reports coming in from Apple, Meta, and Amazon. Coincidentally or not, they’re all happening on Thursday.

Elsewhere in the world, China’s benchmark CSI 300 Index climbed as much as 1.2% and Hong Kong’s Hang Seng Index gained as much as 2.1%, adding to the latter’s 1.3% advance from the previous session, after seeing a whopping 6.36% plunge Monday, the steepest since 2008.

In the UK, the newly elected Prime Minister Rishi Sunak will have a wide range of issues to contend with from spending and reducing the deficit to immigration and the U.K.'s relationship with the EU going forward.

In Europe, analysts are now projecting an interest rate hike of 75 basis points expected from the European Central Bank on Thursday.

In Japan, the Bank of Japan offered to buy more bonds than planned at its regular market operation amid an ultra-loose monetary policy which is expected to be reaffirmed on Friday. The Yen (USDJPY) is still hovering at 148 against the dollar, its weakest level in 24 years.

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

• 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 Monthly Timeframe

Key Resistance Zone: 19,858 - 20,516

Before we get into the usual analytical pattern that starts with the weekly timeframe, it’s best to take a step back to look at the bigger picture.

Despite seeing big moves yesterday (Oct. 25, 2022), Bitcoin (BTC) on the monthly timeframe is still struggling slightly below the 61.8% (20,516) Fibonacci Retracement level derived from Oct. 2020 - Mar. 2021.

As October is coming to an end, BTC bulls will need to close the monthly candle above the resistance zone formed between the monthly resistance level of 19,858 and the 61.8% (20,516) Fibonacci level, in order to make a “higher-high” price action formation in relative to the last monthly candle which opened at 20,052.

If the bulls succeed in pushing the price of BTC above said resistance zone (19,858 - 20,516), which will then become a support zone, then the next resistance zone will be 23,137 - 25,328.

On the other hand, if they fail, there are two scenarios that might occur in the month of November - December:

1. the accumulation period continues and BTC continues to hover between 19,858 - 18,017;

2. BTC bears use the failed opportune of the bulls to bring the price towards 16,222 - 13,779.

BTC Weekly timeframe:

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

As of Oct. 26 Asian session, Bitcoin (BTC) was trading above the 38.2% (19,792) weekly Fibonacci Retracement level measured from Sep. 12 - 19 and the monthly resistance level of 19,858.

As it stands, the correlation between BTC and Nasdaq composite index is at 0.41, implying traders should look closely at everything that’s happening in the US.

This week, in particular, traders should pay attention to big tech’s profit report, as yesterday’s uptrend was heavily influenced by Google and Microsoft.

Because of the jump yesterday, the price of BTC has made a “higher-high” price action formation relative to the last weekly candle and is currently trading within the resistance zone (19,991 - 20,356) derived from the last candle with the help of the Fibonacci Extension tool.

Before the end of the week, BTC bulls will need to maintain the price above the monthly resistance level of 19,858 to sustain a bullish outlook going into next week.

BTC Weekly Resistance zones

1. 19,991 - 20,356
2. 20,516 - 20,885
3. 21,002 - 21,806

BTC Weekly Support zones

1. 19,858 - 19,792
2. 19,704 - 19,568
3. 19,262 - 18,960

BTC Daily Timeframe:

Key Note: Ideally, the price of BTC should pull back towards 19,977 before making another effort to push beyond the next resistance zone (20,125 - 20,338) to establish a “higher-high” price action formation relative to Oct. 3 - 4 ascension.

As of this writing on Oct. 26 00:22 UTC, Bitcoin (BTC) was trading at $20,112, or up 4.11% 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.

On Monday, 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.

Oct. 26 Update: On Tuesday, BTC has failed to close above the 23.6% (20,098) Fibonacci Retracement level derived from the two-day ascent between Oct. 3 - 4 but remains above the 38.2% (19,876) level. Ideally, the price of BTC should pull back towards 19,977 before making another effort to push beyond the next resistance zone (20,125 - 20,338) to establish a sustainable bullish outlook. By closing a daily candle above the resistance zone, a “higher-high” price action formation can be established as it would invalidate a range set between Oct. 3 - 4, which in turn would imply BTC has moved beyond the accumulation phase from the last two months.

BTC Daily Resistance zones

1. 20,125 - 20,338
2. 20,735 - 20,895
3. 20,902 - 21,142

BTC Daily Support zones

1. 19,876 - 19,700
2. 19,699 - 19,523
3. 19,033 - 19,879

🔵 ETH Weekly Timeframe

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

As of Oct. 26, Ether (ETH) was trading above the monthly support level of 1,428 but testing the 50% (1,456) 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.

Oct. 25’s ascension is closely related to Wall Street’s optimism for big tech earnings reports. For Ether, the sudden rise in buying volume has helped push the price above a resistance zone (1,458 - 1,428) which has now become the closest support zone.

Before the end of the week, ETH bulls will need to maintain the price above the monthly resistance level of 1,428 to sustain a bullish outlook going into next week.

ETH Weekly Resistance zones

1. 1,456 - 1,494
2. 1,552 - 1,575
3. 1,598 - 1,692

ETH Weekly Support zones

1. 1,458 - 1,428
2. 1,428 - 1,402
3. 1,379 - 1,345

ETH Daily Timeframe

Key Note: ETH bulls will now attempt to push past the next resistance zone (1,494 - 1,517), at the minimum, ETH bulls must close a daily candle above the weekly trendline to establish another anchor point in case we see a failed attempt.

As of this writing on Oct. 26 01:20 UTC, ETH was trading at $1,469, or up 9.88% in a 24hr period.

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.

On Monday, 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.

Oct. 26 Update: On Tuesday, fueled by optimism from Wall Street over Q3’s big tech profits, Ether saw a rally akin to Aug. 29 which helped boosted its price above a resistance zone (1,404 - 1,449) which has now become its closest support zone. ETH bulls will now attempt to push past the next resistance zone (1,494 - 1,517), at the minimum, ETH bulls must close a daily candle above the weekly trendline to establish another anchor point.

ETH Daily Resistance zones

1. 1,494 - 1,517
2. 1,576 - 1,598
3. 1,603 - 1,637

ETH Daily Support zones

1. 1,443 - 1,419
2. 1,404 - 1,373
3. 1,342 - 1,334

📌 The topic of the Day: How Reddit Is Taking NFTs Mainstream

On Oct. 25, the secondary market sales of Reddit’s Polygon-based avatars surged 799%. The largest internet forum also revealed last week that over 3 million Polygon wallets have been created by users to collect the NFTs.

According to the Dune dashboard, more than 2.9 million of the avatars are now in circulation. Each avatar is based on Snoo, the Reddit alien mascot, albeit with various visual styles contributed by an array of artists.

Based on data from Reddit Floor, about 86,000 NFTs were sold to users, and they now have a collective market cap (or value) of about $100 million.

Reddit’s approach to NFTs can be seen in how they’re promoting the initiative. Reddit appeared to purposely avoid using blockchain terms like “crypto” and “NFT” in the main portion of its sales presentation of digital collectibles and prefers the term “Collectible Avatars.”

Falling cryptocurrency prices have caused a lot of heavily promoted NFT collections to lose significant value in recent months, which may justify Reddit’s approach.

According to Stardust co-founder and CEO Canaan Linder,

“I think that decontextualization; that these are just games, these are just collectibles, these are just items you can take from one game to another, it is going to make this technology so much more accessible.”

🗒 Happenings of The Week (Oct. 21 - 25):

Notables This Week:

• 📣 The European Commission has released multiple reports investigating ways to supervise DeFi this month. 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. On Tuesday, European Commissioner Peter Kerstens called on the crypto industry to help come up with better solutions to regulate DeFi.

• 📣 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.

• 📣 According to the lawmakers, over 200 US government officials have left to join the digital asset sector. On Oct. 24, several progressive lawmakers including Senator Elizabeth Warren submitted an inquiry to various financial agencies requesting to know how they will cut down on their staff leaving to join crypto industry firms.

Oct. 25

• 📣 Decentralized lending protocol Compound approved proposal-131 to suspend four tokens with low liquidity as lending assets. The tokens are 0x (ZRX), basic attention token (BAT), maker (MKR) and yearn finance (YFI). The move comes as a preventive measure following the Mango Markets incident in which prices of assets with low liquidity were exploited.

• 📣 Decentralized exchange Pancakeswap passed a governance proposal to deploy on the newly launched blockchain, Aptos. Pancakeswap’s token CAKE will be natively integrated into Aptos, along with four of its DEX primary features.

• 📣 Tech giant Meta partnered with makeup brand L'Oréal and French business school HEC Paris to back a new startup acceleration program called Station F for creativity in the metaverse. The initiative aims to help businesses that specialize in 3D production, AR, VR, mixed reality, avatar creation, portability in user experience, token economy or other topics related to the metaverse and web3.

• 📣 Gaming blockchain Oasys debuts mainnet ahead of public token listing. The blockchain’s node validators include Square Enix, Ubisoft and Sega, among other famed gaming publishers.

• 📣 Near Foundation announced a fund to replenish a $40 million collateral deficit found in USN stablecoin. The foundation also recommended that the issuer Decentral Bank should retire the stablecoin.

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:

  • 🔹 Decentralized finance company Thala Labs raised $6 million co-led by ParaFi Capital, White Star Capital and Shima Capital. The startup is focused on deploying DeFi products on Aptos, the latest buzz in the crypto space.
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  • 🔹 NFT startup Exclusible raised $5 million led by Dan Holzmann, co-owner of Swiss football club FC Basel, and venture capital firm Tioga Capital. The platform works with luxury brands to develop their digital asset offerings, such as Asprey Bugatti, Christian Lacroix and Louis Moinet.
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  • 🔹 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.
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• 📣 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.