Bitcoin (BTC) starts the second week of October up 4% month-to-date as geopolitical instability provides a snap market focus.
BTC price action continues to hold steady at $28,000, but what will happen next as markets react to the war in Israel?
In what could end up a volatile period for risk assets, Bitcoin has yet to offer a significant reaction, spending the weekend in a tight corridor.
That could soon change, however, as the Wall Street open comes amid a hike in oil and gold, along with U.S. dollar strength.
Macroeconomic triggers are also far from lacking, with the coming days due to see the September print of the U.S. Consumer Price Index (CPI). In the wake of surprise employment data last week, the readout holds additional importance for the Federal Reserve.
Beneath the hood, meanwhile, on-chain metrics are pointing to interesting times for Bitcoin, as BTC/USD trades in a key range, which has formed a watershed area since 2021.
Cointelegraph looks at these factors and more in the weekly rundown of potential BTC price triggers to come.
Bitcoin “illiquid and choppy” as weekly close passes
The weekend saw market participants fully focused on the abrupt breakout of war in Israel, and as markets themselves reopen, change is already afoot.
For Bitcoin, however, the ongoing events have yet to deliver a palpable chain reaction, data from Cointelegraph Markets Pro and TradingView shows.
BTC price action has centered on $28,000 since Friday, and that level remains key as traders hope for a resistance/support flip.
“Nothing special going on this weekend,” Daan Crypto Trades summarized on X (formerly Twitter) into the weekly close.
“Would expect volumes to pick up a bit soon but ultimately we should be hovering around this price region until futures open back up tonight.”
A further post noted that Bitcoin had yet to decisively break through the 200-week moving average (MA), which sits at $28,176 at the time of writing.
Analyzing the 4-hour chart, popular trader Skew described BTC price behavior as “illiquid and choppy.”
$BTC 4H— Skew Δ (@52kskew) October 9, 2023
these wicks really say how illiquid & choppy price action is pic.twitter.com/Qq13GsuqfB
“Bitcoin’s bullish flag is still in play — but it is taking too long to play out,” fellow trader Jelle continued, zooming out to monthly performance.
“October is generally the most bullish month of the year, thus I’m still expecting this one to break out upwards.”
War returns to crypto observers’ radar
When it comes to price triggers, however, the unfolding conflict in Israel has Bitcoin and crypto market participants anticipating the bulk of volatility is still to come.
With the memory of Bitcoin’s reaction to the war in Ukraine in February 2022 still in the background, Jelle was cautious over what might happen to BTC/USD next.
“All I do know is that the Ukraine war triggered an 8% down candle, that was erased within a day,” part of the day’s X commentary explained.
Mike McGlone, senior macro strategist at Bloomberg Intelligence, meanwhile described Bitcoin as now showing a “risk-off tilt” among traders.
“My bias is the downward sloping 100-week moving average is likely to win the battle vs. the up trending 50-week. Spiking #crudeoil is a liquidity pressure factor,” he wrote on Oct. 8.
At the time, the 100-week and 50-week MAs were at $28,938 and $24,890, respectively.
McGlone touched on an unfolding macro asset phenomenon, with gold up 1% on the day and Brent crude up 3.25% ahead of the Wall Street open.
“Markets reacting quite defensively,” Skew added, noting renewed strength in the U.S. Dollar Index (DXY), which gained 0.4%.
Last week, the DXY hit its highest levels since late 2022.
CPI leads “huge week for inflation”
In the U.S., attention focuses on the week’s macroeconomic data prints, headlined by the September CPI report.
After jobs data last week showed that employment levels remained resilient despite anti-inflation moves from the Fed, Bitcoin briefly recoiled over fears that officials would enact another interest rate hike, further pressuring liquidity.
While BTC/USD rebounded, those fears remain.
“A good CPI data on Thursday could provide a chance to break out from this range, whereas a hot CPI would push us back into the range lows with the premise that the FED might be forced to hike 25bsp,” part of weekend analysis from popular commentator CrypNuevo read.
According to data from CME Group’s FedWatch Tool, markets are increasingly betting on rates staying at current levels on decision day, set for Nov. 1.
Beyond CPI, this week will see the Producer Price Index (PPI) release, along with more jobless claims and a total of 12 Fed speakers delivering commentary. The minutes of the Fed meeting around the previous rates decision will also be unveiled on Oct. 11.
Key Events This Week:— The Kobeissi Letter (@KobeissiLetter) October 8, 2023
1. September PPI Inflation - Wednesday
2. Fed Meeting Minutes - Wednesday
3. September CPI Inflation - Thursday
4. OPEC Monthly Report - Thursday
5. Jobless Claims Data - Thursday
6. Total of 12 Fed speaker events
Huge week for inflation and the Fed.
“Huge week for inflation and the Fed,” financial commentary resource The Kobeissi Letter summarized in part of an X thread.
“In addition, markets will react to geopolitical tensions from this weekend. Volatility is the new normal.”
NVT signal spikes to highest since 2018
Within Bitcoin, the network value to transaction (NVT) signal leads the pack on on-chain metric volatility to start the week.
NVT, which its creator, Dmity Kalichkin, describes as a “PE ratio” for Bitcoin, seeks to estimate local BTC price tops and bottoms by comparing market cap to daily on-chain transaction values.
The latest data from on-chain analytics firm Glassnode shows NVT hitting its highest levels in five years — over 1,750 and far beyond its position at the start of 2023.
NVT has undergone various overhauls in recent years, as the dynamics of the BTC supply call for different guidance figures for determining price tops.
“If the trend towards side-chains and private transactions continues, we can expect less-and-less transactions to be captured in the public on-chain data (reducing the relative value of the “T” in NVT),” Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, wrote in part of his own research in 2019.
“This could cause the fair value NVT range to increase with time.”
Analyzing the NVT spike, crypto market intelligence platform IntoTheBlock suggested that it was representative of a broader metamorphosis.
“The lens through which we view Bitcoin's value is changing,” it wrote at the weekend.
“Transaction value & volume were once the go-to metrics. However, recent spikes in NVT ratios hint that Bitcoin's value is now moving independently of transactional utility, hinting at its growing role as a store of value.”
Neither fearful, nor greedy
Providing a fleeting insight into crypto market sentiment, the classic Crypto Fear & Greed Index reflects an overall air of indecision.
Related: Bitcoin bull market awaits as US faces ‘bear steepener’ — Arthur Hayes
The average investor is ambivalent when it comes to the market, as shown by the Index sticking rigidly to its “neutral” territory.
As of Oct. 9, Fear & Greed is at 50/100 — exactly half way along its scale between two sentiment extremes.
Zooming out, recent months have marked some of its least volatile conditions on record.
“You know the drill, i will be mass buying when we drop down to Extreme Fear and a $20,000 Bitcoin,” popular trader Crypto Tony reacted to the latest data.
“May take a while, but i feel Q1 / Q2 2024 will be the ticket. If i see a change in behaviour i will re-evaluate.”
Crypto Tony referenced an inkling that BTC/USD will return to $20,000 for a final retest before expanding higher after the 2024 block subsidy halving.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.