Fundamental and Technical Outlook
In light of various analysts speculating that Bitcoin
is finally decoupling from the stocks and bonds markets, the US stock market has witnessed the longest run of quarterly declines since the 2008 financial crisis. Over the past few weeks, the entire global economic stage has descended into a bearish landscape, including the likes of DeFi and TradFi (traditional finance) respectively. Yet, this decline has extended throughout the entirety of 2022 for the US stocks market, with the Nasdaq 100 dropping 33% and the Dow Jone Industrial Average losing more than 20% across the entire year, with Q3 bleeding the markets at an unprecedented rate. However, it appears that Q4 will cast a similar dismal outlook for the stock market whilst cryptocurrencies begin to rebound.
Stocks began to tick lower across recent weeks, closing the quarter at detrimental lows, with UBS noting that Bitcoin
abandoned its typical beta of 3x to major US stock indices that dropped twice as much during September. The correlation between Bitcoin
and stocks has further declined across the past week with the Nasdaq correlation falling to 0.77 and the S&P falling to 0.75. Analysts have reported that this is in light of the global macroeconomic crisis, whereby a huge portion of formerly powerful international currencies (GBP, EUR, YEN) have suffered a substantial hit, whilst the dollar gains strength. This has been demonstrated by the substantial crash of the Yen, the Euro reaching parity with the dollar, and the Great British Pound falling to an all-time low of $1.0327 against the dollar.
This has led to speculation that Bitcoin
is once again living up to its title of an inflation-proof asset, demonstrating that irrespective of the traditional financial markets that it can continue to perform and maintain a semblance of stability. As a result, investors have begun to flood into the asset, with earlier this week marking the highest rate of trading volume for Bitcoin
seen since June.
Despite displaying only modest gains, the cryptocurrency market has begun to exude a sense of calm, with a majority of assets trading horizontally or beginning to display minor gains and losses in the single-figure percentages. For example, across the past week, Bitcoin
has only grown by 1%, while Ethereum has only declined by 0.61%. This more positive sentiment has begun to infiltrate the remainder of the market, with a majority of the top 50 assets being privy to an uptick across the past week.
and Ethereum have seen minor losses across the past day, with Bitcoin
shedding 0.83% and Ethereum losing 2.13% – yet from a weekly perspective, these losses appear to have a minimal impact. Both assets seem to be forming a more stable price trajectory, with Bitcoin
still pushing above the boundaries of $19,000 and Ethereum clawing its way towards $1,300.
🟠 BTC Daily Timeframe
Bitcoin is trading below its 1-day SMA. Source, Coinmarketcap.
Over the past week, Bitcoin
has begun to break free from the confines of the bear market, finally moving above the resistance level of $20,000 and permeating the 7-day SMA and, for the most part, remaining consistently above this threshold. Having entered the week at $19,098, Bitcoin
has since pushed towards $20,400 and remained consistently between the bounds of $19,200 and $20,200, with ephemeral dips into the $18,000 witnessed on the 28th.
On a daily timeframe, Bitcoin
is trading below the previously established daily support zone of 19,406 and $18,532. However, analysts speculate that it is pushing to a new daily support zone, which can be estimated to be between $19,200 and $20,100.
Experts have forecasted that based on previous Bitcoin
trends an extreme price correction is imminent in Q4, predicting that a correction of 20-30% is nigh and that Bitcoin
is also at a pivotal entry point for bullish investors, signalling that this key support level could be lifted provided this bullish momentum extends to Bitcoin
If this correction occurs, experts forecast that highs of $25,000 could be reached once again, establishing a new floor for Bitcoin
from which it can continue to build its valuation. This could be furthered providing the current shift of investor focus remains fixated on Bitcoin
as a safe haven asset, potentially signalling that an influx of trading volume and buying power could enter the market and contribute to an uptick in value.
However, various analysts have begun to speculate that October could be a pivotal time for Bitcoin
, with previous years having indicated that Bitcoin
typically inflates in value by 24% across October – leaving many with a bullish sentiment regarding the coming month.
With the fear and greed index having indicated that the market is in a state of extreme fear for an extended period of time, strong selling pressure is rearing its head and could lead to bears breaking through the support level further providing they succumb to the pressure. This has been witnessed throughout the week as the valuation has been briefly forced below the 7-day SMA.
Bitcoin appears to be pushing for a new support level. Source: Coinmarketcap
In terms of technical outlook on a weekly timeframe, Bitcoin
is currently trading between the upper bounds of $18,500 and the lower bounds of $20,300 and is predominantly trading above its 7-day SMA.
With the current valuation suggesting that Bitcoin
is pushing against the resistance zone of $20,000 and is regaining strength, as well as investor interest, this could signpost a more bullish trajectory for the asset in the coming days.
However, based on the current chart activity, it is likely that Bitcoin
will continue to trade beneath the resistance of $20,000 following a more horizontal pattern, with brief spikes allowing it to further test the level.
🔵 ETH Daily Timeframe
ETH is trading in a progressive decline below its 1-day SMA. Source: Coinmarketcap
ETH is currently trading consistently below its 1-day SMA in a continuous decline following a short-lived bullish sentiment on Friday as a result of the Consumer Sentiment data. As a result, a sell-off has occurred and Ethereum has fallen below its key support point of $1,330 and is continuing to descend into the upper bounds of the $1,200 region.
Despite the sell-off, bears are attempting to climb above the current point of resistance, which is acting at $1,325. Additionally, Ethereum’s 14-day RSI is also consolidating this and is teetering below a ceiling of 41.00, which could positively correlate with the 10-day moving average being positioned for a price increase, however, this will only be made possible provided that the ceiling on the RSI indicator is broken.
With Ethereum facing a resistance point below its current support, this could indicate that the bear market is far from over for Ethereum. This is furthered by the way in which whales and opportunists continue to sell their bags at any positive price point, further accelerating Ethereum into a bearish spiral.
Ethereum has broken through its 7-day SMA. Source: Coinmarketcap
In terms of a technical outlook on a weekly scale, Ethereum is pointing towards a volatile market space in which bearishness appears to override any bullish price activity. Somewhat redeeming is the fact that Ethereum has only shed a total of 2.13% in value in comparison to a more substantial 7.72% witnessed last week, suggesting that this bearish trajectory may be beginning to slow. Providing Ethereum can gain some momentum, it is possible that it can begin to test the current resistance of $1,325 and push above its key support level.
📌 The Topic of The Day
Hacker Returns 70% of the Funds Stolen From Transit Swap DEX
The multi-chain DEX, Transit Swap, suffered a devastating hack last night as a flaw in its code was exploited, leading a hacker to steal a substantial $21 million. Having acknowledged on Twitter that the protocol was able to self-identify the code flaw and presumably patch the issue, Transit Swap have confirmed that they are working in conjunction with SlowMist, Bitrace, PeckShield, and TokenPocket to acquire information on the xploit and the hacker.
As a result, Transit Swap have confirmed that they have now gained information on the hacker’s IP address, email address, and their associated on-chain addresses and that following this breakthrough they would attempt to communicate with the hacker to recuperate their users’ devastating losses.
Fortunately, TransitSwap were able to confirm earlier today that they had been semi-successful in their attempts to communicate with the hacker and that as a result 70% of the total funds stolen had been returned from two addresses. Currently, little else is known yet about the current timeframe or the possibility of the remaining 30% being returned to the DEX.
This $21 million exploit is regarded as one of the most high-profile exploits in recent months, with only the likes of the infamous Wintermute hacking on September 20th, whereby $160 million was stolen, competing. However, hacks have been on a consistent rise throughout the past year, with the Crypto analytics firm, Chainalysis, confirming that this year's numbers have far outpaced the previous years.
🗒 Happenings of the Week (Sept.25 - October 1)
🔹 Israel, Norway and Sweden central banks partner with BIS to explore CBDC payments. The BIS reported on Sept. 27 that a CBDC pilot involving the central banks of Hong Kong, Thailand, China and the United Arab Emirates was “successful” after a month-long test facilitating $22 million worth of cross-border transactions.
🔹 Brazil’s securities regulator asks Mercado Bitcoin
to clarify token information. A crypto regulation bill in Brazil’s Congress has reached key milestones this year, but it has been stalled in the lower house since the Senate approved the proposal in April.
🔹 BlackRock launches ETF in Europe with blockchain and crypto company exposure. The iShares Blockchain Technology UCITS ETF is designed to track 35 blockchain companies from around the world and is listed on Euronext under the ticker BLKC.
🔹 Star Atlas offers first glimpse of gameplay with debut on Epic Games Store. Based on Solana and built using Unreal Engine 5, Star Atlas is one of the most ambitious gaming projects in web3. The project is aiming for a full Showroom with expanded functionality release in the fourth quarter of this year.
🔹 This week’s fundraising activities include but are not limited to: Carbon Credit platform 1GCX Raises $2 billion in a partnership with T3 Trading to tap ‘Internet of Energy’. Crypto investment firm Pantera Capital is seeking $1.25 billion for a second blockchain fund. Pantera’s portfolio includes companies like Anchorage Digital, Amber Group, Coinbase, Flashbots and FTX. Tech venture studio MPCH Labs raises $40 million Series A. The startup is developing a proprietary MPC6 engine based on multi-party computation (MPC) technology. Bitcoin
payments firm Strike raises $80 million in a Series B funding round led by Ten31. Strike is building a payments protocol on Bitcoin
’s Lightning network.
🔹 Christine Lagarde, president of the European Central Bank (ECB) said on Wednesday a digital Euro will not be used for commercial purposes and would protect people from data collection. The central bank announced the five partner companies that will help build the trial payment system earlier this month. The evaluation and results of the project are expected in March 2023.
🔹 A daily transaction cap for non-euro stablecoins has been reinserted into the European Union’s draft rules for cryptocurrencies. The newly reinstated provision puts a cap on how much foreign currency-backed tokens are allowed to be transacted within one day. The European Parliament’s Committee on Economic and Monetary Affairs is scheduled to vote on the legislation in October or November.
🔹 Interbank messaging service SWIFT has linked up with Chainlink Labs on a cross-chain interoperability proof-of-concept project. Chainlink oracles allow on-chain smart contracts and applications to utilize off-chain data in a secure and decentralized manner. It recently announced the SCALE program to grow decentralized application ecosystems in the Layer 1 and 2 space by helping with access and cost barriers to oracle services and configurations.
🔹 Lightning Labs releases initial Taro protocol code. This will allow users to issue and transfer assets on the Bitcoin
blockchain and Lightning. The company first launched Taro, a Taproot-powered protocol, in April. Lightning Labs was founded in 2016 and has raised money from Square CEO Jack Dorsey and Robinhood CEO Vlad Tenev.
🔹 Terraform Labs Founder Do Kwon says he's 'making zero effort to hide' but declined to disclose his exact whereabouts. On Monday, South Korea says Interpol has issued a red notice for Do Kwon. Terraform Labs executives are wanted by the government for allegedly breaking capital market laws, following the $40 billion collapse of luna and terraUSD. On Tuesday, the Luna Foundation Guard (LFG) refuted claims from a CoinDesk report that suggested a wallet was set up for the LFG on Binance this month and linked to 3,313 BTS that authorities have sought to freeze.
🔹 IMF calls on global financial watchdog to lead crypto regulation push. Two new reports by the International Monetary Fund (IMF) on regulating stablecoins and unbacked cryptoassets have called on the Financial Stability Board (FSB) to set and lead global efforts on crypto regulation. The FSB reports to G20 officials.
🔹 Australia’s CBDC pilot is looking for industry participants to make submissions on CBDC use cases. Dubbed the “eAUD,” the pilot is currently in the research stages and will be tested by participants in January next year. Last week, The People’s Bank of China announced it was extending the trial of e-CNY to several new provinces including Guangdong and Sichuan.
🔹 California Governor Gavin Newsom vetoed a bill that would create a license for companies operating in the crypto space. Newsom wrote in a Sept. 23 letter to the California State Assembly, “A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.”
🔹 Disney is hiring transaction lawyer for 'aggressive' NFT and DeFi plans. Disney CEO says the conglomerate is focused on “next generation storytelling.” Last year, it dropped the Walt & Mickey “Partners” NFT on the VeVe app for iOS and Android.
🔹 Ethereum gas fee has reached a two-year low. The number of users, transaction count on Ethereum, and transaction count on Layer 2s remain on a positive upward trajectory. Notably, interest in speculative NFT buying has dropped significantly.
🔹 China GPU prices drop to new lows after the Ethereum Merge. The Nvidia GeForce RTX 3080’s price dropped from $1118, or 8,000 yuan, to 5,000 yuan within three months, according to a Chinese merchant.
🔹 Hacker steals $950,000 from crypto vanity address as exploits continue. Hackers are continuing to steal cryptocurrency created by a tool called Profanity. The latest hack comes after Wintermute lost $160 million as a result of this issue.
🔹 Solana endures another decimating outage that causes the network to require a mainnet reboot. As a result, the SOL token has lost 4.12% of its value over the past day alone.
🔹 Federal reserve governor, Michelle W. Bowman, has stated that cryptocurrency activities raise a ‘significant number of issues’, particularly for the traditional banking sector. Bowman also stated that the regulatory landscape needs to be better prepared to handle the ‘emerging technology’ as it reimagines finance.
🔹The US stocks market has witnessed the most substantial quarterly decline since the likes of the 2008 financial crisis. This comes in light of Bitcoin
further decoupling from the stock market and being regarded as a more inflation-proof asset.
🔹Transit Swap suffers a decimating hack, whereby $21 million is stolen overnight. However, following negotiation initiatives, TransitSwap have been able to recover 70% of the total lost funds from two addresses.
Author: Gate.io Researcher Matthew Webster-Dowsing
This article represents only the researcher's views and does not constitute any investment advice.
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