Bitcoin rises 3% as volatility rises amid persistent inflation data
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(Kitco News) – Volatility returned to the crypto market on Friday after higher-than-expected data related to core personal consumption expenditures (PCE) – both month-on-month and year-on-year – increased the likelihood that the Fed will have to continue raising interest rates in the foreseeable future.
After climbing to a multi-decade high earlier in the week, the DXY has fallen 2.15% from its peak, providing some relief for asset prices. Developments in Europe – including record consumer price indices (CPIs) such as a 17.1% year-on-year increase in the Netherlands – crushed any momentum generated by the decline in the US dollar.
Data from TradingView shows that Bitcoin (BTC) experienced a rapid 3% gain on a single hourly candle and hit an intraday high of $20,165 in the early hours on Friday before profit-taking saw it return to support at $19,700.
BTC/USD 1 hour chart. Source: TradingView
The sudden rise in the BTC price was not a surprise to Kitco senior technical analyst Jim Wyckoff, who had mentioned that “Prices have been grinding sideways in a quieter manner recently,” in his morning Bitcoin update, which had “created a “collapse in volatility” despite stronger risk aversion in the general market.”
“The collapse in volatility suggests a bigger price move is on the horizon,” suggested Wyckoff, ahead of today’s explosive move higher by Bitcoin. Still, the analyst cautioned against going all-in just yet, as “bears still have the slight overall technical advantage in the near term.”
“A move in BC prices above the September high would embolden the bulls to suggest a price uptrend is developing, and a move below the September low would recharge the bears and restart a price downtrend,” Wyckoff said.
Bitcoin as a hedge against currency collapse
The topic of Bitcoin as an inflation hedge is still highly debated in the face of the “digital gold’s” poor performance so far in 2022 amid rising global inflation, but its use as a hedge against currency collapse is gaining ground.
As shown in the following tweet from crypto market intelligence firm Messari, demand to buy BTC with Euros and British Pounds soared to all-time highs this past week as the dollar took a hit.
As these UK and EU individuals see the value of their currency collapse, they are effectively selling the pound and euro for #Bitcoin.
If this was just a trade to capture volatility, we would have seen similar highs in May 2021 and certainly in March 2020. pic.twitter.com/aMYOun6Pzx
— Messari (@MessariCrypto) 29 September 2022
One of the most notable developments is the fact that Bitcoin has remained relatively stable in the face of the rising dollar while competing fiat currencies have collapsed, a possible indication that the wider public is starting to wake up to the value BTC has to offer.
For now, weary crypto traders may have something to look forward to as Friday brings the end of the month and the end of Q3, making way for Q4, which has historically been positive for Bitcoin and the crypto market.
Historically, Q4 has been Bitcoin’s best performer by far, with an average quarterly return of +103.9%
October and November have been the best individual months with average returns of 24% and 58%
Do seasonality matter? Let us see.
— Will Clemente (@WClementeIII) 30 September 2022
Altcoins end the week in the green
Overall, it was a positive day for the altcoin market, with a majority of tokens in the top 200 seeing at least a small increase on Friday.
Daily performance in the cryptocurrency market. Source: Coin360
At the time of writing, Bitcoin is up 4.8% on the weekly chart and is trading at $19,751, while Ether (ETH) is up 4.3% on the weekly chart and is trading at $1,354. Notable winners on Friday include UNUS SED LEO (LEO), which rose 11.6%, a 9.6% increase for XRP and a 7.57% increase for Quant (QNT).
The total cryptocurrency market cap is now $950 billion, and Bitcoin’s dominance rate is 39.6%.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
