Crypto Market Forecast: Week of October 25th 2022

Bitcoin (BTC) dropped by 1.2% this week and currently trades at ~US$19.28K. Ether (ETH) had a moderate 1.1% climb over the week, currently sitting at ~US$1.34K. Binance-coin (BNB) fell by 0.64% and now trades for US$273.

Binance Pool has launched a program to provide $500M worth of loans to crypto asset miners. The company’s press release says that its loans will range between 5-10% interest on 18 to 24-month terms.

The “crypto winter” has been harsh on miners, and loans of this type likely come as a welcome relief. Bitcoin’s mining difficulty remains at its all-time high, and global supply chain disruptions have pushed up energy prices in some parts of the world — increasing costs for miners.

On another front, institutional investment now dominates the lion’s share of Coinbase’s trading volume by customer segment. In fact, Q1 2019 was the last time the retail segment had a dominant share (50%+) of Coinbase’s volume. Since then, institutions have taken the lead on the giant US digital asset exchange.

Following the May 2022 Terra/LUNA collapse, however, overall volume has dropped; a “crypto winter” has begun, and Q2 2022 finished off with institutional investment comprising an unprecedented ~79% of Coinbase trading volume.

Regulatory uncertainty continues as the SEC and CFTC chairs continue to make public statements, contradicting one another, as to whether Ether (ETH) is a security. Meanwhile, an ever-present awareness of a pending crypto regulation framework remains, which adds to bearish market sentiment.

As for a timeframe for crypto asset regulation, representative (D) Jim Hines of Connecticut estimated in an interview last week that crypto regulation would be on its way sometime in 2023 or 2024 (coincidentally, just in time for Bitcoin’s next “halving” event, which its price cycles have historically been sensitive to).

Meanwhile, across the Atlantic, the UK’s new Prime Minister and former Chancellor Rishi Sunak is generally considered “crypto-friendly” and aspired to turn the UK into a “crypto hub”.

Crypto news for the weeks ahead

2 November

The Federal Open Market Committee (FOMC) will be meeting. Possible additional interest rate hikes will be announced. Markets are projecting a 99.7% probability(!) of 75 bps rate hikes, which would raise the target rate from 3.75-4.0%.

10 November

The US Bureau of Labor Statistics will release its Consumer Price Index (CPI) numbers for the month of October. This is a key indicator the Fed will look to when it considers even further rate hikes going forward.

Top 10 Crypto Summary

BNC’s top 10 crypto assets by market cap mostly traded sideways this past week — with the notable exception of Solana (SOL) and Cardano (ADA), which dropped by ~8.2% and ~3.8% respectively. Solana’s price is likely to have been impacted by news of another high-profile hack this month of the so-called “Mango Markets” based on its blockchain.

Bitcoin Price Chart

Glassnode’s analysis for week 42 looked at times of previous relative price stability (back in April 2021 and right before the Terra/LUNA crash of May 2022) and noted how they preceded “serious volatility” events. As to which direction a wave of volatility may be headed now, the metrics don’t overwhelmingly point in one particular direction or another.

Readers from last week’s BNC newsletter may remember a similar topic of analysis (a “calm before the storm”). Glassnode’s analysis for week 42 includes additional metrics, analyzing what futures markets tend to be indicating.