October Cryptocurrency Market Outlook And How To Get A Headstart On Trading On ProEX

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Last Updated on October 13, 2022 by Bitfinsider

September was historically the month with the lowest performance for Bitcoin (BTC), although the cryptocurrency market continued to struggle throughout the month.

Ethereum (ETH) finally finished the long-awaited shift to a Proof-of-Stake consensus mechanism, but investors in ETH were disappointed because it did not serve as the positive trigger they had hoped for.

When looking ahead to the month of October, Wall Street is concentrating on the foreign market, inflation, and interest rates. Late in September, the pound’s value against the dollar reached a fresh all-time low as a result of the economic unpredictability in the United Kingdom.

Cryptocurrency, as an alternative to the pound, may appeal to certain investors as a more desirable investment option. However, the first few months of this year have shown that cryptocurrency is not a hedge against inflation.

September Crypto Market Performance

On September 15, the integration was successfully accomplished for Ethereum, however investors viewed the event as a “sell the news” opportunity.

The price of Ethereum increased by 32% in the two months preceding up to the conversion of ETH to Proof of Stake, in contrast to the price of Bitcoin, which decreased by 2.8% over the same time period. Following the completion of the merger, the price of Ethereum fell by 18%, while the price of Bitcoin only fell by 1.9%.

Alkesh Shah, an analyst at Bank of America, predicts that Ethereum’s market share would most certainly continue to decrease in comparison to other rival altcoins such as Tron (TRX), Avalanche (AVAX), and Solana (SOL).

According to Shah, “ETH’s significant price appreciation from mid-July through mid-August continues to reverse as investors digest that Ethereum’s transition to proof of stake does not address scalability concerns or high transaction fees and shift to a wait-and-see approach regarding future upgrades.” 

Continued worries among investors about the impact of rising inflation and interest rates have a negative impact on cryptocurrencies and other risk assets. The Federal Reserve raised interest rates by 75 basis points (bps) once again in September, marking the third straight increase in this amount.

The price of a bitcoin is relatively the same from month to month, but it is 58% down year over year. The price of Ethereum dropped by 12% in September and has dropped by 63% so far this year.

The Influence of a Strong Dollar on Cryptocurrency

The precipitous drop in the value of the British pound was one of the most important market drivers in the month of September. The sell-off was brought on by the announcement made by the incoming Prime Minister of the United Kingdom, Liz Truss, of an ambitious new economic stimulus program. This program featured tax cuts and investment reward programs.

After Truss’s revelation, the value of the pound plummeted to all-time lows in comparison to the dollar, which prompted the Bank of England to intervene and declare that it would start purchasing long-term government bonds issued by the United Kingdom. After temporarily surpassing over 4%, the yield on the 10-Year U.S. Treasury Note retreated to its previous level of 3.7%.

According to Marcus Sotiriou, an analyst with GlobalBlock, uncertainty and volatility in the market for fiat currencies may wind up being beneficial to the cryptocurrency market in the long term.

The current state of the market demonstrates that there is a lack of confidence in the Bank of England and the United Kingdom Treasury, as evidenced by the fluctuating movement of currency. This opens the possibility that cryptocurrencies may provide a solution to this issue, a way out of depending on a select few persons to supply economic stability, as stated by Sotiriou. “This raises the possibility that cryptocurrencies could provide a solution to this mess.”

The recent strength of the United States dollar indicates that investors are deeply concerned about the possibility of a downturn in the global economy, and they continue to view the greenback as the safest safe-haven. This is unfortunate for investors in cryptocurrencies.

Consolidation of the Cryptocurrency Industry

September was a month that saw no letup in the decentralized finance (DeFi) industry’s unraveling process.

A precipitous fall in cryptocurrency values at the beginning of 2022 caused a liquidity crisis among crypto investors and lenders, which in turn led to the collapse of the $60 billion TerraUSD/Luna market along with its related stablecoin, TerraUSD. The decline was also responsible for the largest stablecoin in the world, Tether (USDT), briefly deviating from its 1:1 peg to the US dollar in the month of May.

The liquidity crisis was the precipitating factor that led to the failure of the $10 billion cryptocurrency hedge fund Three Arrows Capital as well as the cryptocurrency lending companies Celsius and Voyager Digital. Late in September, a bankruptcy auction was won by cryptocurrency exchange FTX, which resulted in the acquisition of Voyager Digital’s assets for around $1.4 billion.

Sam Bankman-Fried, the billionaire owner of FTX, has been making aggressive acquisitions of assets in 2022, taking advantage of the volatility in the cryptocurrency market. The Voyager agreement comes after FTX extended a $250 million line of credit to the financially troubled cryptocurrency lender BlockFi in July. This gave FTX the option to acquire BlockFi in its entirety at some point in the future.

The month of September was full of significant changes for cryptocurrency lenders. Alex Mashinsky, the CEO of Celsius, tendered his resignation on September 27 as the company continues to work through the bankruptcy processes.

Institutional Opinions Regarding Cryptocurrencies

While individual investors in cryptocurrencies are still having a difficult time, institutional investors are growing their footprint in the cryptocurrency and blockchain area.

On September 9, Bankman-Fried FTX’s Ventures acquired a thirty percent ownership position in the alternative investing business SkyBridge Capital. Skybridge intends to invest a portion of the profit it receives from the transaction in the acquisition of forty million dollars’ worth of cryptocurrencies, which it will then record as an asset on its balance sheet.

Mitch Mechigian, a partner at Blockchain Coinvestors, claims that the cryptocurrency winter has not slowed down institutional investment in blockchain technology.

According to Mechigian, despite the fact that market conditions have had an effect on certain categories of institutional adoption, most notably balance sheet purchases, the crypto winter has not slowed the steady stream of institutional activity. “What is notable is that while market conditions have affected some categories of institutional adoption, most particularly balance sheet purchases,”

As far as Mechigian is concerned, there is no institutional bear market for cryptocurrencies. According to him, the top firms and financial players are continuing to put a significant emphasis on blockchain technology.

According to Shah, the merger might also make Ethereum more enticing to institutional investors.

“The significant reduction in energy consumption post-merge may enable some institutional investors to purchase the tokens who were previously prohibited from purchasing tokens that run on blockchains leveraging proof-of-work consensus mechanisms,” says Shah. “This may enable some institutional investors to purchase the token that was previously prohibited from purchasing tokens that run on blockchains leveraging proof-of-work consensus mechanisms.”

Bitcoin Price & Technical Outlook

Image from TradingView

The price of bitcoin is getting dangerously close to the psychological barrier of $20,000.

Bitcoin was unable to break above the trendline resistance, and the cryptocurrency is currently traveling in the opposite direction, aiming to cross below the 50-day moving average, which is giving immediate support near the psychological threshold of $20,000.

Even if leading technical indicators like the relative strength index (RSI) and moving average convergence and divergence (MACD) are still above 50 and 0 respectively, this continues to point to a buying trend. The “hanging man” candlesticks pattern, on the other hand, is indicating that there is a possibility of a negative correction today.

Bitcoin’s immediate support level remains at $20,000, and the level at $18,650 serves as an immediate support level below this level. If the price of Bitcoin were to decline, this level would serve as an immediate support level.

Ethereum Price & Technical Outlook

Image from TradingView

The price of ETH is currently stabilizing inside a small trading range of $1,300 to $1,400, presumably waiting for a compelling fundamental cause to drive a breakthrough. After recovering from the psychological support level of $1,300, the ETH/USD pair is trading modestly higher at this time. This can be seen from a technical perspective.

A modest rising triangle pattern can be seen on the daily time frame. This pattern offers immediate resistance close to the $1,400 level. Because patterns of ascending triangles have a high possibility of breaking out on the bullish side, the odds of an ETH’s bullish bias remaining strong are a direct result of this.

As a consequence of this, a positive crossover over $1,400 may make it possible for an uptrend to continue its progression to either $1,575 or $1,650. If the price of Ethereum keeps up as expected, one coin might hit $1,795 in value. On the other hand, support is still located in the vicinity of $1,300 and $1,227.

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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.