Key Takeaways
What is the crypto sentiment like now?
Things have been scary over the past two weeks, with recent volatility pushing sentiment back into the ‘Extreme Fear’ zone.
What’s next for Bitcoin and the crypto market?
The rest of the week will likely see another bout of volatility, but the macro outlook showed potential for a Bitcoin recovery.
Sentiment on the crypto market shifted again to ‘Extreme Fear’ on Wednesday, October 22.
The Crypto Fear and Greed Index has fluctuated between the values of Fear and Extreme Fear since the market crash on October 10.
Over the past 24 hours, Bitcoin [BTC] experience greater volatility. It rose 5% from $108k to $113.4k, before falling back to $108k within 8 hours. This volatility has affected the broader market.
CoinGecko data showed that the various altcoin sectors are all down 2%-5% over the past 24 hours. In short, this was crypto today.
The decentralized exchange sector (DEX) was among the worst performing sectors. Aster [ASTER] and Pump.fun [PUMP] fell 10.2% and 4.7% in 24 hours, while Hyperliquid [HYPE] fell by 1.9%.
The rapid increase in volatility left many traders in the derivatives market sidelined. CoinGlass data shows that $281 million worth of positions were liquidated in the last 24 hours.
It was pretty evenly split between long and short positions.
Liquidations of long positions were worth $128.95 million, while shorts were liquidated worth $152.21 million. Analyst Axel Adler Jr pointed out that the liquidation index rose above 3 sigma.
This implied high volatility and was not an everyday occurrence in the market.
Bearish on crypto today, but the macro outlook is positive
Source: TOTAL on TradingView
Despite the deep correction earlier in October and losses over the past 36 hours, the overall crypto market remained above the $3.56 trillion support at the end of July. This was an encouraging picture for long-term investors.
The recent wave of bearishness and increased volatility is unlikely to disappear immediately. The uncertainty surrounding the government shutdown remained.
The September Consumer Price Index report will be released on Friday and will also capture the market’s attention, likely to increase volatility again.
Crypto Investment Specialist at 21Shares, David Hernandez, shared his commentary on Bitcoin and the broader macro conditions.
“The macro context remains quietly supportive: long-term interest rates have fallen, gold is heading back to record highs and recession risk is still not priced in as imminent. Bitcoin is quietly benefiting from the same flows of ‘strategic allocation + potential store of value’, effects that are not felt in the intraday market.“
He added:
“With ETF AUM resilient, policy optionality lopsided and CPI only a threat if it absolutely melts faces, Bitcoin is coiled and ready to bounce higher. Any CPI relief or continuation of the spotless disinflation story quickly reopens the window of opportunity.”
Traders should be wary of short-term volatility. Less experienced traders cannot trade on margin under these conditions. Long-term holders and investors can wait for the rolled BTC to jump higher.