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Cryptocurrency exchange Bitfinex evaluated the latest outlook in the markets in its weekly “Bitfinex Alpha” report.
According to the report, weak inflation data and easing US-China trade tensions have helped Bitcoin hold in the $113,600 range, signaling a gradual return of optimism in the crypto market.
Bitfinex data shows that market volatility has decreased significantly following the record $19 billion liquidation on October 10th. BTC options open interest decreased by approximately $7 billion to $31 billion, the sharpest weekly decline since June. Realized volatility fell to 44.1% over the 30-day period and 27.9% over the 10-day period, suggesting that traders are now anticipating a continued consolidation rather than a sudden breakout.
Bitcoin spent most of the week below the 0.85 quantile level mentioned in last week’s report, the cost floor for short-term investors. However, lower CPI data and signs of easing US-China tariffs helped BTC break above these resistance levels. According to Bitfinex, a sustained hold above $113,600 would confirm the market has returned to its “accumulation phase.” Otherwise, the price risks a pullback to $97,500.
On the macro front, US inflation rose by 0.3% month-over-month and 3% year-over-year in September. This rate is seen as progress toward the Fed’s goal and reinforces expectations for a late-October interest rate cut. However, the Bitfinex report notes that underlying this positive outlook are “two distinct economies”: one bolstered by record stock market gains, while the other still grapples with high food, energy, and service prices.
The US’s public debt, which has reached $38 trillion, also poses a risk to global financial confidence. Its debt-to-GDP ratio of 124% and rising interest expenses are forcing the country into a cycle of “borrowing to pay off existing debt.” Japan and China’s reductions in their US bond holdings are increasingly shifting this burden to domestic institutions.
On the Asian front, Japan’s Financial Services Agency (FSA) is preparing to allow domestic banks to offer cryptocurrency trading and custody services. This move represents a fundamental shift from Japan’s previously strict crypto policies.
In the overall picture, Bitfinex concludes that volatility in the markets is decreasing, optimism is gradually returning, but a major bullish breakout seems difficult in the near term.
*This is not investment advice.
