Bitcoin faced a decline of nearly 4% in October as ETF outflows marked the end of the month; however, volatility indicators, specifically Bollinger Bands, reached unprecedented levels.
Key Points:
- October Performance: Bitcoin recorded its worst performance in October since 2018, causing traders to reassess their cautious strategies.
- ETF Outflows: The return of outflows highlights increased risk aversion among derivatives traders, despite overarching favorable macroeconomic factors.
- Volatility Anticipation: Data indicates that the BTC price is likely to see significant volatility soon.
As BTC hovered around $110,000 last Saturday, market sentiment remained bearish following a disappointing October.
BTC/USD one-hour chart
BTC/USD one-hour chart. Source: Cointelegraph/TradingView
Weak Demand for Bitcoin as Uptober Concludes
According to reports from Cointelegraph Markets Pro, Bitcoin was recovering from losses experienced on Wall Street last Friday. There was significant selling activity both in U.S. exchanges and among Bitcoin ETFs.
Analytics firm Glassnode noted that ETF outflows suggest an increase in sell pressure from traditional finance investors alongside renewed weakness in institutional demand, tallying $191 million in outflows on Friday after a staggering $488 million on Thursday.
US Spot Bitcoin ETF Netflows
US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors
Additionally, Glassnode pointed out that the market has dismissed macroeconomic boosts such as the U.S. Federal Reserve’s interest rate cut. Although the Fed’s move was anticipated, its hawkish rhetoric regarding December has impeded positive sentiment.
“The initial rally faded as traders moved back into cautious mode, a shift clearly reflected in BTC’s options market.”
Crypto investor Ted Pillows remarked that we are witnessing a phase of “time-based capitulation” for Bitcoin. He stated:
“BTC time-based capitulation is happening now. But for this, Bitcoin needs to consolidate above $100,000. A weekly close below this level will confirm the downtrend.”
Trader Daan Crypto Trades cautioned that any decisive movement could only occur after BTC’s price crosses key resistance levels of $107,000 and $116,000.
"$BTC held $107K again and moved back to the mid-range. It’s just up one day, down the other at this point. We remain patient for $107K or $116K to break to see some momentum back into this market."
Anticipated Price Volatility Ahead
The monthly candle for October concluded with a disappointing 3.7% loss for BTC/USD, marking the worst performance since 2018. Traditionally, November has been the most favorable month for Bitcoin, with an average increase of 42.5% since 2013 according to CoinGlass.
BTC/USD monthly returns
BTC/USD monthly returns (screenshot). Source: CoinGlass
Commentator Matthew Hyland mentioned that volatility indicators suggest a significant uptick of market activity on the horizon. He noted:
“Monthly Bollinger Bands have reached the most extreme levels in Bitcoin’s entire history.”
This tightening of Bollinger Bands has caught the attention of traders and analysts, especially since its creator, John Bollinger, suggested that it is time to monitor potential volatility in both Bitcoin and leading altcoins.
“This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making decisions.”
