September was a month with lateral movements in the crypto market. Therefore, investors are expectant regarding the next movements in cryptocurrencies in this new month:
Will they hit new yearly lows or will we see significant increases?
Bitcoin has a lot to tell us about this question, since in recent weeks its price has moved in the range of $18,500 and $22,500. The $18,500 serves as a good support, which apparently only in a really pessimistic scenario could be broken. However, this month will be decisive for that support and later you will understand the reasons.
For its part, in ETH, after the week starring The Merge and the subsequent fall, its price moved laterally in the range of $1,300. Said $1,300 has been a good support and when the price tried to break it it led to a bounce.
Some analysts have highlighted the fact that BTC whales that count between 100 and 10,000 BTC continue to dump. The evidence of this is that during the past month these addresses have reduced their supply by 0.4%. Which, furthermore, goes against the thesis that we are facing a phase of accumulation of the whales.
On the other hand, the crypto market capitalization stands at $934 billion. The $900k million being a good support for said capitalization.
Inflation will dictate the next big crypto market move
Inflation has played an important role in the prices of the crypto market, since based on it, the FED has defined its interest policy. So the development of inflation in this month of October plays a key role for the next interest rate update in November.
It is worth noting that the PCE of the United States, which is the index preferred by the Federal Reserve, exceeded the forecast of 4.7% year-on-year, reaching up to 4.9%. The development of this measure during the month of October is key to determining the next interest rates.
Several economists are not optimistic about the development of inflation this month and therefore predict that the next rise in interest rates will be 75 points again. The vice president of the FED in New York stressed that “policy will have to be restrictive (…) We are committed not to back down prematurely.”
The upcoming interest rates are a real test for the crypto market and if they are drastic, we will have the opportunity to check if the prices have really bottomed out or can still exceed the yearly lows..
Economist Sal Guatieri believes “there is more pain ahead as the economy heads toward a moderate recession in the first half of next year.”
For its part, the US dollar has fallen 0.12% in the DXY index in the last day. Which is a bit of a relief after DXY headed for all-time highs. Let us remember that the strengthening of the dollar leads to fewer investments in risky assets such as cryptocurrencies.
Regulations will be a hot topic in October
Currently, the crypto market is heading towards a series of important regulations that could make room for the influx of institutional investments. The legal loopholes in the regulation of cryptocurrencies generate uncertainty in institutional investors. Therefore, regulations can lead to an influx of investors.
In this area, the European Union is the leader and, therefore, we must be attentive to the opinions of Brussels. It is precisely the MiCA law that aims to establish the necessary laws in Europe and it is a legislative proposal from the EU for the regulation of cryptocurrencies. Although it is true that the European market is not the largest for crypto assets, its laws in the digital field have influenced those of the United States. This is known as “the Brussels effect”.
Speaking of government measures, the month of September was a bullish one for XRP, which rose as much as 50% as its victory against the SEC became evident. Of course, beyond the results of the legal disputes, a clear regulation will be a good motivator for the access of new investors to the crypto market, as we have said.
However, it must also be taken into account that the legal landscape could really improve well into 2023, when such regulations advance in the midst of government bureaucracy. In the following months before 2023 we will surely only see some frameworks and discussions.
Remember that the above article is not investment advice. Get professional advice and education before investing in cryptocurrencies.