On Thursday, the cryptocurrency market was digesting a 9% collapse in the evening hours the day before. The leading media wrote off a significant rollback on the message about the alleged beginning of the bankruptcy of the developer Evergrande (HK:3333).
Apparently, these experts relied on the reaction of the market in the past, when it was in the correction phase in September and used, among other things, Chinese FUD as an excuse. But times are different now – bitcoin is being pushed up by rising inflation expectations, and reaching a new historical maximum occurred just at the acceleration of inflation to the maximum since 1990. Its pullback is due to something else – the strengthening of the dollar, which was facilitated by a sharp increase in government bond yields.
Anyway, this driver has become just a trigger.
The scale of the downward movement was given by significant leverage. Against the background of a decrease in the activity of institutions, the role of physicists has increased, who have joined the game called “$100,000 by the end of the year.”
According to CoinGlass, the volume of liquidations of long positions on indefinite contracts for the second half of October 10 amounted to $532 million, the maximum since October 26. The good news is that there was no repeat on September 7, when bitcoin was losing 19% at the moment. Thanks to this, financing rates have returned to the corridor of reasonable values.
The exchange rate rebounded from the consolidation zone above $63,000, in which whales had previously formed positions. Continued consolidation will allow you to take off steam and gain new energy to continue growth. So far, the conclusion is confirmed that in November the FOMO effect will be self-regulated by periodic liquidations of longs. Or even simpler – volatile growth. It’s just right to “hang your shoulders in grams” (for those who know how to “cook” with them).
On Friday, it is worth paying attention to the evening speech of Fed representative John Williams at 20-10. Biden wants to fight inflation, but does not want the collapse of the markets due to falling ratings, while in a year the midterm elections to the US Congress will take place. Therefore, the fight against high gasoline prices has been announced, but criticism of the Federal Reserve has not been heard.
The curtailment of the quantitative easing program, as previously announced, will begin in mid-November. But Williams will not want to substitute his patron with talk about the need to revise the pace of policy normalization (few openly talk about this at the Fed). For this reason, inflation expectations will have no reason to decrease.
Therefore, bitcoin and through correlation with it, other cryptocurrencies have a good chance to update record highs on a regular basis by the end of the year.
