Key Takeaways
What is the crypto sentiment like now?
It has been fearful over the past two weeks, and the recent volatility pushed sentiment into the “Extreme Fear” zone once again.
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.
The crypto market sentiment shifted to “Extreme Fear” once again on Wednesday, the 22nd of October.
The Crypto Fear and Greed Index has been hovering between Fear and Extreme Fear values since the market crash on the 10th of October.
Over the past 24 hours, Bitcoin [BTC] experienced increased volatility. It rallied 5% from $108k to $113.4k, before falling back to $108k within 8 hours. This volatility has affected the wider market.
CoinGecko data showed that the various altcoin sectors were all down 2% -5% over the past 24 hours. In a nutshell, this was crypto today.
The decentralized exchange (DEX) sector was among the worst performers. Aster [ASTER] and Pump.fun [PUMP] down 10.2% and 4.7% in 24 hours, while Hyperliquid [HYPE] was down 1.9%.
Source: Axel Adler Jr on X
The quick increase in volatility caught many traders offside in the derivatives market. CoinGlass data showed that the past 24 hours saw $281 million worth of positions liquidated.
It was quite evenly split among long and short positions.
Long positions liquidations were worth $128.95 million, while shorts worth $152.21 million were liquidated. 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 macro outlook is positive
Source: TOTAL on TradingView
Despite the deep correction earlier in October and the losses of the past 36 hours, the total crypto market remained above the $3.56 trillion support from late July. This was an encouraging sight for long-term investors.
The recent spate of bearishness and increased volatility will likely not die down right away. Uncertainty around the government shutdown remained.
The September consumer price index report will be released on Friday and will also command market attention, likely driving greater volatility again.
Crypto Investment Specialist at 21Shares, David Hernandez, shared his commentary on Bitcoin and the broader macro conditions.
“Macro context remains quietly supportive: long-end yields drifted lower, gold is again pressing toward all-time highs, and recession risk is still not priced as imminent. Bitcoin quietly benefits from the same “strategic allocation + potential store-of-value” flows, effects which are not felt on the intraday.“
He added,
“With ETF AUM resilient, policy optionality skewed dovish, and CPI only a threat if it absolutely melts faces, Bitcoin is coiled and ready to spring upward. Any CPI relief or continuation of the immaculate disinflation narrative re-opens the opportunity window quickly.”
Traders should beware of short-term volatility. Less experienced traders have no business trading on margin in these conditions. Long-term holders and investors can wait for the coiled BTC to spring higher.
