Market Wrap: Bitcoin Hovers at $19K to Remain Within Current Range

Bitcoin and ether were flat, decentralized finance (DeFi) tokens were up amid moderate trading volume as investors continued their fretful watch of wider economic indicators.

The DeFi token rally was a rare exception in a market that has been moving sideways for weeks, said Riyad Carey, a research analyst at crypto data firm Kaiko.

The CoinDesk Market Index (CMI), a broad-based market index that measures the performance of a basket of cryptocurrencies, was relatively flat, falling 0.80%.

Traditional financial markets declined on Wednesday, with the tech-heavy Nasdaq off 1.1% and the Dow Jones Industrial Average (DJIA) and S&P 500 each falling by a few fractions of a percentage point.

In major macroeconomic data, U.S. housing starts plunged 8.1% to 1.439 million in September, falling slightly short of the consensus estimate but reflecting a sagging of the once-torrid housing market. However, September housing permits, an indicator of future construction, rose by 1.4% over August.

Global inflation continued to tick higher, with Great Britain (10.1%) and Canada (6.9%) each reporting higher increases in prices than expected. Both countries recently increased their key interest rates by 0.50% and 0.75%, respectively. Hotter-than-expected inflation increased the likelihood that both countries would raise interest rates aggressively, similar to the U.S., where the Federal Reserve’s Federal Open Markets Committee is expected to approve a fourth consecutive 75 basis point rate hike in November.

In commodities, Brent crude oil, a measure of energy markets, was recently trading slightly down but still hovering well over $90 per barrel, up more than 15% from the start of the year. Safe-haven gold declined 1.4%.

On a technical basis, the decision whether to go long bitcoin at current levels will depend on the investor’s time horizon.

For investors with short-term trading horizons, BTC appears to be offering few opportunities. The average true range (ATR) for BTC has declined by close to 74% year to date, taking with it the volatility needed for short-term traders to generate additional alpha.

The opportunity set for long-term holders appears stronger as support for BTC’s price is establishing itself near current levels. The lack of volatility should prove beneficial in this regard because investors with the luxury of waiting can accumulate BTC at a more favorable price.

The most recent Commitment of Traders report, released each Tuesday by the Commodity Futures Trading Commission, shows that reportable positions for asset managers are now 80% long and 20% short bitcoin futures.

BTC’s Relative Strength Index (RSI), a metric commonly used as a proxy for momentum, is in neutral territory with a reading of 45.7. Traditionally, RSI readings below 30 imply that an asset is “oversold,” and readings over 70 imply that an asset is “overbought.”

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk Market Index (CMI) is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.