October Market Review | Bybit Alpha Hunter, what should we pay attention to next?

This article is provided by Bybit

Just one month into the fourth quarter, Bitcoin has already broken through its all-time high! Bitcoin's expected annual return rate has also risen to 110.8%, indicating that the "October attack" of Bitcoin is expected to continue until the end of this quarter. However, will the subsequent launch of Bitcoin-linked ETFs show the same strong bullish trend?

Rise, Rise, Cash Out

The launch of the first Bitcoin futures ETF by ProShares has sparked enthusiasm among investors. As a result, Bitcoin reached a historic high, surpassing $66,000. Expectations of this watershed moment have led to a surge in long positions in the market, causing a 12% spike in the premium of Chicago Mercantile Exchange (CME) options and open interest contracts reaching the highest point in 8 months, totaling $3.22 billion. These events all occurred around the launch of the ETF on October 18, 2021, fueling the continued Bitcoin bull market.

Whales accumulated Bitcoin in early October, further driving up prices and contributing to the positive development of the Bitcoin market. However, the whale ratio dropped to 0.39 at the time of writing this article, indicating that some whales are cashing out their Bitcoin profits from exchanges. Therefore, the market currently anticipates Bitcoin to retrace to support levels between $60,000 and $62,000.

Does the decrease in the whale ratio on Bitcoin exchanges indicate an overheated market? After a prolonged period of increase, the 30-day 25△ risk reversal indicator for cryptocurrencies fell into negative territory on October 22, 2021, aligning with a short-term pullback. However, not to worry! With the 30 and 180-day 25△ risk reversal indicators returning to positive territory, the market is taking a long-term bullish stance.

Slowing Pace, Slower Dance

As tightening policies draw near, significant fluctuations in the cryptocurrency market may occur in November. After November, ATM IV will sharply increase, reflecting the volatility. Whether the upward trend in cryptocurrencies can continue largely depends on the speed of tightening. In 2013, hastily reducing bond purchases led to a year-long "taper tantrum": high bond yields and panic selling in the stock market.

With global inflation risks rising and U.S. unemployment rates decreasing, the Federal Reserve is cautiously implementing moderate tightening measures and will meet again on November 2nd and 3rd, 2021, to finalize details. Mark your calendars! At that time, Bitcoin will attempt to retest the current support levels and continue to oscillate within a range.

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