As we enter the second week of October, geopolitical instability is on the agenda in the markets. While this issue scares many investors, what can we expect to see in the markets? Bitcoin, which failed to hold at $28,000 and was trading at $27,496 at the time of writing, may rise in such a market environment along with the opening of Wall Street, the rise of oil and gold, and the strengthening of the US dollar.
Fed’s Interest Rate Decision and Bitcoin
US data has always played a triggering role in Bitcoin prices. Despite the methods highlighted by Fed officials for inflation after the employment data announced last week, the employment level has not yet reached the desired levels. This situation could lead to a new interest rate hike decision in the US.
Investment instruments like Bitcoin, which do not guarantee income and are considered risky, have always reacted negatively to interest rate decisions. The decrease in liquidity in an environment where income is guaranteed will also put pressure on the price of Bitcoin. Popular investor CrypNuevo made the following comment over the weekend:
“A good CPI data on Thursday may provide a chance to get out of this range, while a hot CPI will push us back to the lowest levels of the range with the proposition that the Fed may be forced to raise rates by 25 basis points.”
However, some analysts believe that the Fed will leave interest rates at their current levels. According to the data obtained by CME Group’s data analysis service FedWatch, analysts are making transactions based on the expectation that interest rates will remain unchanged in the decision to be announced on November 1.
The important data to be announced in the US this week will be the Consumer Price Index (CPI) and the Producer Price Index (PPI). In addition, the market will focus on the comments of 12 Fed officials this week and the minutes of the previous interest rate decision. The minutes will be announced to the public on October 11. The financial news source The Kobeissi Letter said the following about this week: “A big week for inflation and the Fed,” and added:
“In addition, the markets will react to geopolitical tensions starting from this weekend. Volatility is the new normal.”
Changing Bitcoin Metrics
Another notable topic of this week will be the Network Value to Transactions (NVT) signal in Bitcoin network value. This data enables predictions of bottoms and tops for Bitcoin, and it stands out this week with on-chain metric volatility. This metric, presented by Dmity Kalinckin, can be defined as a “PE ratio” for Bitcoin. NVT compares Bitcoin’s market value with the daily chain transaction value and tries to predict the bottom and top points in Bitcoin price through this method.
The latest data from on-chain data analysis platform Glassnode shows that NVT has reached its highest level in the last five years. The metrics influencing this data have undergone various updates recently. The reason for this is the changes in Bitcoin’s supply dynamics.
IntoTheBlock, a data analysis platform, commented on the NVT increase, suggesting that this record level will pave the way for a significant adoption process. According to the platform, the metrics to be considered in Bitcoin are changing:
“Transaction value and volume were once the measures used. However, the recent increases in NVT ratios imply that Bitcoin’s value is now moving independently of operational utility and implies an increasing role as a store of value.”
