(Kitco News) – Volatility returned to the crypto market on Friday after higher-than-expected data related to core personal consumption expenditures (PCE) – both month-over-month and on an annual basis – added to the likelihood that the Fed will need to continue to raise interest rates for the foreseeable future.
After climbing to a multi-decade high earlier in the week, the DXY has declined 2.15% from its peak, which provided some relief to asset prices. However, developments in Europe – including record-high Consumer Price Index (CPI) readings such as a 17.1% year-on-year increase in the Netherlands – squashed any momentum generated by the pullback in the U.S. dollar.
Data from TradingView shows that Bitcoin (BTC) experienced a quick 3% spike on a single hourly candle and hit an intraday high at $20,165 in the early trading hours on Friday before profit taking saw it pullback to support at $19,700.
BTC/USD 1-hour chart. Source: TradingView
The sudden spike in BTC price was not a surprise to Kitco senior technical analyst Jim Wyckoff, who had mentioned that “Prices have been grinding sideways in quieter fashion recently,” in his morning Bitcoin update, which had “created a ‘collapse in volatility’ despite keener risk aversion in the general marketplace.”
“The collapse in volatility suggests a bigger price move is on the horizon,” Wyckoff foreshadowed, prior to today’s explosive move higher by Bitcoin. Still, the analyst warned against going all in just yet, as “bears still have the slight overall near-term technical advantage.”
“A move in BC prices above the September high would empower the bulls to suggest a price uptrend developing, and a move below the September low would recharge the bears and restart a price downtrend,” Wyckoff advised.
Bitcoin as a hedge against currency collapse
The topic of Bitcoin as an inflation hedge remains highly debated in the face of the “digital gold’s” poor performance thus far in 2022 amid rising global inflation, but its use as a hedge against currency collapse is gaining traction.
As shown in the following tweet from the crypto market intelligence firm Messari, the demand for purchasing BTC with the euro and British pound spiked to all-time highs over the course of this past week as the dollar went on a rampage.
As these individuals from the UK and EU see the value of their currency collapsing, they effectively selling the pound and euro for #Bitcoin.
If this were just a trade to capture the volatility, we would have seen similar spikes in May 2021 and certainly in March 2020. pic.twitter.com/aMYOun6Pzx
— Messari (@MessariCrypto) September 29, 2022
One of the most notable developments is the fact that Bitcoin has remained relatively stable in the face of the surging dollar while competing fiat currencies collapsed, a possible indication that the wider public is starting to wake up to the value BTC has to offer.
As for now, weary crypto traders may have something to look forward to as Friday brings the end of the month and the end of Q3, making way for Q4, which has historically been positive for Bitcoin and the crypto market.
Historically Q4 has been Bitcoin’s best performance by far, with an average quarterly return of +103.9%
October and November have been its best performing individual months with avg returns of 24% and 58%
Does seasonality matter? Let’s see.
— Will Clemente (@WClementeIII) September 30, 2022
Altcoins finish the week in the green
On the whole, it was a positive day for the altcoin market, with a majority of tokens in the top 200 seeing at least slight gains on Friday.
Daily cryptocurrency market performance. Source: Coin360
At the time of writing, Bitcoin is up 4.8% on the weekly chart and trading at $19,751, while Ether (ETH) is up 4.3% on the weekly chart and trades at $1,354. Notable gainers on Friday include UNUS SED LEO (LEO), which climbed 11.6%, a 9.6% gain for XRP and a 7.57% increase for Quant (QNT).
The overall cryptocurrency market cap now stands at $950 billion, and Bitcoin’s dominance rate is 39.6%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.