Summary
- Wintermute said Bitcoin is defending $82,500 support and that a break above $87,000 could signal further gains.
- It said markets are largely pricing in a hold in the benchmark rate at the FOMC meeting on Oct. 28, but cautioned that a hawkish hold could bring forward expectations for a December rate hike and push Treasury yields higher again.
- Wintermute said expected returns for Bitcoin and Ether are more attractive than for altcoins, and that alongside currently low implied volatility in the options market, the narrow price range centered on $82,500 could soon give way.
Bitcoin is holding a key support level near $82,500, with price volatility potentially set to increase around the Federal Open Market Committee meeting on Oct. 28, crypto market maker Wintermute said.
In a market report released on Oct. 20, Wintermute said Bitcoin has traded near $82,500 for more than three weeks. The firm said the level had acted as resistance during the rally but is now functioning as support.
Bitcoin briefly fell below $82,500 last week but rebounded to close the week above that support, Wintermute said. A decisive move above $87,000 could signal further upside. A clear break below $82,500, by contrast, could turn the level back into resistance and leave room for a drop to the low-$70,000 range.
The macroeconomic backdrop has recently weighed on Bitcoin. US consumer prices rose 3.7% from a year earlier, up from 3.4% previously. Core CPI also increased 0.3% from a month earlier, above market expectations for 0.2%.
Concerns over investment tied to artificial intelligence also pressured sentiment toward risk assets. Over the past week, the Nasdaq fell 5.52%, while Bitcoin slipped 1.99%, showing relative resilience. Wintermute highlighted that Bitcoin outperformed the Nasdaq by about 3.5 percentage points.
Interest-rate expectations were also cited as a key variable. Markets are treating a hold in the benchmark rate at the Oct. 28 FOMC meeting as the base case, while pricing in roughly a 15% to 17% chance of an increase. Still, Wintermute said a hawkish hold from the Federal Reserve could bring forward expectations for a December rate hike and push Treasury yields higher again.
The altcoin market has been weaker than Bitcoin. Major altcoins fell an average of 5.69% over the past week, while capital shifted out of altcoins and into larger digital assets such as Bitcoin and Ether.
Wintermute said risk-adjusted return expectations currently look more attractive for Bitcoin and Ether than for altcoins. A broader altcoin rally is more likely to resume only after Bitcoin moves higher first.
The firm added that implied volatility in the options market remains low. With the FOMC meeting, the US midterm elections and third-quarter earnings reports approaching, Wintermute said the narrow trading range centered on $82,500 is likely to break soon.
