Bitcoin Sees Lackluster Price Action for Third Successive Weekend In October

Bitcoin (BTC) has remained grounded at $19,150, swinging closely around this narrow consolidation range on Sunday. The lusterless movement in the last 24 hours marks the third weekend of dull trading action for the flagship cryptocurrency. The zoomed-out BTC/USD trading chart shows that Bitcoin has been unable to break out of the $19K and $24K bounds where it has lingered for months.

Weekend price action

Bitcoin briefly slipped below the $19K mark early on Friday, sliding below $18,800 before recovering to the current range where it has since been trading rigidly. Bitcoin Fear & Greed Index chart accentuates the markets' negative sentiment, with traders bearing ‘extreme fear' emotions for the last four weeks.

The constrained price movement comes against a background of strong macro correlation, a global market liquidity steamroller, interest rate hikes, and rising US bond yields. The cumulative impact of these factors has been reflected in the on-chain exchange flow. Glassnode reported a daily net flow of -$27.3 million for Bitcoin yesterday, $262 million in inflows and $289.3 million in outflows.

On-chain activity and correlation with macro market

Santiment shared in an Oct. 18 tweet that Bitcoin addresses for the 10 and 100 BTC group, as well as 10,000 and 100,000 BTC, reached their highest level since last February. Meanwhile, addresses with 0.1 and 10 BTC accounted for 15.9% of the total supply. While the latter group's supply ratio was at its highest, Bitcoin addresses holding 100 and 10,000 BTC had the lowest-ever supply share in more than three years.

Meanwhile, market data shows that Bitcoin's correlation with macro markets has traced new peaks in 2022. The asset's 30-D Pearson correlation index resumed an uptrend after a brief hiatus since Oct. 7.

Notwithstanding immediate resistance above the current price mark, Bitcoin has displayed relative resilience. In a recent LinkedIn post, Bloomberg Intelligence commodity strategist Mike McGlone observed that the leading crypto is on its way to outperforming most major assets. The veteran analyst earlier noted that Bitcoin's relative discount to hash rate had touched levels not visited since Q2 2020.

“Returning to its propensity to outperform most assets may be a matter of time, as mainstream adoption progresses and adaptive changes in US accounting standards give it a lift.”

Separately commenting on the crypto and traditional markets, Edward Moya, an analyst at Oanda, cautioned that Bitcoin remains under test.

Bitcoin's uniqueness and utility provide an unprecedented opportunity

The current Bitcoin market doesn't reflect the real potential of Bitcoin, at least according to Daryl Ho, DBS Bank's Investment Strategist and Senior Vice President. In a media briefing on Oct. 14, the bank executive said Bitcoin's lack of need for a centralized entity makes the token a unique asset. At a time when the leading asset is down by over 70% from its all-time high figures, Ho advanced that solely focusing on the token price action strips the accurate reflection of its inherent benefits.

He added that the volatility falls out of the question when considering the utility that Bitcoin provides, citing earlier this year when users could not liquidate some of their rationed assets on traditional exchanges. The case is different for Bitcoin users, who could raise cash and liquidity as its markets are open 24/7.

Price fluctuations don't dispel Bitcoin as a unique, DBS Bank briefs

The Senior VP added that Bitcoin continues proving itself relevant by decentralizing finance rather than having users go through central clearing parties, as with fiat systems, say when they are completing asset trades. He concluded that volatility blurs Bitcoin's actual inimitability and benefits.

DBS Bank has been scaling its crypto operations despite the ongoing bear market, particularly due to its class of corporate clients who remained unfazed by the state of the crypto market, instead taking advantage to acquire BTC cheaply. According to DBS Digital Exchange (DDEx), the bank's digital asset trading platform, trading volumes surged four times in June, compared to the start of the bearish period in the previous two months (market crash in April).

To learn more, visit our Investing in Bitcoin guide.

Mainstream adoption trajectory looks compelling despite a lasting bear market

The massive pressure of markets (not just crypto) potentially dipping further would make it seem like it's all been bad news around crypto assets, but such is not the case. In the last two months, for instance, there have been bullish indications of mainstream companies previously rooted in traditional finance establishing long-term engagements with this asset class.

In August, mammoth asset management firm BlackRock announced a spot private trust offering to provide direct exposure to Bitcoin for its institutional clients in the US. The asset manager cited substantial interest that its clientele is showing in efficiently and cost-effectively engaging with crypto asset technology. Such was a major fete given that the US Securities and Exchange Commission has persistently shot down proposals to create a publicly-traded spot Bitcoin ETF, restricting approvals only to futures products.

Also taking advantage of the bear market to build, multinational search engine firm Google last week confirmed it would start accepting payments in several cryptocurrencies for its Google Cloud services starting early next year. Google said it partnered with crypto exchange Coinbase for the endeavor, particularly to accelerate Web3 adoption and innovation. The search engine giant said it would avail the service to select users, but with Coinbase also adopting Google Cloud as its strategic cloud partner as part of the agreement, developers will massively benefit from Google's powerful solutions.

Moreover, anticipating future adoption, one of America's oldest banks BNY Mellon last Tuesday debuted crypto custodial services for Bitcoin and Ethereum. The bank's CEO, Robert Vince, said during the earnings call for Q3 that a survey on large institutional asset managers, asset owners and hedge funds confirmed increasing interest in digital assets. Vince pointed out that the survey results weren't “the tipping point” but proof of client demand for institutional grade custody and solutions. Select investment firms can store their private keys with the bank, which this year became the custodian for the reserves of USDC, a leading stablecoin.

Token wrapping could help Bitcoin extend its reach in DeFi

In other news, Cardano founder Charles Hoskinson earlier this month projected that Bitcoin, dominant as it is, could grow in decentralized finance even further with the emergence of wrapped coins pegged to the price of BTC. Increased token wrapping will allow Bitcoin value to be traded on networks supporting decentralized applications and smart contracts.

Hoskinson acknowledged that the flagship crypto asset is already penetrating legacy financial systems, but wrapping it would potentially enhance its utility. He, however, clarified that Bitcoin would likely not morph, regardless of interactions with other networks.