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After a dismal third quarter to say the least, we are finally entitled to some action in the markets. The price of bitcoin like that of most cryptocurrencies has increased for 48 hours. For bitcoin, that means a price that hasn’t been visited in six weeks. This is also a break of the resistance around $20,500, at least if the price can close above this area later today.

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With bitcoin seeking a break above $21,000 at the time of this writing, crypto market sales over the past day have surpassed $1 billion. October has always been a positive month for the major cryptocurrency, with monthly gains recorded tenfold over the past 13 years. Ether’s price push is even more impressive, 2e crypto in market capitalization seeing a peak of 14% over a 24-hour period. We told you to keep a close eye on the price of ETH in our recent publications. We seized the opportunity, taking large positions early on in the rise. About half of the fund’s capital is currently exposed to Ether.

Last-day liquidations, which are essentially the forced closing of short positions in major cryptocurrencies, reached record levels dating back to July.

However, the correlation between bitcoin and major US stock markets continues to attract attention. This increase in prices was, moreover, parallel to an increase in these markets. To that end, it’s encouraging to see that bitcoin’s 20-day realized volatility, a metric that measures daily changes in bitcoin’s price, has fallen below the Nasdaq and S&P 500 for the first time in two years. .

The current correlation is about 0.5 with the S&P. Over the past few weeks, bitcoin seems to (finally) now act as a sort of buffer against macroeconomic uncertainties. The divergence in market activity for the two asset classes suggests that cryptocurrencies are more resilient to recent macroeconomic events that cause volatility. In short, the indicators point to a recent dissociation. The real question is whether the latter will hold up in the face of future macro events, particularly the US interest rate hike on 2 November.

October saw an increase in the bitcoin hash rate, which pushed the metric to a new all-time high average of 263 exhahahashes per second. This means in parallel that the difficulty of the network has been increasing since July 2022. Indeed, the competition among bitcoin miners has reached a new level, the difficulty of mining the network increased by another 3.44% on Sunday to reach a new level. all-time high of 36.835 trillion hashes.

In addition to the macroeconomic factors that are currently driving all markets, it is precisely this trend that allows us to maintain our unyielding certainty of a rosy future for bitcoin. As Metcalfe’s Law aptly explains, the value of a network is determined by the number of links and its overall elasticity. Robert Metcalfe made the mathematical hypothesis that “the utility of a network is proportional to the square of the number of its users”. Now, there is no doubt that there are more participants in the bitcoin network than ever before.

Historically, hashrate has been a leading indicator of price growth. If you believe in this fundamental proposition in bitcoin’s valuation, the arbitrage opportunity has never been so attractive.

The network gave us two examples this week of both its power and the dangers of a fully decentralized financial structure. On Sunday, one user transferred a whopping 5,000 BTC ($103 million) for a fee of 208 sats… or about $0.04. All in just a few minutes, of course. Experience such an achievement through your bank! In parallel, a user was reminded that the fees to be paid are decided by the user and not by a third party. In a transaction that entered Bitcoin block 760,077, a user paid 1,136,000 satoshi (0.0136 BTC or $220.52 at the time of the transaction) to move 3.8 BTC ($63,000). These extremely high fees are 1000 times higher than the usual Bitcoin transaction fees, because at block height 760,077, the average transaction fee was about $0.20.

The coming week leading up to next Wednesday’s Fed announcement will be filled with challenges – and opportunities – for the crypto market. Will ETH be able to continue its sudden reversal and rise against bitcoin? Will bitcoin itself be able to confirm the breakout of the resistance at $20,500 and try to climb to the top of its channel for the last few months? We are looking for a first resistance around $23,000, a second one at $24,000 formed by the 200 week moving average, finally the August high at $25,200. Breaking the latter convincingly would be a clear indication of an exit from the bear market and could definitely lead to fireworks.

The fund is currently exposed to 50% BTC, 45% ETH and 5% MATIC.

This article is brought to you by Fonds Rivemont. The Rivemont Cryptocurrency Fund is Canada’s first and only actively managed cryptocurrency fund. RRSPs and TFSAs eligible. Accredited investors can learn more here.

Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..

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