Macro crypto currency market outlook

Bitcoin has been in consolidation mode since topping out at a record high just ahead of $65,000 earlier this year. At the moment, the latest recovery rally has stalled out above $50,000, leaving the door open for further consolidation and the potential for another round of setbacks towards major support in the form of the June low around $29,000. Ultimately, while there is room for shorter-term weakness, the medium and longer-term outlook remains highly constructive, with setbacks expected to be very well supported on any dips below $30,000, ahead of the next major upside extension targeting a retest and break of the record high.

Bullish momentum in the crypto space has stalled out since the market ascended to record highs back in April. Price action in September was bearish overall, and technically speaking, as per above, bitcoin’s topside failure above $50,000 could set the stage for deeper setbacks within this broader consolidation.

We anticipate weakness in bitcoin will translate to weakness across other cryptocurrencies. But at the same time, we still see all of this weakness as weakness within a bigger consolidation, with setbacks expected to be very well supported by institutional demand and committed early adopters.

Fundamentally speaking, there have been a number of developments that have been weighing on crypto assets in recent weeks. These include crypto specific headlines around regulatory uncertainty in the US and China, and macro fallout from an anticipated shift in monetary policy at the Federal Reserve.

Looking ahead to Q4 performance, we believe the biggest risk to crypto is the risk that we see a more severe shakeup in traditional risk assets. While bitcoin is expected to fully mature into a store of value in the years ahead, at the moment, many market participants still consider crypto to be an emerging market, which makes it somewhat vulnerable to periods of risk off, at least for now.

As a final note, in September, our own Jenna Wright, Managing Director of LMAX Digital sat down on a call to discuss the intersection of crypto and finance. We recommend tuning in to see what Jenna had to say.