(Kitco News) – The wider crypto market trended negative on Monday following last week’s explosive price action for several tokens – including Dogecoin (DOGE) – which remains up 108% on the weekly chart following Elon Musk’s purchase of Twitter and widespread speculation that the popular meme coin could soon be integrated with the social media platform.
Stocks showed a similar pattern of weakness to start the week, but still managed to close the month of October in the green as investors from around the world await several highly anticipated announcements from the Federal Reserve later this week, including a decision on the size of the next interest rate hike.
Data from TradingView shows that an early morning attempt by bulls to push Bitcoin (BTC) higher was soundly rejected by bears at $20,840, which led to a pullback in price to a daily low of $20,245 before reinforcements managed to bid it back above support at $20,400.
BTC/USD 4-hour chart. Source: TradingView
As it stands now, there is a “fledgling price uptrend in place on the daily bar chart,” according to Kitco senior technical analyst Jim Wyckoff, who added that “Bulls still have the overall near-term technical advantage to suggest the path of least resistance for prices will be sideways to higher in the near term.”
A survey of crypto Twitter shows that the prevailing sentiment is a positive one, especially considering the fact that as it stands now, BTC is set to see a weekly close above $20,000 for the first time in nearly two months.
But before going all in, it would be wise to consider the warning offered by market analyst and Eight Global founder Michaël van de Poppe, who highlighted the possibility of “a correction tomorrow or Wednesday before the actual FOMC event taking place,” and suggested that after a bit of volatility following the announcement, “the party and relief rally continues.”
Bitcoin is showing increased stability
Insight into how the traditional investing world is viewing Bitcoin currently was offered by Mohamed El-Erian, President of Queens’ College, University of Cambridge, and chief economic adviser at Allianz, who now believes that the crypto sphere is showing significantly more stability than it had previously.
Speaking with CNBC Squawk Box cohost Andrew Sorkin, El-Erian agreed that Bitcoin is now going through a classic cycle of innovation whereby following a boom characterized by overconsumption and overproduction, the market is now “ending in tears.”
“If you are a #crypto fan you should welcome the relative stability we have seen the last two months,” says @elerianm #bitcoin. “#crypto can and should survive as part of the ecosystem for payments…it just needs to be better regulated.” pic.twitter.com/CyVUSNwHfw
— Squawk Box (@SquawkCNBC) October 31, 2022
El-Erian then went on to say that what comes next is a reinforcement. “If you are a crypto fan you should welcome the relative stability we have seen the last two months. It suggests that we have shaken out a lot of the excess in the market.”
He finished by saying, “crypto can and should survive as part of the ecosystem for payments, and as an asset class, it just needs to be better regulated.”
Weakness in financial markets
Overall, both the crypto and traditional markets struggled in trading on Monday as traders await this week’s Federal Open Market Committee meeting and the decision on an interest rate hike.
The S&P, Dow and Nasdaq all finished the day in the red, down 0.75, 0.39%, and 1.03%, respectively.
Daily cryptocurrency market performance. Source: Coin360
Out of the top 200 tokens, the most notable gainers on the day include a 21.63% gain by Chain (XCN), an 8.71% increase for Injective (INJ), and an 8.43% gain for Dogecoin.
The overall cryptocurrency market cap now stands at $1.01 trillion, and Bitcoin’s dominance rate is 38.7%.
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