October Crypto Market Newsletter Breaking the previous high as expected, BTC likely to experience upward volatility in the near future.

October Crypto Market Newsletter BTC Breaks Previous High as Predicted, Expect Upward Volatility in the Near Future

The information, opinions, and judgments regarding the market, projects, cryptocurrencies, etc. mentioned in this report are for reference only and do not constitute any investment advice.

Macro Market

In the golden autumn of October, those who understand the cycle and firmly hold on rejoice in the abundant harvest!

After a long period of ambiguity and volatility, driven by the expectation of spot ETFs, BTC broke out of the oscillation box that had been suppressing it for six months, returning to the upward channel with a monthly increase of up to 28.54%, continuing its recovery journey.

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In the September report, EMC Labs predicted that the multiple forces in Q4 would drive BTC to break the previous high of $32,000. Now, this prophecy has already been fulfilled in the first month. The sharp market trend is unexpected.

However, the global macro financial market is not optimistic. After the Nasdaq experienced the largest monthly decline of the year in September, it further dropped by 3.25% in October. The suspense of whether there will be an interest rate hike in December, in addition to the pressure of the argument of a US economic recession, has caused the Nasdaq to decline for three consecutive months after the AI speculation boom subsided, marking the end of the rebound since the beginning of this year. The macro financial market is heavily cautious.

NASDAQ Monthly Trend

The outlook is uncertain, so institutional funds choose to enter the “golden” safe haven, pushing the price of gold to rise sharply by 8%, approaching historical highs.

Gold Price Daily Trend

In comparison, the crypto market, which saw a slight rise in September, broke out in October, breaking through the upper limit of the oscillation box that had troubled the market for half a year at $32,000 and pushing the price to the $35,000 level.

According to the signals from the Emergence Engine, the current cycle of recovery started in January and has been ongoing for 10 months, with 7 months recording increases. Among these 7 months, October had the second-largest increase, following the extreme rebound in January. The significant increase in volume indicates that the bulls are determined and passionate about breaking through the box’s suppression.

BTC Monthly Trend

Behind the dramatic surge, the direct cause was the influx of $900 million stablecoins in the monthly period. Although $900 million may not seem like much, it is the only month this year with a positive inflow. This may indicate a change in sentiment among off-chain funds.

October’s market performance of BTC fully confirms EMC Labs’ prediction that “with strong on-chain data support, the market will rapidly rise once capital inflows reoccur.”

This month, the trend of a “short into long” recovery phase continues for BTC, but there are signs of a slowdown as the price rises. The short-term surge triggered a wave of selling by both short and long-term investors, which has now come to an end. However, the profit scale remains huge and continues to be a potential factor affecting price fluctuations.

On-chain data deteriorated in October but has since recovered after the sharp rise. Caution should be exercised when observing the market going forward.

Taking into account multiple factors, EMC Labs believes that the recovery phase trend will continue and that the market will experience oscillations in the ascending channel of a bullish and bearish divergence in November and December.

Crypto Market

In October, BTC opened at $26,961 and closed at $34,656, a 28.54% increase with a 32.03% volatility.

BTC Daily Trend

From a technical indicator perspective, October was a month of great gains.

After mid-March, BTC entered a consolidation structure (purple area in the chart). The lower boundary was $25,000, and the upper boundary was $32,000. On October 23, BTC broke through the upper boundary after oscillating within the consolidation structure for over 6 months, spanning more than 180 days. During this time, there were unsuccessful attempts to break the upper boundary in April and July and continuous tests of the lower boundary in June, August, and September. In the process, the ascending channel since the beginning of the year was breached in August and September (blue area in the chart).

Most of the selling chips during this period came from the short-term whales.

In the September review, we pointed out that there was ample time for testing in August and September. The market began attempting an upward movement at the end of September and retested the support in the first half of October, ultimately initiating a frenzy of rapid price increase and pushing the price from $26,000 to $35,000 within 11 trading days.

Key breakthroughs on October 16, 23, and 24 were accompanied by significant volume, indicating that long-term investors were confident and refused to make a retracement after defeating the bears. Instead, they waited at high levels for the moving averages to shift upwards, expecting further upward movement after a future adjustment.

Funding Supply

This year, we have observed continuous improvement in on-chain data, comparable to firewood getting drier. However, the eruption of the market’s rapid rise relies not only on the drying of the firewood (internal factors) but also on the ignition of the flame (external factors).

Now, let’s focus on the supply of stablecoins and examine external factors.

Major Stablecoin Supply

In previous reports, we pointed out that during the recovery period, the upward momentum of BTC mainly came from the position replenishments of on-exchange funds. In fact, behind BTC’s 100% surge this year, the overall funds have been in a state of outflow, with a total outflow of up to $14.6 billion USD from the beginning of the year to the end of September.

In the September Report, we mentioned that the outflow of stablecoins was slowing down.

In the first half of October, the outflow of stablecoins stagnated, and from the 15th, stablecoins started to flow in, triggering an upward trend in BTC.

As of the 30th, the net inflow of stablecoins in October has reached $900 million USD!

This is the first time this year that stablecoins have achieved a monthly net inflow, indicating that the outflow of on-exchange funds has been contained and off-exchange funds have started to enter the market.

This is the most optimistic external factor detected by EMC Labs after the bearish trend in on-chain data – stablecoins starting to emerge from the bear market.

The net inflow of stablecoins and the launch of the BTC price are coinciding, which is enough to prove that the most direct driving force behind the violent surge is the off-exchange funds entering through stablecoins.

Furthermore, we will focus on the two stablecoins with the largest supply – USDT and USDC.

1.1~10.30 –

• USDT: +18.28 billion USD;
• USDC: -19.25 billion USD.

9.30~10.30 –

• USDT: +1.4 billion USD;
• USDC: -0.1 billion USD.

It can be seen that USDT has had a net inflow throughout the year, while USDC has experienced significant outflows until it started to stabilize in October. The Asian funds (as well as European and South American funds) that primarily use USDT have driven BTC’s rebound this year. Moreover, this month’s significant breakthrough is more evident with the issuance of USDT amounting to as much as 1.4 billion USD.

For future market analysis, observing stablecoins is essential.

As we enter the first month of Q4, we have achieved the first month of net inflows this year. If we continue to see net inflows in November and December, then a market phase known as a “bull market” will be upon us.

Supply Trends

Alongside the violent surge of BTC in the second half of the month, the profitability of on-chain BTC has significantly improved. The market-wide MVRV (Realized Profit Ratio) reached 68%, Long-Term Holders (LTH) MVRV reached 66%, and Short-Term Holders (STH) MVRV reached 20%.

Market Supply Pressure

In the short term, the rapid and substantial increase in prices has caused a significant increase in market supply pressure, especially for short-term investors who have already reached a profit threshold of 20%. After achieving satisfaction, selling is inevitable, and this may be the reason for BTC’s consolidation in the range of $34,000 to $35,000.

We further examine the profit/loss situation when long-term and short-term investors sell BTC.

Profit/Loss Situation from Selling BTC

As BTC prices rise, both long-term and short-term investors have seen a significant increase in profits from selling. Some long-term investors have achieved profits as high as 61-70%, while short-term investors have also reached profits approaching 6%.

In addition to profit from selling, we take a closer look at the selling scale of long-term and short-term investors.

Exchange Balance LTH & STH 2 Exchanges

24th was a day of rebounding to new highs and also the climax of selling by long-term and short-term investors. On this day, 3,724 BTC were sold by long-term investors, and 45,874 BTC were sold by short-term investors, both several times larger than the daily selling scale.

The 24th was the third largest selling day for long-term investors and the eighth largest selling day for short-term investors this year.

The profit-taking selling after this wave of increases has already come to an end, and the scale of BTC entering the exchanges has now dropped to around 20,000 BTC per day.

From the perspective of exchanges, as of the 29th, CEX has reduced its holdings by 5,000 BTC this month without accumulating greater selling pressure. However, compared to the outflow of 60,000 BTC in September, the outflow this month has decreased significantly.

In addition, the potential profit for short-term investors is still as high as 20%, and there is an urgent need for new short-term investors to enter and lower the profit value. As the market improves, the potential profit for short-term investors during the recovery period can also rise to 40%, which is still much higher compared to the current 20%.

However, short-term trading is driven by emotions, and emotions are mainly influenced by external factors. If there is a large-scale sell-off, it will trigger price fluctuations in stages, and we still need to continue monitoring.

Long vs. Short Game

Currently, both long-term and short-term investors still hold significant profits, with the overall profit scale of BTC approaching 15,980,000 BTC, accounting for 81.82% of the total supply. In this situation, selling pressure continues to increase, and we need to take a closer look at the holding scale of long-term and short-term investors to assess the real selling pressure.

Long positions, short positions, centralized exchanges, and miner BTC holdings

10.1~10.30——

• Long positions: +34000
• Short positions: -1000
• CEX (Centralized exchanges): -5000
• Miner: +3000

Long positions and miners continue to accumulate, while short positions and CEX continue to flow out. Despite a monthly increase of 28.54%, the trend of “short to long” continues, which is a typical characteristic of a recovery period.

The scale of short positions continues to decrease, while the selling pressure of long positions will only appear at a higher MVRV value. Although the rate of decrease has slowed, market liquidity is still decreasing while buying power is recovering. Overall, mid-term liquidity is secure.

In the previous monthly report, we have been tracking the activities of short position whales. During the past 6 months of consolidation, they have dominated the market’s fluctuations.

In October, this group continues to sell to realize profits. The 310,000 coins purchased at the bottom have already been sold, and they are now selling their remaining inventory, with a net sell-off of 110,000 coins in October.

In the context of net fund inflows, their selling activity no longer has an impact on the market. However, they still hold over 6 million BTC, which is still a significant selling force, especially during a weak market, and is expected to have a more noticeable impact in the medium-term.

On-chain data

From late September to mid-October, the uncertain outlook and sluggish market led to a significant decline in new address data. After a rebound, new on-chain addresses saw a rapid increase driven by speculation.

Daily new BTC addresses

There has been a similar change in active entities and daily transaction volume.

Daily active entities on the Bitcoin network

Daily transaction volume on the Bitcoin network

It is worth noting that with the rise of Ordinals, the data structure of the Bitcoin network has changed, and the recent decline in on-chain activity is also related to the fading hype around NTFs (Non-fungible tokens) and BRC-20 Meme coins based on Ordinals.

Aside from these, on-chain activities are important factors that influence the price of the currency, and it is worth tracking them in the long term and in depth. The trend of medium and long-term prices should not deviate from on-chain activities.

Conclusion

In the September briefing, EMC Labs predicted, “The long position force in the fourth quarter is highly likely to take positive actions, pushing the market to challenge the annual high of $32,000 again. It is highly likely to make a historic breakthrough by breaking through the upper edge of the box that has trapped BTC for six months. Despite the difficulties, the recovery period has ended.”.

October is coming to an end, and the prediction has been fulfilled by the market.

Regarding the future trend, considering on-chain supply, on-chain activities, and technical indicators, EMC Labs believes that after the sharp rise, the current loose chips in the long and short hands have been cashed out for profits. The trend of “entering long” is still continuing. The trend of the recovery period will continue, and from November to December, the market will oscillate upward along the ascending channel in the long and short divergence.

Returning to the box below $32,000 is an extremely low probability event. If it happens, it will bring excellent opportunities for replenishment.

Internal factors that need to be focused on include the correction of on-chain data, BTC-ALTCOIN rotation, and the selling off of short-term whales. External factors include net fund inflow, the trend of the Nasdaq, and the possibility of economic recession. On the contrary, the impact of the increase in the US dollar is likely to be the weakest. If there is another rate hike in December, the market is highly likely to see it as a shoe dropping.

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