decrypt.co 01 October 2024 10:50, UTC

The Bitcoin price is experiencing a cautious start to October as China’s Golden Week holiday begins on October 1.

This annual seven-day celebration, which marks China’s National Day and extends through various cultural festivities, often results in lower trading activity across global markets—including cryptocurrencies—as Chinese traders and businesses take a break.

Analysts are predicting a slow market this week and are cautioning that Bitcoin may undergo a 5-10% correction before any significant upward movement can resume.

The Bitcoin price is currently hovering around $63,980, down 0.6% in the last 24 hours, while Ethereum is trading slightly up by 0.5% at $2,643, according to CoinGecko data.

The market’s subdued performance comes amid a slew of crucial macroeconomic events lined up for the week, including the U.S. vice-presidential debate between Tim Walz and J.D. Vance on October 1, the U.S. initial jobless claims report on October 3, and the U.S. Nonfarm Payrolls and Unemployment Rate on October 4.

Overnight trading in the crypto market has shown signs of increased volatility.

In a note sent to Decrypt, Jake Ostrovskis, an OTC trader at Wintermute, explained that “IV prints higher led by short-dated contracts – pushing VRP to 13/14pts in the majors.” In simpler terms, implied volatility (IV) for short-term options contracts is rising, which has created a volatility risk premium (VRP) in the market, suggesting that traders expect sharp price swings in the near term.

Ostrovskis noted that last Friday’s $5 billion options expiration (OPEX) could lead to heightened market fluctuations.

“We’re seeing some of this flow overnight as we approach month-end,” Ostrovskis added, pointing to shifting dynamics in both Bitcoin and Ethereum trades.

Notably, he added, spot Bitcoin trading dipped below the $65,000 mark, with the volatility surface indicating a downside bias until late October or early November. However, Ostrovskis observed that “current positioning suggests support for a post-election rally.”

Analysts from Bitfinex caution that Bitcoin’s recent gains may be hitting a short-term ceiling.

“Bitcoin has reclaimed key on-chain levels such as the Short-Term Holder Realised Price ($62,750) but there are warning signs,” they said in a note sent to Decrypt. Spot market buying has recently flattened, the analysts added, suggesting the market may have reached temporary equilibrium.

Additionally, open interest (OI) in Bitcoin futures has surged past $35 billion, a level that has historically correlated with local price peaks. While this could indicate the market overheating, Bitfinex analysts believe a modest 5-10% pullback could reset OI without derailing the overall uptrend.

Valentin Fournier, an analyst at BRN, echoes these sentiments, pointing out that Bitcoin ended September with a 3.5% loss.

“The Stochastic RSI continues to signal bullish potential, but the MACD indicates weakening momentum,” Fournier stated. He added that Bitcoin’s Relative Strength Index (RSI) has exited overbought territory, signaling a potential correction. A dip into the $61,000-$62,500 range, he suggests, could serve as a solid foundation for a renewed uptrend.

“The U.S. unemployment rate will be a crucial market-moving event,” Fournier said. Any deviation from the expected 4.2% rate could impact market sentiment and influence risk assets, including cryptocurrencies, he added.