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What does Q4 hold for Bitcoin?

Since 2010, Bitcoin has averaged a quarterly advance of 87% in Q4, which also includes back-to-back Q4 gains over the past two years.

This trend also features the following eye-popping Q4 numbers:

  • Q4 2020: +170.82%
     
  • Q4 2017: +236.66%
     
  • Q4 2013: +487.69%

 

However, this quarter is set to be different.

After all, global financial markets still have to contend with a plethora of woes:

  • Major central banks are still hell bent on hiking interest rates to combat red-hot inflation, with such policy tightening risking a global recession.
     
  • The Russia-Ukraine war is still raging on, potentially worsening Europe’s ongoing energy crisis.
     
  • China’s economic slowdown continues to drag global growth.
     

All of the above has sapped risk appetite in 2022,  contributing to Bitcoin’s losing of more than half of its value so far this year (down 57.6% year-to-date at the time of writing), while having fallen in five of the past 6 months.

In recent weeks, Bitcoin has been trading within a tight range just below the psychologically-important $20,000 level.

Even though major US stocks indexes such as the S&P 500 and the Nasdaq 100 climbed by more than 2% respectively yesterday, Bitcoin put in a relatively subdued shift on Monday, climbing just 1.88%.

What does Q4 hold for Bitcoin?

 

Separating the wheat from the chaff

At least Bitcoin, birthed in 2009 as the world’s first cryptocurrency, continues to hold resolute even as other pretenders have been left lifeless amid this crypto winter.

According to data provider Nomics, about 12,100 crypto tokens have ceased trading for over a month, or as they call it, “zombies”.

Bitcoin aficionados point to this period of relative stability as the price floor amid the rout in risk assets that has transpired for most of 2022.

 

Ultimately, Bitcoin has to punch through the host of macro woes in order to make it three-in-a-row for quarterly gains.

And for that to happen, the primary driver would be an easing of market fears surrounding the Fed’s ultra-aggressive battle against inflation.

If market participants sense that the Fed can’t hike as much and may not be able to keep rates higher-for-longer for fear of tipping the US economy into a deeper recession, such a narrative should bolster risk appetite, which in turn would serve as a tailwind for Bitcoin.

And even with Kim Kardashian’s influencer prowess, having been barred from promoting any crypto asset securities for 3 years after being charged and fined by the SEC, Bitcoin and co. will have to relay on broader market forces in order to enjoy a positive end to what has been a tumultuous 2022.

 

For more immediate consideration, look out for this Friday’s US jobs report.

If we witness a lower-than-250k headline jobs figure or a higher-than-3.7% unemployment rate, that may be signs of the intended ‘demand destruction’ stemming from the ongoing Fed rate hikes.

That would be perceived as good news for risk assets, again, based on the notion that the Fed may have to dampen its hawkishness out of consideration for the US economy.

On the other hand, continued resilience evidenced in the US jobs market may embolden the Fed to keep interest rates higher-for-longer, which in turn may spell another leg down for risk assets, including cryptocurrencies.

 

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