Last week, Bitcoin was trapped in the middle of two opposing forces.
Contrasting with the Federal Reserve's tightening posture and persistent inflation data, risk assets found relief in China's better-than-expected GDP and a declining yuan.
Consequently, there was no breakout in the market; rather, it stayed inside its range.
Source: CoinGecko
With the last full trading week of October about to begin, the real question is not whether Bitcoin can increase, but rather for how long it can resist the macro crosscurrents.
The Price Action: A Range That Refuses to Break
Bitcoin started the week of October 12–16 around the bottom of its current range-bound movement.
From the end of September to the beginning of October, the asset failed three times to break over the $87,000 resistance level, creating a technical hurdle that is currently the most important obstacle the market faces.
Spot price fluctuations between $81,700 and $81,900 were noticed by Darkfost at the time of the most recent rejection.
This does not necessarily mean a breakdown, but it does signal a retreat from the recent highs.
All things considered, the third quarter forecast remains optimistic.
At the end of September, Bitcoin's value had surpassed $87,000, reflecting its most powerful growth since 2024, which was a 40% increase in the third quarter.
But October hasn't been so great.
The net outflows for US spot Bitcoin ETFs were $228.58 million over the five sessions ending on October 16.
BlackRock's IBIT was particularly hit hard, losing $165.45 million.
With a loss of $319.97 million, Ethereum ETFs were part of a larger outflow of more than $548 million for all cryptocurrency ETFs for the week.
Because it coincides with a shift in the overall economic story, the flow reversal is very significant.
Bitcoin ETFs saw net inflows of $7 billion between July and September, a spike that helped absorb payouts from long-term investors and led to price rises.
That progress has now stopped.
CoinShares, which tracks worldwide digital asset products, said that $434 million left its accounts in the week after the CPI report, describing the change as "a clear deterioration in sentiment."
The Fed Factor: Warsh’s Silence Speaks Volumes
The primary macro event of the week was characterized not by a data release, but rather by a notable absence of a statement.
When asked about a potential rate hike during the Federal Reserve's meeting on October 27 and 28, Chair Kevin Warsh chose not to mention it when speaking at the IMF-World Bank Annual Meetings in Bangkok on October 16.
Warsh said, "I will not prejudge the outcome of the meeting," adding that the Federal Reserve has started "a new chapter" by not providing advance guidance on interest rate decisions.
Lack of communication was seen by the markets as an indication of a more flexible position.
Futures pricing shows that the probability of a 25-basis-point hike in October dropped from over 25% to about 15% following Warsh's remarks.
While Nasdaq 100 futures entered positive territory and the MSCI Asia-Pacific index increased by 1.5 percent, the Bloomberg Dollar Index fell by 0.2 percent.
The Kospi index in South Korea rose 3.6%, which is quite extraordinary. But the story that emerges from the underlying facts is less encouraging.
Consumer prices rose 0.6% month-over-month and 3.7% year-on-year in September, more than the 3.6% predicted by economists.
The core consumer price index rose 0.3% from the previous month, bringing the yearly rate to 2.6%.
As pointed out by CoinShares, the Federal Reserve is very concerned that inflation is still out of control due to this substantial increase.
Sales at retail establishments rose 0.8%, more than the predicted 0.3% gain. This points to strong demand, which makes the case for loosening policies more difficult.
Certain analysts took Warsh's choice not to acknowledge the inflation overshoot - that is, not to repeat his earlier declaration that "inflation is too high" - as an indication that the bar for quick tightening has been raised.
Another factor to think about is whether or not that interpretation will be valid in light of the upcoming CPI print.
China’s GDP and the Dollar-Alternative Thesis
The announcement of China's GDP for the third quarter on Monday added another level of intricacy.
The economy surpassed consensus expectations with a year-on-year growth of 4.5%, up from 4.3% in Q2.
Not only does the Chinese growth statistic matter for the cryptocurrency world, but so do the ramifications for global risk tolerance and the dollar's behavior.
If the Chinese economy continues to grow, there will be less need for drastic stimulus measures, which means the yuan will be safer, commodity-linked currencies will be stronger, and emerging market risk assets will be more appealing.
A structural study that successfully navigates the short-term swings was revealed in the Coinbase-Glassnode quarterly report.
Compared to the S&P 500's 0.30 correlation and the Nasdaq's 0.29 correlation, Bitcoin's daily return correlation with precious metals in Q3 was 0.61. There was a negative correlation of 0.43 with the dollar index.
"More aligned with demand as a dollar alternative than indicative of a wider increase in risk-asset appetite" was the report's final verdict on Bitcoin's recent recovery.
The hesitancy of Warsh to tighten, along with the dollar's resulting weakness, gives Bitcoin more support than usual risk-on mood, if that theory is correct.
The $10,000 Call and the Fidelity Counterpoint
Bloomberg Intelligence's chief macro strategist Mike McGlone delivered the most interesting forecast of the week when he predicted that a 20% correction in the S&P 500 may cause Bitcoin's price to fall to $10,000.
According to McGlone, technical indications are pointing downward, and Bitcoin's 50-week moving average has done the same since it peaked above $100,000 in 2025.
This tendency is similar to the bad markets of 2018 and 2022, according to McGlone. Since Bitcoin is the most liquid asset, he says it might be the first sign of a larger macroeconomic slump, with stocks and industrial metals following suit. Bold as the analysis is, McGlone has never been one to cheer for Bitcoin. Nonetheless, it's worth thinking about since the basic idea is sound: speculative asset prices should not be based on rising bond yields and restrictions on global liquidity.
In the third quarter, the yield on the 10-year Treasury rose 85 basis points to 5.29%, the highest level since the second quarter.
Forgoing the possibility of returns on an asset that does not yield is a substantial expense at those levels.
Jurrien Timmer of Fidelity offered a different viewpoint. Bitcoin may be about to embark on a new four-year cycle bull market, according to the global macro director, who cited power-law tendencies. "Bull markets seldom start with a clear narrative," he said.
Less weight is given to the short-term swings in weekly ETF flows in Timmer's structurally oriented paradigm, which is focused on the bigger picture.
While both McGlone and Timmer analyze data in their own unique ways, the key distinction between the two is the emphasis each places on different time frames: Timmer on modeling the adoption curve and McGlone on trading cycles.
What to Watch This Week
Whether Bitcoin breaks out over $87,000 or returns to the $80,000 support level, which has been stable since early October, depends on three things.
At the outset, stability in ETF flows is crucial. Considering the $7 billion in Q3 inflows, the $228 million weekly outflow is not significant. However, if redemptions continue for a second straight week, the marginal buyer argument that supported the summer rise could be undermined.
Second, Warsh's silence has had a major impact on the dollar. The dollar index's continued fall on lowered expectations for interest rate hikes would give Bitcoin a second wind as a viable alternative currency.
Still widely expected among Fed watchers is a rate hike in December, which may cause the currency to gain and put downward pressure on Bitcoin if the market reacts accordingly.
And lastly, the $87,000 mark.
Risk reversals, which point to a lower put premium, indicate that the market is "less defensive" than usual, according to QCP Capital's analysis of the present options situation.
If the price breaks beyond $87,000, the focus will go to $94,000; if it falls back, we may see price around 75,000, the lows from September, again.
A 10-year yield higher than 5.5% or a decline in Bitcoin below its 200-day moving average at $71,000 would severely dampen the prediction, according to the Coinbase-Glassnode analysis, which also identified the $90,000-$94,000 region as a major obstacle. Neither of those things has happened just yet.
Currently, Bitcoin is trading within its range, the Federal Reserve is keeping a low profile, and the market is ready for something to happen. In the absence of one, the range is unaltered, and the $87,000 mark is firm.
