Decentral Block Post

One hundred and eleven days have passed since Bitcoin (BTC) posted a close above $25,000 and this led some investors to feel less sure that the asset had found a confirmed bottom. At the moment, global financial markets remain uneasy due to the increased tension in Ukraine after this week’s Nord Stream gas pipeline incident. 

The Bank of England's emergency intervention in government bond markets on Sept. 28 also shed some light on how extremely fragile fund managers and financial institutions are right now. The movement marked a stark shift from the previous intention to tighten economies as inflationary pressures mounted.

Currently, the S&P 500 is on pace for a consecutive third negative quarter, a first since 2009. Additionally, Bank of America analysts downgraded Apple to neutral, due to the tech giant’s decision to scale back iPhone production due to "weaker consumer demand." Lastly, according to Fortune, the real estate market has shown its first signs of reversion after housing prices decreased in 77% of United States metropolitan areas.

Let's have a look at Bitcoin derivatives data to understand if the worsening global economy is having any impact on crypto investors.

Pro traders were not excited by the rally to $20,000

Retail traders usually avoid quarterly futures due to their price difference from spot markets, but they are professional traders' preferred instruments because they prevent the fluctuation of funding rates that often occurs in a perpetual futures contract.

Across all tradeable markets and currencies, U.S. Treasurys — government bonds — have significant influence. In finance, any risk measurement is relative, meaning, if one insures a house, the maximum liability is set in some form of money. 

Similarly, if a loan is taken from a bank, the creditor has to calculate the odds of the money not being returned and the risk of the amount being devalued by inflation.

In a worst-case scenario, let’s imagine what would happen to the costs associated with issuing debt if the U.S. government temporarily suspended payments to specific regions or countries. Currently, there is over $7.6 trillion worth of bonds held by foreign entities, and multiple banks and governments depend on this cash flow.

The potential cascading effect from countries and financial institutions would immediately impact their ability to settle imports and exports, leading to further carnage in the lending markets because every participant would rush to reduce risk exposure.

There is over $24 trillion in U.S. Treasurys held by the general public, so participants generally assume that the lowest risk in existence is a government-backed debt title.

Bitcoin (BTC) wobbled in its narrow trading range at the Sep. 29 Wall Street open as official data put the United States economy in recession. 

U.S. meets technical definition of recession

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD still hovering just above $19,000 at the time of writing.

The pair weathered gloomy figures for the U.S., with the second quarter gross domestic product (GDP) growth estimated at -0.6%. This, despite protests of the White House to the contrary, meant that the U.S. met the standard criteria for recession — two consecutive quarters of negative growth.

"Everyone talks about recessions as if they should never happen," financial commentary resource The Kobeissi Letter reacted.

"Any economy that is healthy in the long run will have many recessions. If you never have a recession, you just have a bubble. In this case, we just have a bubble and a recession. Fake markets don’t work."

Bitcoin (BTC) traders lay in wait for fresh volatility on Sept. 29 as BTC/USD cooled near $19,000.

Volatility absent a day before the monthly close

Data from Cointelegraph Markets Pro and TradingView charted a calm overnight phase for the largest cryptocurrency, which hit intraday highs above $19,600 the day prior.

Those 6% gains were a welcome relief after heavy losses earlier in the week, but it no clear direction, market participants were still uncertain over how Bitcoin would handle the September monthly close.

“Can certainly build a case for local support holding in this range, at least until the monthly and quarterly close on Friday, unless, of course, we get the mother of all rug pulls,” on-chain analytics resource Material Indicators summarized.

Material Indicators referenced order book data which suggested that $18,000 could provide range support in the event of fresh market weakness.