Bitcoin Faces Potential 5-10% Correction Amid China’s Golden Week and Key U.S. Economic Events

As Bitcoin enters the first week of October with caution, it coincides with China’s Golden Week, which began on October 1. This seven-day holiday, celebrating China’s National Day, often results in reduced global trading activity, including in the crypto markets, as Chinese traders and businesses go on vacation. Analysts predict that trade volumes will remain low, with Bitcoin potentially experiencing a 5-10% correction before any significant upward movement.

Bitcoin’s market fluctuations, macroeconomic events, and increasing volatility signals mark a critical period for crypto traders seeking strategic insights.

The Impact of China’s Golden Week on Crypto Trading

During China’s Golden Week, global market dynamics are inevitably influenced by reduced trading activity. With the absence of Chinese traders, Bitcoin’s market performance typically remains sluggish, leading to lower liquidity and trading volumes. Currently, Bitcoin is trading at around $63,980, marking a 0.6% decline in the last 24 hours. Meanwhile, Ethereum has seen a modest 0.5% increase, trading at $2,643.

Key Upcoming Macroeconomic Events to Watch

This week brings several key macroeconomic reports that could impact the crypto market. Important events include the U.S. initial jobless claims report on October 3 and the non-farm payroll and unemployment rate data on October 4. These reports provide critical insights into the health of the U.S. economy, which could affect investor sentiment and volatility in the crypto markets.

Volatility Indicators and Market Sentiment Analysis

Nighttime trading activity has shown increased volatility signals. According to Wintermute OTC trader Jake Ostrovskis, short-term contracts have raised implied volatility (IV), driving volatility risk premiums (VRP) to 13/14 points. This uptick suggests that traders expect significant price fluctuations in the near term. The recent expiration of $5 billion in options could also exacerbate market movements, particularly as liquidity patterns shift between Bitcoin and Ethereum.

Bitcoin Spot and Futures Market Dynamics

In the spot market, Bitcoin has dipped below $65,000, with volatility indicating potential downward movement through early October and November. Analysts observe that the current stance supports a post-election recovery. However, short-term signals from Bitfinex analysts suggest that Bitcoin’s recent gains may have reached a temporary peak. While spot market purchases remain relatively stable, open interest (OI) in Bitcoin futures has surpassed $35 billion, historically linked to local price peaks. A 5-10% mid-level correction could reset OI without disrupting the overall bullish trend.

Technical Analysis and Market Outlook

BRN analyst Valentin Fournier shares a similar outlook, noting that Bitcoin closed September with a 3.5% loss. While the stochastic RSI continues to signal a bullish trend, the MACD indicates weakening momentum. The RSI’s retreat from the overbought zone signals a potential correction. Fournier suggests that a drop to the $61,000-$62,500 range could provide a solid foundation for the upward trend to resume. The projected 4.2% U.S. unemployment rate could serve as a crucial market driver, with any deviation potentially impacting risk assets, including cryptocurrencies.

As Bitcoin navigates this critical period, the convergence of macroeconomic events, technical indicators, and volatility expectations points to a potential recalibration phase. Traders should remain cautious, considering both immediate market signals and broader economic factors that could influence future movements. A calculated approach during this potentially turbulent period could provide a strategic advantage in navigating the crypto markets.

Bitcoin, China’s Golden Week, U.S. economic events, volatility, correction