Bitcoin (BTC) gained 5% on Nov. 10, and confidence is returning to the global macro outlook and news that FTX is starting to partially open withdrawals for users.

The cryptocurrency and stock market pair (Consumer Price Index (CPI) data showed that inflation was 0.4% for the month, compared with 7.7% a year earlier, below expectations for monthly gains of 0.6% and 7.9%. News boosted Nasda The gram index rose 6% and was on track for its biggest one-day gain since 2020.

After volatility caused by the potential bankruptcy of FTX, the price of Bitcoin reacted to the positive news of the opening of withdrawals and positive stock movements, rising by $1,000 within minutes.

Nasdaq and Bitcoin 3-month charts. Source: TradingView

Volatility is still possible amid the ongoing FTX situation, and crypto commentators still have a sense of less doom, but some analysts believe that the crypto market has yet to bottom out.

The rest of the fourth quarter remains unclear, as some analysts still expect 2022 to replicate the 2018 bear market. Meanwhile, this bearish trend is expected to fade in early 2023.

The entire cryptocurrency market has been positive, including Solana (SOL), which has gained 20% since Nov. 9 despite a 32.4% loss in total value locked in its decentralized finance (DeFi) ecosystem.

Let’s take a look at the three main factors influencing the strength of the crypto market in the current environment.

The Fed may change its stance on rate hikes

When Cointelegraph reported on why the crypto market saw fresh losses last month, the U.S. Federal Reserve topped the list.

Concerns focus on unwavering policy, keeping the dollar strong and interest rates surging for the foreseeable future – a worst-case scenario for risk assets.

At the same time, with the Fed running out of room to maneuver, rumours about the prospect of a rate hike are mounting. After a 75 basis point rate hike in November, there are suspicions that policy will start to turn around, with small rate hikes in the ensuing months before a full reversal in 2023.

So any signal that the Fed is ready to soften its hawkish stance has been caught by a market weary from a year of quantitative tightening (QT).

December’s Federal Open Market Committee (FOMC) expected According to CME Group’s FedWatch tool, the rate hike was 50 basis points, not 75 basis points.

Probability map of the Fed’s target rate.Source: CME Group

Unemployment data released on Nov. 4 boosted bulls’ confidence. Higher than expected, which means the rate hike may be having the desired effect – so a pivot point may come sooner rather than later.

Bitcoin volatility hits record low

Analysis from Cointelegraph Markets Pro and Transaction viewit is clear that BTC/USD has been too quiet for too long after reaching yearly lows below $16,000.

This is especially evident in the Bollinger Bands Volatility Indicator, which has rarely come close in Bitcoin’s history and has been calling for a breakout for weeks.

BTC/USD 5-day candle with Bollinger Bands (Bitstamp). Source: TradingView

Last month, Bitcoin was even less volatile than some major fiat currencies, making BTC look more like a stablecoin than a risky asset.

However, analysts have long expected a drastic change in this trend. As in its real form, the crypto market did not disappoint.

A look at the Bitcoin historical volatility index (BVOL), which has been at multi-year lows in recent times, shows that Bitcoin still has some way to go to give up this feature.

William Clemente, co-founder of crypto research firm Reflexivity Research, said: “It’s very interesting that volatility is so compressed that we’ve become so accustomed to market participants that even the slightest 3% move It feels like a 15-20% change,” Comment.

Bitcoin Historical Volatility Index (BVOL) 1-week candlestick chart. Source: TradingView

US dollar opens new chapter

After a parabolic uptrend throughout 2022, the dollar is only just beginning to show signs of weakness.

related: Bitcoin seller exhaustion hits 4-year low in ‘typical’ bear market move

after With a parabolic uptrend throughout 2022, the dollar is just beginning to show signs of weakness.

The U.S. dollar index (DXY) recently hit its highest level since 2002, and momentum may resume to move higher — at the expense of risk assets and major currencies alike.

At the same time, however, DXY is under pressure and its decline has coincided with the return of Bitcoin and altcoins.

This marks a problem that Bitcoin bulls are keen to address – the continued strong correlation with traditional markets and the negative correlation with the US dollar.

“Bitcoin’s correlation with gold is now around 0.50, up from 0 in mid-August,” trading firm Barchart disclose in October.

“While higher correlations are with $SPX (0.69) and $QQQ (0.72), the correlations have fallen recently.”

Analyst Charles Edwards, founder of crypto asset management firm Capriole, pointed out that Bitcoin macro price bottoms are often accompanied by an increase in gold correlation.

BTC/XAU related chart.Source: Bar Chart/Twitter

Overall, crypto markets are likely to remain volatile going forward, but the positive news that FTX has resumed withdrawals provided a nice boost, analysts said.

The views and opinions expressed here are those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk and you should do your own research when making a decision.