LMAX Digital volumes cooled off on Tuesday after a nice start to the week. Total notional volume for Tuesday came in at $214 million, 32% below 30-day average volume.

Bitcoin volume printed $124 million on Tuesday, 36% below 30-day average volume. Ether volume came in at $52 million, 30% below 30-day average volume.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size at $7,269 and average position size for ether at $2,383.

Market volatility has cooled off dramatically after an impressive run higher in early August. We’re looking at average daily ranges in bitcoin and ether of $2,465 and $128 respectively.

It’s unlikely the presidential debate is having any major impact on the market. We believe the latest price action is more about consolidation in the aftermath of an impressive Tuesday rally and some positioning ahead of today’s US inflation data.

As far as potential impact from the inflation data goes, we think it makes the most sense to think of the data in terms of the effect it will have on US Dollar yield differentials.

If the inflation data comes in on the hotter side, it will invite a more favorable US Dollar yield differential and could weigh on crypto assets.

If on the other hand the data comes in softer, or even as expected, it will make the US Dollar less attractive and move yield differentials in favor of other currencies, including crypto assets.

Technically speaking, bitcoin has been in a consolidation since March of this year. At the moment, we are closer to the lower end of the consolidation, which ultimately bodes well for the outlook, especially ahead of what should be an impressive Q4.

It’s also worth highlighting that this consolidation is a consolidation within a longer-term uptrend, which means it’s a bullish consolidation that should result in a breakout to the topside to a fresh record high.