After the surprise rise in September, Bitcoin and cryptocurrency investors are optimistic that October could pave the way for record highs in the fourth quarter.
Bitcoin Unusually Closed September in the Green Zone
Bitcoin posted its best monthly performance since May, gaining 7.7% in September, typically its weakest month. Despite the strong finish, Bitcoin rose only 2.5% in the third quarter as it struggled to break out of the range it has been stuck in since March.
Ethereum, the second largest cryptocurrency, also showed resilience, rising over 3% in September, despite closing the third quarter with a decline of over 20%. Despite these gains, the road to new highs for both cryptocurrencies is unlikely to be smooth. Bitcoin is held by government assets in the US and Germany, as well as Mt. Gox continues to face supply pressure from repayments to creditors following the stock market crash.
The upcoming US presidential elections also keep traders on edge. Federal Reserve Chairman Jerome Powell recently hinted at further interest rate cuts but said there was no clear policy direction, adding to uncertainty in the market. According to Crypto Valley Exchange CEO James Davies, “Liquidity remains weak in both crypto and traditional markets, leaving room for sharp changes in volatility if macro events or regulatory news trigger sudden changes.”
However, October has historically been one of the strongest months for BTC. Known as “Uptober” in crypto circles, Bitcoin has closed higher in all but two Octobers since 2013, with an average return of nearly 23%. Many investors believe this month will create a positive feedback loop for BTC and other cryptocurrencies as liquidity returns to markets and companies prepare for year-end earnings.
David Duong, head of institutional research at Coinbase, noted that macroeconomic factors have greatly influenced crypto performance in recent months, and this trend is expected to continue. Interest rate cuts, increased inflows into BTC ETFs, and election clarity are seen as potential drivers for Bitcoin’s price in the coming months.
However, it is not only the FED’s policies that are important. Investors also have their eyes on the Central Bank of China. Duong said that the FED’s interest rate cuts could pave the way for other central banks to adopt more incentive policies, which could further increase risky assets such as Bitcoin.
Despite its difficulties, Bitcoin is up 47% year-to-date, while ETH has gained 10% in the same period.
*This is not investment advice.
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