Bitcoin is not having the Uptober many were hoping for. Historically, October has been a good month for the apex crypto.
The term “Uptober” comes from past performances, with Bitcoin averaging 22.9% gains in this month since 2013. Some years, like 2021, saw even bigger gains, like the 40% jump.
But this year? It’s been rocky, to say the least. By October 12, Bitcoin was barely holding onto $63,000, and that’s after a mild 8% rise in September. Those expecting a rally have reason to be nervous.
A lot of factors are threatening Bitcoin’s chance for a true Uptober comeback, a break from the streak.
Futures, spot market activity, and selling pressure
High open interest in Bitcoin futures is one of the biggest challenges. Right now, futures contracts are sitting at $35.3 billion. Historically, high levels like this point to market peaks.
What happens next? Increased volatility is almost guaranteed. When traders start to take profits, we usually see corrections, and that could drag Bitcoin down.
On top of that, spot market activity has been pretty weak. After a solid buying spree following Bitcoin’s price correction in September, that energy has faded.
Traders are staying cautious, and buyers aren’t rushing in. It’s a signal that the market could be about to stall.
Meanwhile, the spot market is cooling. After the sharp dip and recovery in early September, spot investors were quick to scoop up BTC. But that buying momentum has flattened out.
The market isn’t seeing the kind of aggressive purchases that were driving prices before. That’s another warning sign.
Fewer buyers mean less support for prices, and when the market becomes balanced between buyers and sellers, prices often stay flat or even start to drop.
Adding to this pressure is a change in overall investor sentiment. Many investors are starting to take profits, particularly those who saw modest gains in September.
The Fear and Greed Index has been sitting comfortably in ‘Fear’ territory, at 37 points. Profit-taking is happening, and when realized profit/loss ratios rise like this, it just means more selling pressure is coming.
Macro and geopolitical concerns: Fed, China, and war
But futures and spot market trends aren’t the only things throwing Bitcoin off balance this October. Macroeconomic factors are also at play.
The Federal Reserve’s potential interest rate cuts have created some optimism, but there’s still a lot of uncertainty. Inflation rates and employment data are all over the place.
For instance, the Consumer Price Index (CPI) data isn’t giving clear direction, and that’s making it hard to predict what the Fed will do. This disaster of economic signals is making Bitcoin less appealing as an inflation hedge.
There’s also the global picture. China was expected to implement new stimulus measures after their Golden Week holiday.
Investors were hoping for a spillover effect that would benefit Bitcoin. But China’s National Development and Reform Commission (NDRC) failed to deliver.
Instead, they offered a vague briefing with no concrete plans. This disappointed investors and Bitcoin took a hit. Along with that, the Hang Seng index in Hong Kong plummeted 9.41%, its worst drop since 2008.
Geopolitical tensions have also shaken the market. Early October saw Israel launch attacks in Lebanon, followed by Iran firing missiles at Israel, and then Russia and North Korea threatening America over Israel.
All these sent shockwaves through global markets, and Bitcoin wasn’t immune. And if all that wasn’t enough, we’ve got the U.S. presidential election just 24 days away.
Research from XBTO shows that Bitcoin’s volatility is now closely tied to traditional financial markets, more so than in previous election cycles. Bitcoin’s correlation with the S&P 500 is now at +86%.
Compare that to 2020, where the correlation was -39%. Bitcoin is moving more in sync with the stock market, which is pretty weird for an asset that was supposed to be a hedge against traditional markets.
All in all, the chances of an Uptober look pretty slim right now.
