Bitcoin kicks off 'Uptober' eyeing 22.9% historical gains

Key Takeaways

• Bitcoin's historical October performance, known as 'Uptober,' is jeopardized by high futures interest and reduced spot buying.
• Despite potential market overheating, a 5% to 10% pullback could maintain Bitcoin's uptrend.

As October begins, the crypto market enters “Uptober,” a period historically associated with strong Bitcoin performance. Over the past nine years, Bitcoin has exhibited an average 22.9% in gains from eight Octobers, potentially pushing the leading cryptocurrency above $78,000 and into new all-time high territory if the trend continues, according to QCP Capital’s latest Asia Colour report .

Bitcoin has been consolidating between $60,000 and $70,000 for eight months, prompting speculation about a potential breakout . The market is considering this possibility, especially with the upcoming US elections . Spot ETF inflows remain consistently positive, while perpetual funding rates approach levels reminiscent of Q1’s bull run.

Weekly data shows signs of imminent bull run

Bitcoin has shown notable price action this week, trading at approximately $63,905 as of October 1, 2024, with a peak of $64,208 and a low of $62,869. Despite a 2.91% decrease over the past 24 hours, the cryptocurrency has seen a 3% increase throughout the week, breaking above the $64,700 resistance level. This upward trend is attributed to increased institutional demand and significant inflows into Bitcoin ETFs, totaling around $140.7 million.

The overall sentiment in the cryptocurrency market remains bullish, supported by positive on-chain data and a favorable macroeconomic environment. Traders are anticipating potential interest rate cuts from the Federal Reserve, which has contributed to the optimistic outlook. With daily trading volumes around $37 billion, Bitcoin’s price action continues to reflect its ongoing volatility and sensitivity to broader market trends and institutional interest.

Macro, Ethereum, and Fed rate cuts

Ethereum, while typically performing well in October, has shown more modest average returns of approximately 5% over the past eight Octobers. However, significant ETH October call option purchases were observed on the first day of the month, indicating bullish sentiment.

The Bitfinex Alpha report highlights several bullish factors for Bitcoin as it enters the fourth quarter. The Federal Reserve’s potential rate cuts contribute to optimism, with Fed Chair Jerome Powell suggesting another 50 basis point cut this year. Bitcoin’s recent 26.2% surge since its September 6 correction, breaking through the $65,000 mark, further supports the positive outlook.

However, the report also notes warning signs that could threaten Bitcoin’s performance. Spot market buying activity has been flattening, suggesting a temporary balance between buyers and sellers. Additionally, Bitcoin futures have registered $35.3 billion in open interest, a level often associated with local market peaks and potential “overheating.”

Despite these concerns, Bitfinex analysts believe a 5% to 10% pullback would be sufficient to cool the market without ending Bitcoin’s recent uptrend. The alpha cryptocurrency’s consolidation between $50,000 and $68,000 mirrors its 2020 pre-halving pattern, where an October rally led to significant price increases.

As “Uptober” begins, traders are exploring strategies to capitalize on potential breakouts. One suggested trade idea involves a Bitcoin Call DIGI (75k 25-OCT) with a 6.5x payout potential, based on a $64,000 spot reference.

With historical data suggesting strong fourth-quarter performance and various bullish indicators present, the crypto market watches closely to see if Bitcoin can maintain its “Uptober” momentum and potentially reach new heights in the coming weeks.