logo

Are we in for a Bitcoin and crypto market Uptober? Let's observe the key factors

organization

Fxstreet

Oct 1, 2024 6:00 PM

  • The crypto market historically performs better in October and Q4 than in other months and quarters.
  • Increased interest rates cut and US elections will play a key factor in how market participants react.
  • Crypto community members' expectations of more upside in October could fuel buying pressure, leading to a self-fulfilling prophecy.

Bitcoin and the crypto market may rally in the coming days as “Uptober” is trending across several crypto community platforms on Tuesday. However, a few key market factors could alter or strengthen the bullish bias among investors.

Uptober trend and historical market performance

The trend follows expectations that buying momentum may increase in October due to crypto's historically high returns in the month. According to data from Coinglass, Bitcoin has only posted negative returns in October on just one occasion in the past ten years. The top crypto boasts an average October gain of 20.4% in the past ten years. The only month that comes close during the same period is February, with an average gain of 15.7%.

This also aligns with a historically positive Q4, where Bitcoin has posted an average return of 81%, far higher than in other quarters.

Additionally, crypto analyst Ali Martinez noted that Bitcoin historically kicks "off a parabolic bull run" during October in its halving year.

As a result of the high expectations of a market rally, investors may step up their buying pressure in the coming days, leading to a self-fulfilling prophecy of an Uptober bull run.

Token unlocks for October

The crypto market will witness token unlocks worth $3.46 billion in October across projects including Celestia, Solana, Worldcoin and SUI, per Token Unlocks data. Token unlocks could lead to short-term bearish pressure in these cryptocurrencies if demand fails to catch up with the supply. Hence, investors may need to watch out for potential correction in tokens experiencing unlocks despite the Uptober trend.

Interest rates cut expectations

Since the Federal Reserve (Fed) cut rates by 50 basis points on September 18, the crypto market has been on a rally, with Bitcoin and top altcoins posting double-digit gains. In his speech on Monday, Fed Chair Jerome Powell hinted at the possibility of more rate cuts in November and December, which could fuel bullish sentiment in the market as the month progresses.

Open interest needs to grow

Open interest is the total number of unsettled contracts in a derivatives market. An increase in the total crypto market open interest during an uptrend signifies traders are more confident that the trend may continue. Hence, if open interest grows steadily in the coming weeks, an Uptober move will likely play out. However, a decline in open interest could signify a switch in tide toward bears.

Trump and Harris's winning chances in upcoming US elections

Several crypto community members anticipate that a win for Republican presidential candidate Donald Trump could spark a rally in the cryptocurrency market, considering his increased attention to the industry in recent times. Trump has stated that if elected in the upcoming November elections, he would replace Securities & Exchange Commission (SEC) Chair Gensler — whose administration has overseen several lawsuits against crypto companies — if elected. The Republican candidate and his sons have also launched a DeFi platform, World Liberty Financial.

Hence, if Trump's possibility of winning increases in prediction marketplaces like Polymarket, investors may consider allocating more capital toward crypto assets.

On the other hand, Democratic candidate Kamala Harris hasn't expressed a clear stance on digital assets, and many crypto community members have expressed doubts about how she will treat the industry. For example, a few community members have highlighted how the current Democratic administration has supported the SEC in its crackdown on crypto companies.

Hence, an increase in the likelihood of a Harris win may negatively affect crypto prices this month.

Disclaimer: For information purposes only. Past performance is not indicative of future results.