Bitcoin’s October magic: Is “Uptober” making a comeback?

I must admit, the crypto market is as unpredictable as a game of chess played by AI. As someone who has been closely observing the digital economy for over two decades, I can tell you that bullish predictions and potential risks go hand in hand.

Is it possible that Bitcoin‘s strong “Uptober” trends from previous years might reoccur again this October, given its best-ever September performance? Or could we be anticipating an unexpected change in Bitcoin’s price pattern instead?

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October brings back hopes

With October approaching, there’s a palpable sense of anticipation within the Bitcoin community. Traditionally, this month has been Bitcoin’s moment to outshine, hence the term ‘Uptober’ is once again being used.

However, let’s go back a little and discuss the month of September. Historically, this month hasn’t been kind to Bitcoin, with its price typically experiencing declines. Intriguingly, from 2017 to 2022, every September saw Bitcoin’s value decrease. For quite some time, it was one of the poorest performing months for Bitcoin.

2024 didn’t go as expected – instead of faltering, Bitcoin unexpectedly soared! In fact, for the first time in quite some years, September concluded with a remarkable 9.3% gain – its best monthly performance since Bitcoin was first introduced, based on Coinglass data.

Looking back at last September, Bitcoin saw a growth of just 3.91%. At the end of September this year, its value has soared to approximately $64,600, marking an increase of around 2% over the past seven days.

Much of this progress is driven by the latest actions taken by the U.S. Federal Reserve. Specifically, on September 18th, they reduced interest rates by half a percentage point, providing a significant push to the market.

Moving forward, it’s worth noting that historically, the month of October has been particularly profitable for Bitcoin, averaging a return of 22.9%. Given Bitcoin’s current strength as we transition from September, one might wonder what lies ahead in October for this cryptocurrency.

Factors driving Bitcoin’s October outlook

Moving towards October, it appears that various significant aspects are falling into place, which could suggest a promising uptrend in Bitcoin this month. Here’s a look at each factor individually.

Post-halving effect

In the month of April, 2024, Bitcoin underwent its fourth halving, resulting in a reduction of mining rewards by half. This means that instead of receiving 6.25 Bitcoins for each mined block, miners now receive approximately 3.125 Bitcoins per block.

Historically, decreases in supply have frequently ignited a trend of rising prices for Bitcoin, although the impact might not be seen right away. The digital currency typically adheres to a post-halving cycle, oscillating between peaks and troughs before gathering significant momentum.

It’s interesting to note that studies indicate Bitcoin’s price trend usually begins to pick up speed approximately 170 days following a halving, reaching its peak around the 480-day mark.

As we enter October, roughly 170 days have passed since the last Bitcoin halving, leading some to predict that this milestone might initiate a significant surge in Bitcoin’s price.

It’s particularly fascinating that the last three months of the year, especially during halving events, have a tendency to be bullish in nature. For instance, in the fourth quarter of 2012, Bitcoin experienced a significant surge of 97.7%, while the fourth quarters of 2016 and 2020 saw gains of 58.4% and an astounding 168.9% rally respectively.

Looking at historical trends, it’s quite likely that the last quarter of 2024 might unfold similarly. October in particular could pave the way for an impressive market surge.

Election heat

The upcoming 2024 U.S. presidential election is stoking Bitcoin’s momentum as both main contenders are entering the discourse surrounding cryptocurrency.

Previously known as a cryptocurrency skeptic, former President Donald Trump recently underwent a significant shift in stance. In the early months of this year, specifically in May, he started accepting digital currency contributions for his political campaign, an action that quickly drew notice from the cryptocurrency community.

In June, Trump reiterated his positive view on cryptocurrencies by endorsing Bitcoin miners, stating his aspiration for the rest of the Bitcoin to be mined within the country.

Beyond that point, come late July, Trump became a hot topic when he attended a Bitcoin Convention in Nashville as the keynote speaker. There, he suggested establishing a national strategic Bitcoin reserve.

Furthermore, on September 16th, Trump introduced his own Decentralized Finance initiative titled “World Liberty Financial,” demonstrating his growing interest and commitment to the cryptocurrency sector.

Meanwhile, Vice President Kamala Harris has begun engaging with the cryptocurrency community, albeit with a cautious approach. Following a lengthy spell of quietness, her recent remarks suggest she’s growing more receptive towards this field.

In a recent speech in Pittsburgh, Harris highlighted the importance of maintaining U.S. dominance in blockchain technology, a critical backbone of the crypto ecosystem.

Her campaign subsequently unveiled a policy paper advocating for the promotion of advanced technologies such as Artificial Intelligence and digital currencies, hinting at an acknowledgement of the significance of digital assets like Bitcoin.

As a researcher, I find myself observing an intriguing development: Both significant political contenders appear to be exploring the realm of cryptocurrencies. Given the approaching heat of the election season, this trend seems to be subtly reshaping the political landscape in ways that could potentially bode well for Bitcoin.

Stable macroeconomic environment

In simple terms, the broader economic conditions are significantly influencing Bitcoin’s forecast for October. While there are conflicting indicators, there’s good cause to stay hopeful.

In August, the U.S. labor market saw a slight increase of around 142,000 jobs compared to July, giving a modest boost to investor confidence. Yet, adjustments in job data from prior months hint that the labor market might not be quite as robust as it seemed at first glance.

It appears that inflation may be subsiding slightly, or at least it seems so from a superficial perspective. In August, the Consumer Price Index (CPI) reached its lowest point since February 2021, registering 2.5% over a 12-month period, which is slightly lower than the anticipated 2.6%.

Despite the expectation, core inflation, excluding unstable goods such as food and fuel, persistently stayed elevated, registering a 0.3% rise in August. This figure surpassed predictions.

Consequently, on September 18, the Federal Reserve took an unprecedented action, reducing interest rates by 0.5%, which now fall within a range of 4.75% to 5%. This action infused additional funds into the financial market.

Currently, China is making efforts to boost its economy on a global scale. Notably, on September 27th, the Chinese stock market experienced one of its strongest weeks since 2008 due to a stimulus plan introduced by Beijing.

The Chinese central bank, the People’s Bank of China, unveiled a 800 billion yuan ($114 billion) fund to bolster local businesses and non-bank financial institutions. This injection of capital has boosted investor confidence globally, providing a more secure environment for investments in riskier assets such as Bitcoin.

On the international political scene, things aren’t entirely peaceful. The tension persists, notably in the Middle East region, where the Israel-Palestine dispute has been ongoing for almost a year and shows no signs of abating.

The escalating tension between Israel and neighboring countries, particularly the possible danger posed by Hezbollah, a group supported by Iran, might bring unpredictability to international financial markets.

In simple terms, although Bitcoin is frequently viewed as a protective investment during periods of conventional financial instability, significant geopolitical incidents might disrupt the current optimistic feelings towards it, adding complexity to an otherwise beneficial situation for Bitcoin.

What do experts think?

As we move into October, various cryptocurrency specialists and market strategists are expressing their opinions about potential events in the near future.

One significant topic experts are delving into is the escalating worldwide liquidity, a significant factor influencing Bitcoin’s growth. As Julien Bittel, Chief of Macro Research at Global Macro Investor, points out, the global money supply (M2) has started to increase once more, which traditionally indicates a favorable trend for Bitcoin.

As a researcher examining Bitcoin’s behavior, I propose that this digital currency responds swiftly to liquidity injections. Considering the current macroeconomic climate, it seems we could be approaching what he refers to as a “final opportunity to buy before entering ‘The Banana Zone’, where significant growth is expected to take place.

Keep in mind that Bitcoin’s liquidity is generally a positive sign, but it’s crucial to be aware that geopolitical conflicts in the Middle East or sudden economic surprises similar to what occurred during the COVID-19 pandemic could potentially halt its momentum.

Known cryptocurrency expert, Michaël van de Poppe, has expressed a highly optimistic viewpoint regarding Bitcoin’s future price. He estimates that by the close of 2024, Bitcoin could potentially range from $90,000 to $100,000.

Similar to Bittel and van de Poppe, they point out that the increasing worldwide liquidity plays a significant role. Given that gold and silver prices are reaching their highest levels in years, there’s a strong expectation that Bitcoin, frequently referred to as “digital gold,” will also experience a rise in value.

Based on The Kobeissi Letter’s findings, it appears that U.S. consumers are growing more and more skeptical about the country’s economic future. In reality, their faith in the current economic situation has dropped to its most dismal point since 2020, a trend reminiscent of the confidence levels during the 2008 Financial Crisis.

Generally speaking, when the difference between people’s present evaluation and their future predictions surpasses 30 points, a recession usually ensues, with the year 2003 being the lone exception to this pattern.

Currently, we’ve reached a crucial stage where Bitcoin’s potential surge (bull run) and the broader economy’s possible dip into a recession seem to intersect at around 30 points or more.

If a recession does hit, it could have mixed implications for Bitcoin.

From my perspective as an analyst, I see Bitcoin as a potential safe-haven asset in times of economic instability, which might drive its demand higher. However, it’s also important to consider that during a severe economic downturn, investor risk appetite could diminish significantly, potentially constraining the upward potential of Bitcoin.

The road ahead

With October upon us and Bitcoin showing strong bullish signs, the landscape appears ripe for profitable opportunities. Nevertheless, I must emphasize the importance of proceeding cautiously.

Although an increase in global funds and the phase following a halving event point towards significant growth opportunities, there are still potential threats to consider. These include ongoing international conflicts and the prospect of an economic downturn in the U.S., which continue to pose significant challenges.

As a keen observer of the cryptocurrency landscape, I can’t stress enough the importance of keeping in mind its inherent volatility. While the future holds exciting prospects, it’s crucial to anticipate potential turbulence when considering Bitcoin’s trajectory. Just as with any investment, always be mindful not to risk more than you’re prepared to part ways with. Remain vigilant and exercise caution amidst these uncertain times.

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2024-09-30 19:47