Red ‘Uptober’? Why Bitcoin Had Its Worst October in 6 Years

Despite a strong start and a new record at the beginning of October, the anticipated ‘Uptober’ turned into a real decline for Bitcoin, with the leading cryptocurrency falling to levels not seen in four months.

Bitcoin is currently trading around 107,000 dollars, which is about 14 percent below its peak of 126,080 dollars on October 6. Over the 30-day period, the largest cryptocurrency has dropped by more than 12 percent.

Historically, October is one of the best months for Bitcoin, hence the name ‘Uptober’, with CoinGlass data showing only one monthly loss in the past 10 years, back in 2018. This October broke a six-year streak of gains, showing a decline of 3.69 percent from the beginning to the end of the month.

This historically strong month for Bitcoin occurred amid disturbing macroeconomic conditions, including recent concerns about liquidity and diminishing prospects for a third interest rate cut that investors had eagerly anticipated.

On Wednesday, U.S. Federal Reserve Chairman Jerome Powell stated that a cut is ‘not a foregone conclusion’, leading to a sharp drop that at one point brought Bitcoin below 106,000 dollars.

Earlier this month, Bitcoin and other risk assets fell after U.S. President Donald Trump escalated the trade war with China again, raising concerns about the global economy. Investors liquidated over 19 billion dollars in positions, with nearly 90 percent of long positions expecting price increases.

– Negative October returns can be attributed to the convergence of three primary factors: a strong macroeconomic shock, a fragile internal market structure, and a subsequent lukewarm signal from monetary policy – said Bitwise’s senior investment strategist Juan Leon, adding that the crash on October 11 had a long-term effect on the market.

In her newsletter Crypto is Macro Now on Friday, analyst Noelle Acheson wrote that the resetting of interest rate cut expectations continued to weigh on cryptocurrency prices.

– As Chairman Powell acknowledged in his statement, liquidity conditions have tightened. They are not yet close to crisis levels as a percentage of bank reserves, but Bitcoin is one of the more sensitive assets to liquidity conditions – Acheson wrote.

– Stocks have earnings and other factors that affect their attractiveness, and bonds have fiscal and economic growth. Bitcoin does not; it is pure sentiment, which is influenced in the short term by monetary liquidity and in the long term by the balance of supply and demand – she added.

She also noted increased selling by long-term holders, possibly linked to the belief that Bitcoin has peaked in its last four-year cycle, a timeframe that has defined the rhythms of the crypto market.

Bitcoin, cryptocurrencies, and stocks have typically performed well in a low-interest-rate environment. The Fed has cut interest rates at its last two meetings.

Bitcoin rose by nearly 11 percent last October, and in October 2023, it rose by nearly 29 percent. In 2021, it surged by as much as 40 percent that month. On average, it has provided investors with an average return of nearly 20 percent, according to CoinGlass.

The pseudonymous analyst CryptoQuanta Maartun noted that this is one of the weakest ‘Uptobers’ in years. He believes it is not the result of a broad sell-off, but rather primarily driven by selling during U.S. trading hours.

He also highlighted other factors, including Chinese tariffs and economic readings, including unemployment data and consumer and producer price indices, which have moved in less favorable directions in recent months.

However, some analysts are optimistic. Zach Pandl, head of research at Grayscale, said that the long list of crypto funds expected to be approved by the SEC could help the market and that the regulatory environment remains favorable for digital assets.

Is ‘Moonvember’ ahead for Bitcoin? Last year, the 11th month brought an incredible 37 percent price increase for Bitcoin, something investors would undoubtedly be grateful to see again.