The highly-anticipated October has now come to an end. So, how did Bitcoin really fare this historically bullish month? Did we really get an “Uptober?’
Well, it was certainly an ‘Uptober’ with BTC price surging 10.76%. While these gains were mediocre, much lower than the average 21.89% returns seen during this month last year, we did get really close to hitting the new all-time high (ATH).
On Oct. 30th, the $1.36 trillion market cap Bitcoin went past $73,000 and was less than $200 away from hitting its $73,740 peak that was set in March 2024, driven by the approval of Spot Bitcoin ETFs. However, as traders and investors made a profit, the price dropped soon after.
Data from blockchain analytics firm Glassnode shows that short-term holders, which are wallets holding BTC for up to 155 days, sold as much as 54,000 BTC on Oct. 31st, the most in six months. During this time, Bitcoin’s daily relative strength index (RSI) also showed overbought conditions as it crossed above 70.
The sell-off sent the BTC price down to nearly $70K on the last day of October and then marked a red start to November by falling further to under $69,000 just days before the US presidential election.
Interestingly, the decline in price came despite a week straight of inflows for Bitcoin ETFs, a sign of strong institutional demand. This included strong inflows on Wednesday at over $893 million, right after recording $870 million the day before. As a result, cumulative net inflows since the introduction of ETFs in January now total $24.2 billion, according to data tracked by SoSo Value.
Despite the sell-off, market sentiments remain firmly in the ‘Greed’ category still, having a reading of 75 on a 1-100 scale, down only 2% from Oct. 30th. That put the market sentiments in the ‘Extreme Greed’ category, usually the sign of local tops. Interestingly, just last month, sentiments in the market were of ‘fear’ with a reading of 42, as per the Crypto Fear and Greed Index.
A Deeper Look into Bitcoin Price Action: What’s Driving it?
For the last seven months now, BTC price has been trading in a range, and in early August, it went under $50,000. After ending the Q2 red with 11.92% negative returns, Bitcoin had a slow Q3, which made the market apprehensive about what was to come.
But after posting 2.95% gains in July and seeing an 8.6% drawdown in August, Bitcoin had its most bullish September ever.
As the crypto king had its greenest September ever in its history, the market soon began chanting ‘Uptober,’ which points to a green October. Historically, the vast majority of October has been a positive one, and following that trend, prices went up this October as well.
While there were initially concerns that the Uptober narrative may not play out as the BTC price went under $59,000 in the first 10 days, soon the month lived up to its promise, though not as strongly as expected or historically documented.
Last month actually saw the third-lowest positive returns for October at 10.76%. The lowest positive returns were 5.56% in 2022 and 10.17% in 2019, both occurring outside of a bull run.
Despite this small upside and starting November in red, which soon turned positive by 1.19%, Q4 is now recording a positive performance of 12.08%, as per data from CoinGlass.
As the price went up, so did the total Bitcoin open interest (OI), climbing to $43.61 bln on Oct. 30th. But it has since fallen to 589.66K BTC worth $41.3 bln as the Bitcoin sell-off resulted in 92,560 traders getting liquidated for a total of $293.55 million in the past 24 hours. The majority of these positions were longs, betting on the further increase in prices.
When it comes to Bitcoin OI, CME has the most OI at 166.68K BTC (11.65 bln), which has dropped 8.24% in the past 24 hours, followed by Binance at 127.63K BTC ($8.94 bln), which saw a less than 3% decline.
Given that fast-rising OI can indicate high leverage in the market, which makes the market precarious as even a small drop in price can cause a panic and lead to a bigger drawdown, this decline can bring back the market at an even footing.
But what exactly has been driving this latest price action? Well, there have been substantial changes in the market conditions, including a 50 basis points rate cut by the Federal Reserve and US political support that ignited a wave of bullish sentiments that has market participants calling for a new ATH at around $80K in the coming weeks.
Retail interest is also strong in Bitcoin at this time, with more than a million addresses now holding one entire BTC. Interestingly, this current figure of 1,013,120 addresses has decreased from 1,024,437 at the start of the year, according to IntoTheBlock.
Another factor supporting rising prices has been stablecoin supply, currently standing at around $178 billion, up from $135 billion at the beginning of the year.
If we look at the largest stablecoin, USDT, its supply has jumped by $6bln in the last quarter. Its issuer, Tether, actually reported $2.5 billion in net profits during this period, which brings its year-to-date (YTD) profit to $7.7 billion as USDT’s market capitalization surpassed $120.5 billion. More than a billion dollars of these profits came from the company’s US Treasury and gold holdings each.
How’s the Rest of the Market Doing?
With Bitcoin influencing the broad crypto market trend, the weakness in BTC price caused altcoins to fall dramatically.
Ethereum, the second-largest cryptocurrency, continues to disappoint with its lackluster performance. It is currently seeing three consecutive red quarters, recording losses of 5.74% in Q2, 24.19% in Q3, and 3.67% in Q4. While ETH did post a green September, with an upside of just 3.5%, October again turned red, with a decline of 3.4%.
Trading at $2,534, as of writing, Ether is only up 44% year-to-date and still down 47% from its Nov. 2021 peak of $4,880. Meanwhile, ETHBTC is around 0.036, still hanging around its multi-year low.
ETH competitor Solana (SOL), meanwhile, is only about 34% away from its 2021 ATH of $260 as it trades at $173.37, up 340% YTD. The OG meme coin Dogecoin (DOGE) is currently trading at $0.168, up 151% this year but down 77% from the $0.73 peak.
Among the top 100 coins, WIF had the second-largest loss of 9.3% in the past 24 hours. Immutable X (IMX) is the top loser with a 14% drop in price, which was the result of the US SEC sending the Web3 gaming company a Wells Notice.
“Immutable joins Coinbase, Consensys, Ripple, OpenSea, Crypto.com, and others who have all faced SEC escalations, many in the last two months before the US election.”
– Immutable noted in its statement where it vowed to fight for gamer rights
With all these losses, the total crypto market cap is currently sitting at $2.46 trillion, down from $2.55 trillion on Wednesday. The highest this figure went this year was $2.9 trillion in mid-March, while in late 2021, its ATH was $3.07 trillion.
Crypto assets weren’t alone in feeling the heat as shares of the largest crypto exchange in the US, Coinbase (COIN +2.03%), recorded its biggest single-day decline of 15.3% in more than two years. Back in July 2022, its stock price fell 21% amidst a probe from the US SEC.
This drop came after the company’s latest earnings failed to meet analyst estimates by about 11%, which many attributed to Coinbase not listing any meme coins, which are the hottest and most profitable trend of 2024.
Coinbase reported $1.2 billion in total Q3 revenue, while earnings per share were $0.28. In its shareholder letter, the crypto exchange pointed to weaker market conditions for its results. The exchange’s primary income source, transaction fees, dropped by 27%, while subscription and services revenue fell by 7%.
Coinbase Global, Inc. (COIN +2.03%)
Meanwhile, the company authorized up to $1bln share buyback in October, thanks to its balance sheet growing by over $400 million. It ended the quarter with $8.2 billion in cash, cash equivalents and USDC.
This crypto stocks drop actually came amidst a broader stock market decline as more than $950 billion got wiped out, making Oct. 31st a tough day for all.
The red seen across the markets has been attributed to a cautious stance taken by investors ahead of the US elections on Nov. 5th. The growing uncertainty around who will win this election, Kamala Harris or Donald Trump, has led to a correction in stock markets, while the safe-haven gold made fresh highs right above $2,790 an ounce on Thursday and is currently trading just under $2,750.
What’s Ahead for the Bitcoin & Crypto Market? Election Volatility!
With US elections around the corner, all the eyes are now on who will actually win on Nov. 5th and how that will impact crypto prices.
Florida Chief Financial Officer Jimmy Patronis believes Republican candidate Trump winning the elections would be bullish for Bitcoin, saying he would “not be shocked to be able to see that growing under a Trump administration in the near future.” Trump has talked about creating a national Bitcoin stockpile if elected president. The state of Florida itself holds about $800 mln in crypto-related investments in its portfolio.
According to Patronis, ignoring crypto is a “mistake” and, as such, recommended the state retirement system to direct a portion of its funds into crypto.
“I’m going to continue to push forward to make sure that we’re doing everything possible to take advantage of this. It’s not emerging, it’s here.”
– Patronis
Besides Florida, other states looking into crypto include New Jersey and Wisconsin.
A recent report from Standard Chartered also sees a Republican sweep as being most bullish for crypto assets. The bank has set Bitcoin’s year-end target at $125,000. JP Morgan analysts are also among those who believe a Trump win next week will lead to an upward momentum for Bitcoin.
Against this backdrop, some speculate that the latest crypto slump could actually be due to Trump’s shrinking odds.
According to data from crypto betting site Polymarket, the odds of Trump winning the upcoming elections have tumbled from 66.9% on Oct. 30th to 62.8% now. The chances of victory for Democrat Kamala Harris meanwhile jumped from 33.7% to 37.3% during the same period. Trump’s odds shrunk across prediction markets, including PredictIt and Kalshi.
“Big slip-ups by both parties over the past few days have reminded people that the election is too close to call and maybe event-dependent. This has re-introduced uncertainty.”
– Matt Hougan, CIO at Bitwise
Wall Street broker JMP, however, sees the US presidential election as a positive catalyst for the wider crypto market. The election, it said, will bring “greater clarity and building consensus among legislators on both sides of the aisle in the coming months.” Canaccord also sees a change in the regulatory regime as a larger catalyst, at least in the short term.
Darius Sit, QCP Capital’s co-founder, also sees a crypto-friendly White House benefiting the industry globally, and if Trump comes in with more friendly policies, “Bitcoin becomes even more of a cornerstone asset,” he said.
However, he sees BlackRock’s (BLK +0.43%) entry into crypto as more important than Trump’s getting back into the White House. BlackRock CEO Larry Fink discussing Bitcoin as a store of value on CNBC is how crypto becomes “a part of the American investing narrative” and brings crypto mainstream, said Sit.
Upcoming Events That Could Impact Crypto Prices
Besides US elections, updates on inflation and the labor market, as well as the Fed’s next interest rate decision that’s slated to come over the coming trading sessions, are potential events that can affect cryptocurrency prices in the days and weeks to come. There’s also the ongoing tensions between Israel and Iran that are a concern for the markets.
While profit-taking sent BTC prices down as it neared ATH, which was to be expected as all the bitcoin holders were in profit, and several upcoming events point to volatility for Bitcoin, there are a lot of positives for the world’s largest crypto asset and by extension the broad crypto market.
For instance, Bitcoin’s move above the psychologically important $70K level didn’t trigger intense profit-taking, as data from CryptoQuant reveals that the short-term holder (STH) Spent Output Profit Ratio (SOPR) metric isn’t overheated yet. This metric tells whether these holders are in profit or loss compared to when they first bought BTC.
With the ratio coming in at 1.017%, a value above 1 indicating a high percentage of coins having made a profit on their short-term investment and vice versa, STHs are “realizing some profits and are not yet overheating.”
Then we have Bitcoin bull Michael Saylor, who seems unable to stop acquiring BTC. Saylor’s software business, MicroStrategy, has become the world’s largest corporate Bitcoin holder. MicroStrategy’s 252,220 Bitcoins, valued at $18 billion, represent 1.2% of Bitcoin’s total supply.
To increase its bitcoin coffers, the company raised $1.1 billion through an equity offering and $1.01 billion through convertible notes. While the company hasn’t bought any Bitcoin since mid-Sept., they are now planning to raise $42 billion over the next three years to buy BTC. This ’21/21 Plan’ involves $21 billion of equity raises and $21 billion of debt offerings.
“As a Bitcoin Treasury Company, we plan to use the additional capital to buy more Bitcoin as a treasury reserve asset in a manner that will allow us to achieve higher BTC Yield.”
– CEO Phong Le
Another bullish thing is the ETF FOMO, which we are currently witnessing as institutional investors pour hundreds of millions of dollars into US spot Bitcoin exchange-traded funds daily.
While the first wave of inflows into these products was driven by retail investors, Bitwise Head of Research Ryan Rasmussen said institutional investors are leading the charge this time. The likes of Merrill Lynch or Wells Fargo, he noted, have to go through lengthy due diligence and compliance processes, then work with investment committees to vet new types of investments and finally educate the clients about new assets, and they have only now begun “unlocking their wealth managers.” The BlackRock brand certainly helps.
“They can say, ‘Look, the largest institution in the world is backing Bitcoin in a big way,’ and so it’s no longer this contrarian view in the way that it was.”
– Rasmussen
Bitcoin ETFs now hold 1.1 million BTC. At the rate the ETFs are gobbling up BTC, Bloomberg ETF analyst Eric Balchunas on X (previously Twitter) stated:
“They’ll pass Satoshi in less than two weeks.”
The rapid accumulation of Bitcoin by these funds, which now hold $70.86 billion in total net assets in less than a year, has already reached over 50% of the assets held by gold ETFs. In contrast, total net assets for US gold ETFs, just above $137 bln, took two decades to reach this level.
Final Thoughts
Trading just under $70,000, Bitcoin is only about 5% away from its ATH. After several months of consolidation, Bitcoin is drawing attention again. Once the uncertainty around the election passes and if ETF inflows continue to rise, they could help the largest cryptocurrency attain a new high, potentially triggering a market-wide FOMO that could send prices rallying in the year ahead, as they typically happens during bull markets.
Click here to learn all about investing in Bitcoin.
