October Crypto Rally Is Probably Imminent, Here’s Why

As a seasoned crypto trader with over two decades of experience under my belt, I must say that September has always been a rollercoaster month for Bitcoin. However, this year seems to be an exception, with BTC showing a remarkable 11% growth so far this month compared to the usual average loss.

Over the last seven days, the leading digital currency experienced an approximate increase of 4.4%, climbing from around $63,000 to reach nearly $66,000 in value.

Overall, the BTC price has soared a remarkable 4.11% in seven days.

Currently, Bitcoin has climbed further, reaching over $65,500 as indicated by a large, upward-pointing “green candle” on the hourly chart.

Bitcoin appears poised for one of its most significant upward trends ever, and given Bitcoin’s present influence, it seems likely that the broader cryptocurrency market will mirror its trajectory.

Will this actually happen?

The Fed rate cut

In simpler terms, the latest reduction of 0.5% in interest rates by the Federal Reserve – their first decrease in more than four years – was viewed as a potential boost for speculative assets such as Bitcoin. Yet, Chairman Jerome Powell highlighted that any future decisions about interest rates would be based on economic data, which means they might not go as bullishly as initially expected in the market.

As a researcher, I’ve observed that reduced interest rates often stimulate demand for riskier investments, and in this case, it seems that market sentiment started to reflect optimism after a period of time. Intriguingly, the price of Bitcoin momentarily surged by 2% and touched $60,000 before settling down again.

Last week, U.S. stocks hit record highs and Bitcoin surged past $64,000.

Investment specialist Anthony Scaramucci anticipates that Bitcoin might achieve fresh peak prices, propelled by the interest rate decrease and more transparent U.S. cryptocurrency regulations. Such conditions may stimulate additional expansion within the digital assets sector.

Bitcoin/S&P 500 correlation

It’s become more common to see similar movements between popular digital assets and U.S. stocks, as the correlation between the top 100 digital assets and the S&P 500 Index has risen to 0.67 over a 40-day period.

It’s clear that macroeconomic factors are exerting a substantial influence over the markets, and the strongest correlation we’ve seen so far was back in Q2, 2022, with a reading of 0.72.

As Bitcoin takes on more characteristics of a high-risk investment, its link with the S&P 500 becomes stronger, while its safe haven connection with Gold weakens. Institutional investors are closely watching U.S. economic data for indications of future interest rate reductions, which are anticipated to keep shaping crypto prices throughout the Federal Reserve’s period of monetary easing.

In June 2024, the total value of the S&P 500, which is often used as a benchmark for the overall U.S. stock market, was approximately $45.84 trillion. Interestingly, it hit an unprecedented peak of 5670 right before the Federal Open Market Committee (FOMC) meeting, leading to speculation among traders that the committee might lower interest rates by 0.5%.

In recent times, including the 2021 bull market, Bitcoin and the S&P 500 have exhibited a significant relationship, almost mirroring each other’s movements. In early 2024, both assets reached unprecedented yearly highs, suggesting that their connection is strengthening once more.

Although recent trends may indicate a temporary downturn for Bitcoin and the S&P 500, history shows that these markets tend to deliver favorable outcomes over extended periods when they manage to steer clear of recessions, as was the case in 1990, 2001, and 2007.

Uptober imminent?

In a nutshell, October tends to be Bitcoin’s most robust month. A glance at its price trends over the past five years reveals that, in actuality, Bitcoin’s value generally surges during October, showing a consistently bullish pattern.

This month, Bitcoin has experienced a significant increase of approximately 11%, whereas historically, it has seen an average drop of around 5.9% during the month of September over the past decade. In terms of Bitcoin’s monthly performance, September has been one of the least volatile or “greenest” months in its history.

Based on data from CryptoQuant, the Market Value to Realized Value (MVRV) of Bitcoin appears to indicate a positive, or bullish, market trend.

The MVRV ratio is computed by taking Bitcoin’s current market worth and dividing it by the realized value, which represents the cost at which every coin now in circulation was last traded on the blockchain.

At the moment, Bitcoin’s MVRV ratio is at 2.04, slightly higher than its 365-day moving average (MA) of 2.02. This slight elevation suggests a possible upward trend in the market. When the MVRV surpasses the 365-day MA, it’s typically interpreted as a bullish sign by traders, implying potential growth in the cryptocurrency market.

Recently, Analyst Will Woo has expressed a positive outlook about Bitcoin, indicating that the market may be moving beyond its temporary bearish period and heading towards a more favorable phase.

Currently, experienced trader Peter Brandt is emphasizing the current movement in Bitcoin’s price trend, pointing out that it continues to exhibit a pattern of successively lower peaks and troughs.

I underscored that for this trend to break and conclude the six-month expanding triangle formation as suggested by Brandt, we must observe a significant move above the July highs. As long as this level hasn’t been attained, I maintain that the bearish pattern persists, according to my analysis.

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2024-09-28 13:19