Key takeaways:
Bitcoin has decreased by 4.3% in October, despite its historically strong monthly performance.
The CME FedWatch tool indicates a 96.7% likelihood of a 25-basis-point interest rate cut, boosting market optimism.
Inflows into spot Bitcoin ETFs and stock market correlations suggest a possible recovery ahead.
Currently, Bitcoin (BTC) is down 4.3% in October, yet the optimism related to the month’s historically bullish trend persists. Since 2019, Bitcoin has averaged a near 20% gain in October, with a median return of about 15%. Though this year lags behind, market players are eyeing shifts in macroeconomic policies for potential momentum.
The CME FedWatch tool shows a 96.7% chance of a Federal Reserve rate cut of 25 basis points, which typically signals increased liquidity, lowers borrowing costs, and supports a risk-on attitude across asset classes, including cryptocurrencies like Bitcoin.
Institutional investments seem to be aligning with this outlook, as spot Bitcoin ETFs recorded nearly $5 billion in net inflows in the initial two weeks of October, signaling renewed confidence among large investors.
Additionally, Cointelegraph reports that total institutional holdings across public companies have increased to $117 billion, marking a 28% rise quarterly, with over one million BTC stored in corporate treasuries. In Q3, 48 new entities joined, further extending institutional interest in digital assets.
Related: Bitcoin to $74K? Hyperliquid whale opens new 1,240 BTC short
Stock correlation hints at Bitcoin’s next move
Bitcoin’s recent struggles can also be associated with the US equities market. Macroeconomic analyst Jesse Colombo stated that Bitcoin’s 92% correlation with the Nasdaq positions it as a “leveraged play on tech stocks.” This was evident last Friday when the S&P 500 dropped by 2.7%, the Dow Jones by 1.9%, and the Nasdaq 100 Composite by over 4.2%, their steepest declines since April, dragging Bitcoin down as well.
This sell-off was prompted by fresh trade tensions between the US and China, following reports of potential 100% tariffs on Chinese imports that unsettled risk sentiment. However, as markets began to stabilize earlier this week, US stocks started to recover, though Bitcoin’s rebound has not kept pace.
According to Fidelity’s Director of Global Macro, Jurrien Timmer, the recent downturn resembles the late-1990s “super bull” phase, where speculative assets experienced sharp, albeit temporary, drawdowns before rallying again.
If US equities continue to recover as earnings season approaches, it could create advantageous conditions for Bitcoin’s own resurgence. A new rally in tech and growth stocks, supported by a more accommodative monetary policy, may help prolong the optimism of “Uptober” into a more robust month-end.
Related: Bitcoin metric shows ‘euphoria’ as $112.5K BTC price squeezes new buyers
This article does not provide investment advice or recommendations. All investments and trading carry risks, and readers are encouraged to conduct their own research before making any decisions.
