Analysts and experts remain optimistic about a bullish October for the crypto markets, despite a significant liquidation event last week, drawing comparisons to past crypto black swan occurrences.
“I expected October to show significant losses after the largest liquidation in crypto history,” said crypto podcaster Scott Melker on Wednesday.
However, Melker noted that the markets are still stable, which he described as “a small miracle,” asserting, “I don’t think we’re entering a bear market.”
The crypto market capitalization quickly bounced back to reclaim $4 trillion following the weekend downturn, though it has since cooled slightly as Bitcoin (BTC) struggled to maintain momentum, retreating below $111,000 again on Tuesday.
Melker emphasized that this isn’t like 2017 or 2021 when significant external factors influenced the markets, such as “ICO mania, the China mining ban, or FTX.”
“What transpired last week was purely structural. It forced a reevaluation of risk and a reconsideration of what’s feasible (and broken) in this market.”
Expect Near-term Volatility
HashKey Group senior researcher Tim Sun informed Cointelegraph that we should anticipate volatility as we approach the cycle peak.
“After last weekend’s aggressive deleveraging, the overall sentiment in the cryptocurrency market is still recovering, and risk appetite remains low. Price movements are sensitive to news-driven catalysts.”
“While near-term volatility is to be expected, excessive negativity is not justified,” he added, stating that from a medium-to-long-term viewpoint, “policy easing, de-escalation of tensions, and liquidity repair should be the prevailing themes.”
Relevance of Seasonal Influences
October, dubbed “Uptober,” has historically been a solid month for Bitcoin, which has seen gains in ten of the past 12 years. Currently, it’s down 0.6% since the start of the month, but historical patterns indicate it may still reverse to a positive trend by month-end.
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Historically, Bitcoin has shown the most growth in the latter half of the month. In October 2024, it surged 16% after October 15, while in 2023 it increased by 29%, and in 2020, it was up 18% in the second half.
Melker also highlighted the significant rally of gold to an all-time high last week, noting that this usually results in a rotation into Bitcoin.
“Investors are reallocating rather than panicking. If gold can surge that much, imagine the impact when capital starts flowing back into Bitcoin.”
Additional Uptober Influences
The trade tariff concerns that contributed to the weekend’s decline seem to be diminishing, as a White House official confirmed that President Trump will meet with Chinese President Xi Jinping to discuss trade.
“Trade conflict is not a zero-sum game; both sides ultimately want larger portions of the gains, indicating that the outcome is likely to be more moderate than current sentiment suggests,” Sun stated.
Other narratives, such as potential further rate cuts by the Federal Reserve this year and the debasement trade, are also contributing to the belief that Uptober remains on course.
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