Bitcoin’s (BTC) usual strong performance in October is threatened by high open interest in futures and flattening buying activity from spot investors, according to the September 30 edition of the report. Bitfinex Alpha.
The report highlights that October has consistently generated strong results for Bitcoin, with an average return of 22.9% and a median return of 27.7% since 2013.
As a result, the industry has dubbed this trend “Uptober”, which typically leads to a longer upward movement throughout the fourth quarter, with the market averaging an 88.8% return over the period.
Bullish signs for “Uptober”
Potential rate cuts from the Fed also add to optimism as Bitcoin enters the final quarter of this year, according to the report.
Fed Chairman Jerome Powell notably declared during his speech to the National Association for Business Economics on September 30 that a further reduction of 50 basis points was expected this year.
Adding to the bullish sentiment, Bitcoin has surged 26.2% since its sharp September 6 correction to $52,756, breaching the $65,000 mark and surpassing the August 25 local high of $65,200. This is the first time Bitcoin has surpassed a local high since March.
Additionally, Bitcoin’s consolidation between $50,000 and $68,000 mirrors its 2020 halving pattern, where a rally in October led to significant price increases.
Warning signs
Despite the various optimistic signs related to a potentially bullish fourth quarter, the report also highlighted a few warning signs that still threaten Bitcoin’s performance.
The first sign is the flattening of aggressive buying in the spot market. Since September 6, spot investors have massively accumulated BTC, but this movement has weakened since last week.
This suggests a temporary balance in the market between buyers and sellers, potentially linked to a lack of interest from traders who do not wish to take aggressive action until the fourth quarter.
The second sign is Bitcoin futures, which saw $35.3 billion in open interest. The report states that this level is often associated with local market peaks, raising concerns about possible “overheating” of the market.
Nonetheless, Bitfinex analysts believe that a 5-10% pullback should be enough to cool the market and would not end Bitcoin’s recent uptrend.
