Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin experienced an unexpected downturn in October, traditionally known as “Uptober” for its historical gains, with the cryptocurrency finishing the month in the red and sinking to levels not seen in four months. The leading digital asset, which stood at approximately $109,820 per coin, was down over 8% across the 30-day period, significantly below its October 6 peak of $126,080. This performance broke a six-year streak of monthly gains for Bitcoin in October, marked by a 3.69% drop from start to finish.
Macroeconomic Headwinds and Policy Signals
The unexpected plunge for Bitcoin during a historically strong month was largely attributed to unsettling macroeconomic conditions. Concerns about liquidity and the diminishing prospects of an anticipated third interest rate cut by the U.S. central bank played a significant role. Federal Reserve Chair Jerome Powell’s statement that a reduction was “not a foregone conclusion” sent digital assets, including Bitcoin, into a tailspin, pushing it below $106,000 at one point.
Earlier in the month, Bitcoin and other risk-on assets also tumbled after President Donald Trump re-escalated trade tensions with China. This move raised concerns about the global economy and led to over $19 billion in liquidations, with nearly 90% of these being long positions expecting price increases.
Expert Analysis on Bitcoin’s Performance
Juan Leon, Senior Investment Strategist at Bitwise, attributed the negative October returns to a “convergence of three primary factors: a powerful macroeconomic shock, fragile internal market structure, and a subsequent lukewarm monetary policy signal.” He emphasized that the crash on October 11 had a lasting impact on the market.
Analyst Noelle Acheson, in her “Crypto is Macro Now” newsletter, highlighted that the “reset of rate cut expectations” continued to weigh on crypto prices. She noted that Bitcoin is particularly sensitive to tightening liquidity conditions, unlike equities and bonds, which have other influencing factors.
Acheson also pointed to increased selling by long-term holders, speculating that some might believe Bitcoin had reached a peak in its current four-year cycle, a pattern that has historically defined crypto market rhythms.
Historical Context and Future Outlook
Historically, October has been one of Bitcoin’s strongest months, with CoinGlass data showing only one monthly loss in the previous decade (2018). Bitcoin had climbed nearly 11% last October, almost 29% in October 2023, and a significant 40% in October 2021, averaging nearly 20% returns for investors in the month.
Pseudonymous CryptoQuant analyst Maartunn described this as one of the “weakest ‘Uptober’ performances in years,” driven by U.S.-hour selling and other factors such as China tariffs and unfavorable economic readings like unemployment and inflation data.
Despite the recent setback, some analysts remain optimistic. Zach Pandl, Head of Research at Grayscale, suggested that the anticipated approval of numerous crypto exchange-traded funds by the SEC and a favorable regulatory environment could lead to a short-lived market setback. Investors now look to “Moonvember,” hoping for a rebound similar to last year’s 37% price spike in November.
