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Bitcoin: Time running out on "Uptober"

Time is running out for Bitcoin to live up to its stellar reputation come this time of the year.

In October, we typically see a monthly gain for Bitcoin.

Here’s how the world’s largest crypto had fared in recent Octobers past:

  • October 2021: +40.38%
  • October 2020: +29.36%
  • October 2019: +11.51%

Over the past five years, October has even heralded an average monthly gain of 26%.

Such has been the seasonal trend that Bitcoin aficionados have even coined the term “Uptober”.

However, as our article from earlier this month (October 4th) cautioned:

“… this quarter is set to be different.

And indeed, Bitcoin has been trading in muted fashion all of this month.

Quiet October for Bitcoin

Prices are now married to its 50-day simple moving average (SMA), though still oscillating just below the psychologically-important $20k mark.

The volatility in Bitcoin has subsided so much that the T3i Bitcoin Volatility index, which measures the asset’s expected 30-day volatility, last week posted its lowest reading since this index kicked off in 2021.

And unlike the S&P 500’s 5.9% month-to-date gains, Bitcoin’s performance has been left in the dust with a 0.6% contraction so far this month.

Still, using the glass-half-full approach, Bitcoin’s relative resilience may serve to inject further confidence into crypto bulls that Bitcoin has found its floor.

And the notion that Bitcoin is a viable hedge may gather more believers the longer Bitcoin can hold at these levels while riding out the macro headwinds.

 

What to look out for this week?

Keep in mind that macro-economic woes still abound, as markets participants are still wary about the prospects of a US recession in 2023.

In which light, markets will interpret the following economic data releases:

  • US Q3 GDP print: due Thursday, October 27
    - Forecast: 2.3% quarter-on-quarter growth
     
  • September PCE Deflator (the Fed’s preferred gauge for measuring inflation): due Friday, October 28
    - Forecast: 6.3% year-on-year growth

 

Higher-than-expected prints on both of these data points may dash hopes for a “dovish pivot” by the Fed once more, and potentially send risk assets tumbling.

Another such episode may well retest the mettle of crypto bulls as to whether Bitcoin can hold just below the $20k mark, or ultimately suffer a breakout to the downside in keeping with the longer-term trend.

 

Bitcoin now less tethered to US stocks

Had this article been written even just a couple of months ago, one would have rightly pointed to the upcoming Big Tech earnings as potential catalysts for Bitcoin volatility.

The Q3 financial results out of the likes of Amazon, Apple, Alphabet and Microsoft, who combined account for about 20% of the S&P 500’s total market cap, are set to hold large sway over how broader US stock markets perform in the coming days.

Yet, given the earlier-mentioned divergence between US equities and Bitcoin, the latter may well find it hard to follow suit with any risk-on surge post-earnings this week.

 

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