The Bitcoin (BTC) price is set to end the month with losses of close to 3%, partly due to comments made by US Federal Reserve Chairman Jerome Powell and concerns about Japan’s incoming Prime Minister. Powell’s remarks indicated a preference towards cutting interest rates steadily at 25bps intervals going forward, disappointing markets that were hoping for a larger rate cut. Additionally, Japan’s incoming PM, Ishiba, is thought to support policy normalization, though he has expressed support for loose monetary policy. Despite these challenges, Bitcoin remains on track to end the month with gains of 8%, which is unusual for September, a normally bearish month for the Bitcoin price.
October is typically a strong month for Bitcoin, known as “Uptober,” with an average return of 27% compared to a negative return in September. While there may be concerns about pre-US election uncertainty impacting the market, risks are tilted towards the upside for BTC. Factors such as Fed/global central bank easing, delayed post-Bitcoin halving tailwinds, and the alleviation of US election uncertainty are likely to drive the price of Bitcoin higher. However, the US economy remains a wildcard in this scenario, as further weakening could trigger a return of recession fears, impacting risk appetite in the market. Key economic data releases such as the US ISM PMI activity data and the September jobs report will be closely watched in the coming week to gauge market sentiment.
Despite the month-end stumble in the Bitcoin price, it is currently trading in the upper $63,700s, down just over 4% from its recent highs. A potential mini correction before the end of the month was expected after a strong rally to $66,000 last week. With Bitcoin still holding gains of 8% for the month, there is optimism that a major rally may occur in October, given historical trends. The market environment, with factors like Fed easing and US election uncertainty, could power Bitcoin higher in the coming month. A test of $70,000 could be in the cards if economic data continues to support risk appetite and market optimism.
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In conclusion, despite recent challenges in the market, Bitcoin remains on track to end the month with gains, paving the way for a potentially strong October. Factors such as Fed easing, US election uncertainty, and historical trends suggest that the risks are tilted towards the upside for BTC. Economic data releases this week will provide further insights into market sentiment and potential price movements. While the US economy remains a wildcard, a test of $70,000 for Bitcoin could be on the horizon if market conditions remain favorable. As always, it is crucial for investors to conduct their research and exercise caution when investing in cryptocurrencies due to the high-risk nature of the asset class.
