Barring a very big surprise, Bitcoin should end September with a red candle. As an illustration, its current price is down 13.5% compared to 30 days ago. But October should be different. So, what to expect from Bitcoin for this period?
During the month of September, many events followed one another for Bitcoin. First, the “King Coin” set a quarterly record of $52,853.76 after repeatedly failing to overcome the psychological $50,000 mark. It was believed to have broken the “curse” of September. That was without accounting for the over-liquidation of leveraged positions that plunged BTC towards $42,000 on Sept. 7.
Then, a period of calm had set in for a week with a slight rebound of Bitcoin. Evergrande’s fear of default had tarnished that calm by creating a panic situation. Bitcoin then lost its modest gains. The Fed had finally offered hope, but Chinese authorities created FUD with a ban on cryptocurrency transactions.
Bullish bitcoin: the historic comfort of October
Source: Twitter / @ CryptoMichNL
When analyzing the September sell-off in depth, it is not so bad considering the current price of BTC. Historically, this month has been bearish for Bitcoin. Over the past 12 years, the price has slipped by an average of 7% in September.
This year’s decline is also severe, but its price has not fallen below $37,000. If it had come close to $37,000, Bitcoin could say goodbye to crossing $100,000 at the end of the year.
The damage could have been much higher. A Chinese crackdown announced a day before the expiration of more than 70,000 bitcoin options contracts was hardly coincidental. Fortunately for Bitcoin, the market is resisting and trying somehow to defend the upper bound of the $40,000-$44,000 range.
Based on the time series, October should be different for Bitcoin. Over the past 12 years, its price has gained an average of 31% each October. From 2013 to 2020, BTC only dropped twice in October. In 2018, Bitcoin fell 3.83% in October, but in a particularly bearish year for cryptocurrency after the bull run of 2017. In 2018, 9 months out of 12 posted a negative monthly performance. The same observation was made in October 2014, when Bitcoin lost 12.95%. That year, 8 out of 12 months showed a monthly close in the red.
Morgan Stanley doubles its bitcoin position via Grayscale
The American mega-bank seems to sense Bitcoin’s bullish momentum. It took the opportunity to increase its exposure to Bitcoin through the purchase of Grayscale shares. Indeed, according to a report by the US Securities and Exchange Commission (SEC) published on September 27, Morgan Stanley owned 58,116 shares of Grayscale Bitcoin Trust as of July 31. Its exposure has grown 105% since April.
In fact, Morgan Stanley isn’t the only institutional player that has increased its Bitcoin exposure through Grayscale. According to an editorial from Cointelegraph, Ark Investment bought nearly 450,000 more Grayscale Bitcoin Trust shares, bringing its total to 8.3 million shares (GBTC).
On-Chain data confirms the trend of accumulation
Institutional investors still maintain hope for a bullish Bitcoin in the future. Led by MicroStrategy, whose Bitcoin portfolio amounts to approximately 109,000 BTC, institutions are not letting go of Bitcoin. A tweet from a crypto analyst using the pseudonym Bitcoin Archive elucidates this trend towards accumulation:
The decline in the supply of #Bitcoin on exchanges has been the dominant trend for almost 2 years – briefly interrupted by the correction in May.
We are firmly in a period of accumulation.
There is no immediate sign of change.
Some important points to watch out for!
On a technical level, Bitcoin needs to seize $43,600 as support to maintain the bullish divergence. Any sign of weakness and inability to sustain this support will be damaging to the long-term bullish trend.
Regarding fundamental analysis points, trader and crypto expert Lark Davis shared several factors that may affect the price of Bitcoin during the month of October.
Potentially important catalysts include:
- Ethereum merger
- The purchase of BTC by a large corporation and the reactivation of corporate treasury FOMO
- Regulatory clarity in the United States
- Ripple wins lawsuit
Possible reasons that will invalidate this:
- No BTC ETF
- SEC crushes exchanges and stablecoins
- Evergrande contagion
- The Fed’s tapering brings down stock markets, large fortunes holding cryptocurrencies sell for cash
Source: Twitter @TheCryptoLark