The Crypto Market Starts October with a Rally
The crypto market is experiencing a positive start to the month of October, with Bitcoin, Ether, XRP, Cardano’s ADA, and several altcoins rallying. The United States’ temporary aversion to a government shutdown has had a positive impact on both the crypto and equities markets. As a result, the total crypto market cap has increased by $3.7 billion to reach $1.1 trillion on October 2.
Uptober is off to a Solid Start
October, also known as “Uptober” in the crypto market, has historically seen positive returns. Bitcoin and other cryptocurrencies have rallied by 5%, with Bitcoin surpassing $28,500. October has consistently been one of the best months for Bitcoin price gains.
This strong performance in October is much-needed after the third quarter of 2023 experienced significant losses due to various hacks totaling $700 million.
Crypto Liquidations Rule the Day
The recent rally in the crypto market has triggered a wave of short position liquidations worth over $92 million within 24 hours. Bitcoin short liquidations led the way, with the largest single liquidation amounting to $8.39 million on Huobi exchange. In total, $51.5 million in Bitcoin shorts were liquidated in just one day.
Despite this losing streak for short-sellers, 50.5% of the futures market remains short. This imbalance may present an opportunity for a short squeeze and potentially lead to further price increases.
Macro Factors Could Benefit the Crypto Market
The U.S. government’s avoidance of a shutdown on September 30 likely contributed to the initial crypto price pump on October 1, which quickly wiped out $70 million in shorts. Despite the Securities and Exchange Commission’s refusal to approve a Bitcoin exchange-traded fund (ETF) and its ongoing regulatory scrutiny, large institutions continue to show interest in the crypto space.
In fact, VanEck and Bitwise have both launched Ether ETFs on October 2. The Bitwise ETF will be available on the Chicago Mercantile Exchange, while the VanEck Ether ETF will be launched on the Chicago Board Options Exchange.
Although there are still potential risk events that could impact the price of Bitcoin and altcoins, growing institutional interest is improving market sentiment. The Bitcoin Fear & Greed Index has seen an 11-point increase over the past month, indicating improved sentiment.
Hot Take: Crypto Markets Remain Volatile
While the positive start to October has provided a short-term boost to crypto prices, it is important to note that the market may still experience volatility. The market’s response to new enforcement actions or an economic recession will be crucial in determining its future direction.
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