The crypto market is up today and Bitcoin (BTC), Ether (ETH), XRP (XRP), Cardano (ADA) and numerous altcoins rallied to start the month of October. Crypto and equities markets responded positively to the United States’ temporary aversion to a government shutdown, bringing the total crypto market cap up $3.7 billion to $1.1 trillion on Oct. 2.
Crypto market 1-day price action. Source: Coin360
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Let’s examine three of the major factors influencing today’s crypto market rally.
Uptober is off to a solid start
October has historically been celebrated as “Uptober” due to the positive returns in the crypto market. Bitcoin and crypto market prices rallied 5% to over $28,500.
The seasonality of Bitcoin’s returns in October has remained positive, only failing to achieve gains 3 times in the month. With such a strong history, this makes October statistically one of the strongest months for Bitcoin price gains.
Bitcoin returns by month. Source: Look Into Bitcoin
A strong October is much needed after the third quarter of 2023 equated to $700 million in losses due to a variety of hacks.
Crypto liquidations rule the day
The crypto market rally started on Oct. 1 and fueled a wave of short position liquidations across the market, totaling over $92 million in 24-hours. Bitcoin short liquidations lead the way with the largest single liquidation of $8.39 million in one transaction on the Huobi exchange. In total, $51.5 million in Bitcoin shorts have been liquidated in 24-hours.
Total crypto liquidations in 1-day. Source: Coinglass
Despite the short-seller losing streak, 50.5% of the futures market remains short. With the ratio remaining skewed short, a potential opportunity for a short-squeeze could happen and lead to further price upside.
Bitcoin short vs. long ratio. Source: Coinglass
Macro factors could benefit the crypto market
The U.S. government averting a shutdown on Sept. 30, may have helped the initial Oct. 1 crypto price pump which quickly wiped out $70 million in shorts.
Despite the Securities and Exchange Commission (SEC) refusing to approve a Bitcoin ETF and their continued war on the crypto market, large institutions remain interested in the space.
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Such interest has led VanEck and Bitwise to both launch Ethereum ETFs on Oct. 2. The Bitwise ETF will launch on the Chicago Mercantile Exchange (CME) and the VankEck Ether ETF will launch on the Chicago Board Options Exchange (CBOE).
While Bitcoin and altcoins still have overhanging risk events that could impact the price, the growing institutional interest is improving sentiment across the market. The Bitcoin Fear & Greed Index highlights the improved sentiment, noting an 11-point increase over the last month.
Bitcoin Fear & Greed Index. Source: Alternative.me
Overall, crypto markets are likely to continue to experience price volatility. While the positive start to October is providing a nice short-term bump in crypto prices, the market’s reaction to any new enforcement actions or an economic recession will be the true determinant of the direction the market chooses to take.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
