- Bitcoin drops over 3% in early October, contradicting expectations of a bullish ‘Uptober’.
- Recent gains from the US Fed’s rate cut have been mostly lost.
- Market expectations of further Fed easing are deemed unrealistic by BlackRock’s CEO.
- Geopolitical tensions impact Bitcoin’s performance, while traditional safe havens like gold and oil rise.
Uh oh! It was supposed to be Uptober, did Bitcoin and friends not get the memo or what?
It’s just day two of the month of October and the crypto market is in deep red, with many assets dropping like bears are chasing them. Bitcoin is down over 3% in the past 24 hours, dropping to US$60,371 (AU$87,563) at some point, trading now slightly up at the time of writing at US$61,387 (AU$89,036).
Bitcoin Loses Post-Rate Cut Gains
This means BTC has now lost most of the gains made following the US Fed cutting rates by 50 basis points in mid-September. As reported, the Federal Reserve may cut rates two more times this year, though some analysts expect more than just two 25 basis point cuts.
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BlackRock CEO Larry Fink said that while the economy overall is doing rather well, many overestimate the Fed’s appetite for further rate easing. Speaking to Bloomberg at an event in Berlin, Fink said the market’s expectations might be a little…unrealistic:
The amount of easing that’s in the forward curve is crazy. I do believe there’s room for easing more, but not as much as the forward curve would indicate.
Larry FinkFireworks and Missiles, Global Impact on Bitcoin
Of course, it’s only the start of the month and nobody would seriously expect to see green candles all the way to 31 October without any sort of correction. But Bitcoin and Co did react to the rising tensions in the Middle East as things between Israel and Iran are quickly escalating.
While Bitcoin has been on the radar of more institutional investors this cycle, it seems it doesn’t have a status as a safe haven just yet.
As Iran pierced Israel’s Iron Dome with several missiles in retaliation for a ground incursion into Lebanon, safe haven assets like oil and gold rallied.
That’s not to say this trend will continue though, as analysts David Brickell and Chris Mill predict fireworks for BTC later in the week. As Forbes reports, they’re pointing at huge stimulus measures by China to prop up its ailing economy.
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They see BTC hit new all-time highs later in the week, based on China and the Fed:
The steps taken from China this week will unleash a tsunami of liquidity. Alongside the Fed more aggressively cutting and a global easing cycle, we’re pumping in anticipation of that, but against this short term liquidity drain.
David Brickell and Chris Mill
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