Bitcoin, traditionally known for its robust performance in October, has faced a rocky start this year, shedding around 3% in the first two days of the month. The cryptocurrency, which has historically enjoyed a 20% surge during this period, is experiencing a reality check as rising geopolitical tensions in the Middle East dampen investor optimism.
On Tuesday, Bitcoin suffered its most significant drop in nearly a month after Iran launched 200 ballistic missiles at Israel, sparking concerns of a wider conflict in the region. The digital currency, often viewed as a volatile but promising asset, briefly touched a low before recovering slightly to trade at around $61,825 on Wednesday morning in Singapore. Despite the partial rebound, Bitcoin remains under pressure, highlighting how global events can impact even decentralized assets.
Over the past decade, October has typically been Bitcoin’s best-performing month, with an average gain of 20%, according to Bloomberg data. This seasonal trend had led many traders to expect a rally, hoping the cryptocurrency might surpass its March peak of $73,798. However, the escalating conflict between Iran and Israel has introduced uncertainty into global markets, dampening those hopes for now.
Sean McNulty, director of trading at liquidity provider Arbelos Markets, remains optimistic despite the early October dip. “The sell-off is a momentary setback,” McNulty said, pointing to recent policy moves by the U.S. Federal Reserve. “The seasonal trend of October being the best month for Bitcoin is alive and well.” He believes that the Fed’s decision to begin cutting interest rates, coupled with the potential for a more crypto-friendly administration following the U.S. presidential election in November, could reinvigorate the market.
In recent months, digital assets have shown an increased correlation with traditional stocks, underscoring the growing influence of macroeconomic factors on the cryptocurrency market. Bitcoin and other top tokens are now more sensitive to broader market drivers, such as central bank policy and geopolitical tensions. According to Bloomberg, the 50-day correlation coefficient between the top 100 digital assets and MSCI’s global equity index reached 0.65, the highest level since 2022. A reading of 1 would indicate that the assets are moving in perfect sync, while a score of minus 1 signals an inverse relationship.
Investors are closely watching developments in the Middle East, particularly Israeli Prime Minister Benjamin Netanyahu’s response to Iran’s missile attacks. As global markets remain on high alert, Bitcoin’s trajectory in the coming weeks could hinge on how the situation unfolds.
For now, Bitcoin enthusiasts remain hopeful that the seasonal trend will prevail, bringing the cryptocurrency back on track for its usual October rally. However, with geopolitical tensions and macroeconomic challenges casting a long shadow over global markets, it is clear that Bitcoin’s journey this month is far from certain. Investors will need to brace for potential volatility as the digital asset navigates the complex landscape of both global conflict and economic uncertainty.
