Bitcoin speculators hoping for a seasonal rise in October are facing early challenges as escalating tensions in the Middle East spark global market caution.
On Tuesday, Bitcoin experienced its largest decline in nearly a month following the launch of approximately 200 ballistic missiles from Iran to Israel, marking a brief yet intense escalation between the adversaries. The digital asset regained some of its losses by Wednesday, with trading prices around $61,825.
Data shows Bitcoin fell about 3% in the first two days of October, contrasting sharply with the average 20% gain for the entire month over the past decade. This seasonal trend had led some traders to anticipate Bitcoin breaking its March record high of $73,798, but the significant geopolitical developments have dampened optimism.
Sean McNulty, Head of Trading at liquidity provider Arbelos Markets, considers the current selloff a "temporary setback," especially since the Federal Reserve has started cutting interest rates. He believes that a potentially more crypto-friendly government could emerge after the U.S. presidential election in November.
McNulty also noted that October remains Bitcoin's best month, suggesting the seasonal trend persists. Currently, with Israeli Prime Minister Netanyahu vowing retaliation against Iran’s attacks, the market remains vigilant about escalating conflicts. U.S. stock futures fluctuated on Wednesday, and oil prices rose due to supply concerns.
Recently, the movement of digital assets has become more synchronized with the stock market, indicating that macroeconomic drivers like Federal Reserve monetary policy are crucial for Bitcoin. Data indicates that the 50-day correlation coefficient between the top 100 digital tokens and the MSCI World Stock Index has reached 0.65, the highest level since 2022. A reading of 1 suggests assets move in perfect sync, while -1 indicates complete divergence.
