Amid rising geopolitical tensions in the Middle East, Bitcoin speculators betting on a seasonal October rally are facing a challenging reality. Iran launched around 200 ballistic missiles at Israel, escalating regional conflict and causing Bitcoin to experience its largest drop in nearly a month. It later regained some ground in Asian trading. As of 1:10 PM Singapore time, Bitcoin was priced at approximately $61,537. Data shows Bitcoin fell about 3% in the first two days of October, while historically, it has averaged a 20% gain in October over the past decade. This seasonal trend had traders optimistic that Bitcoin might surpass its all-time high of $73,798 set in March. The current geopolitical risks have dampened this optimism.
Sean McNulty, trading head at cryptocurrency derivatives market maker Arbelos Markets, mentioned that the recent sell-off should be seen as a "temporary setback," especially since the Federal Reserve has started cutting interest rates. McNulty believes that the new U.S. government formed after the November presidential election could be more favorable towards cryptocurrencies. He added that October typically remains Bitcoin's best-performing month owing to seasonal trends.
Recent trends indicate that the performance of cryptocurrencies has become more aligned with broader stock markets. This highlights the critical impact of macroeconomic factors, such as the Federal Reserve's monetary policy, on Bitcoin. The 50-day correlation coefficient between the top 100 digital tokens and the MSCI World Stock Index stands at 0.65, the highest since 2022. A value of 1 indicates assets move synchronously, while -1 indicates inverse correlation.
