Bitcoin’s ‘Uptober’ proves that the spot ETF bounce has come to the rescue, highlighting the resilience and potential of the cryptocurrency market.
It has been an eventful end of the month for the crypto industry. Bitcoin has seen a 26% increase for the month, trading above $34,000, while Ether has risen 6.8% to approach the $1,800 resistance level. Other altcoins are also experiencing growth.
This sudden surge in prices has come at the perfect time to save Bitcoin’s “Uptober” narrative. This narrative suggests that October brings a more favorable market for cryptocurrencies after the slow summer period. While many analysts dismiss this narrative as a coincidence, data shows that October has only seen negative results for Bitcoin once since 2015, compared to September which has seen negative growth six times over the same period.
Clara Medalie, head of growth at Kaiko, a market intelligence provider, explains that crypto is often fueled by narratives, and Uptober is one of many narratives used to explain price movements. However, there is some truth to this narrative, particularly in relation to the potential approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
Rumors of an imminent approval began circulating on October 16, and since then, Bitcoin’s price has surpassed $35,000. Medalie believes that the enthusiasm surrounding a possible ETF approval is the catalyst behind the October bounce. An approved spot Bitcoin ETF is seen as a game-changer for the industry, allowing institutional investors to trade Bitcoin on traditional exchanges. The SEC is currently considering applications from major investment firms, and the approval of one ETF could lead to a cascade of approvals and institutional cash flooding into crypto.
According to CryptoQuant, if the SEC approves applications from the seven largest funds involved in the race, up to $155 billion could pour into Bitcoin, boosting the wider crypto market by $1 trillion. This influx of capital could help offset the losses the crypto industry has suffered over the past 18 months, where $2 trillion has been wiped off the market.
However, it’s uncertain whether upward price action in Bitcoin will have a positive impact on other areas of Web3, such as decentralized blockchain technologies, non-fungible tokens (NFTs), and the metaverse. These sectors have also been affected by cryptocurrency price fluctuations and have experienced a decline in interest and funding during the crypto bull market.
Yehudah Petscher, an NFT market analyst, believes that the market is currently experiencing peak FOMO (fear of missing out), which is driving purchases across crypto. But he also warns that the buzz around the spot Bitcoin ETF news could quickly die down, and November could be a challenging month for the industry.
Despite the uncertainties, Hani Abuagla, a market analyst at XTB, believes that the good times for Bitcoin could continue. He predicts that the SEC will approve four or five spot Bitcoin ETFs by the first quarter of 2024, and the upcoming Bitcoin halving event, which increases the coin’s scarcity, will further impact its price. Additionally, the trial of Sam Bankman-Fried, founder of FTX exchange, has not had as much impact on the market as anticipated.
While the current gains align with the Uptober narrative, Clara Medalie advises caution and suggests that more than just an ETF approval is needed to correct the course of the entire industry, considering the setbacks it has faced in the past year.