The highly anticipated 'uptober' begins with massive liquidations against the backdrop of Middle East tensions: Bitcoin plummeted to $60k, giving up most post-Fed rate cut gains. What does this mean for the crypto market's outlook in Q4?
The Bitcoin hashrate has remained at its recent lows, suggesting miners may lack confidence in a sustained rally in Q4.
(Source)
Other historical events, such as the US-China trade war and the Russia-Ukraine conflict, have also demonstrated Bitcoin's volatility during geopolitical crises, with major price movements correlated to increased tensions.
On the other hand, considering that the price of BTC 'magically' has never sustainably fallen below the cost of mining, the potential for further decline also appears rather limited.
"The odds of transitioning to a bull market in the next three months are intriguing. They range from 20% to 66% depending on market conditions. On-chain activity could be the key factor." — Econometrics
Are bitcoin traders' short-term concerns justified? Yes but... Although Bitcoin has not yet broken through the downtrend, it is only a matter of time before it does, according to 10x Research analysts.
Several commentators on Bitcoin also mention the US election factor, noting that a breakout will not occur until the election is over. However, the prospect of a breakout may depend heavily on its outcome.
(Source: Ikigai Asset Management)
The latest Bitcoin market rally is built on hope, as noted by Econometrics:
"The hope that global liquidity will return. The hope that the global economy will avoid a recession. The hope that the typical post-halving Bitcoin rally will happen like in previous cycles. That's a lot of assumptions. But there's solid reasoning behind most of them: we're seeing a synchronized global monetary easing." — Ecoinometrics.
Indeed, according to a recent report by Sam Callahan, the bitcoin price moves in the direction of global liquidity 83% of the time in any given 12-month period, which is higher than any other major asset class.
BTC relationship to global liquidity (Source: Ikigai Asset Management)
Moreover, China’s struggling economy reportedly may provide additional tailwinds for Bitcoin through two factors: i) Chinese investors seeking an exit from stagnating Chinese assets, and ii) China's central bank intensifying its stimulus measures in response to the economic turmoil.
“We anticipate a constructive Q4 2024 due to US rate cuts and significant fiscal and monetary stimulus from China, which should enhance market liquidity and support BTC performance,” Coinbase Institutional analysts wrote in a recent report.
(Tom Dunleavy, partner at MV Capital, on X)
Notably, the Bitcoin exchange flow multiple is nearing its yearly low, from which BTC price rallied around 46% in 2023.
(Source: CryptoQuant)
Thus, with such robust fundamentals, a question that may soon arise is: Are you holding enough Bitcoin and altcoins](https://mail.10xresearch.co/p/fomo-is-back-are-you-holding-enough-bitcoin-and-altcoins-to-ride-the-next-wave) to ride the next wave?
(Source: Coindesk)
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