Bitcoin wobbles in poor start to token’s best month historically

BITCOIN speculators banking on a seasonal October melt-up faced an early reality check as deepening tension in the Middle East drove a bout of caution across global markets.

The digital asset fell the most in almost a month on Tuesday (Oct 1) after Iran fired about 200 ballistic missiles at Israel in a sharp but brief escalation of hostilities between the two adversaries. The token pared some of the drop on Wednesday to change hands at around US$61,825 as at 11.20 am in Singapore.

Bitcoin has shed about 3 per cent in the first two days of October, a contrast with its average 20 per cent climb over the month as a whole in the past decade, according to data compiled by Bloomberg. That seasonal cue had some traders anticipating a lift past March’s record high of US$73,798, until arguably the biggest geopolitical fault line in global markets poured some cold water on the optimists.

Sean McNulty, director of trading at liquidity provider Arbelos Markets, argued that the sell-off is a “momentary setback” given that the Federal Reserve has begun cutting interest rates. The government that emerges after November’s US presidential election is also likely to be friendlier towards crypto, he said.

“The seasonal trend of October being the best month for Bitcoin is alive and well,” McNulty added.

For now, markets are on alert for intensifying conflict as they parse Israeli Prime Minister Benjamin Netanyahu’s vow to retaliate against Iran’s strikes. US equity futures wavered on Wednesday, while oil prices rose on supply fears.

Digital assets of late have moved more in tandem with stocks, indicating macroeconomic drivers such as the Fed monetary policy outlook are key for Bitcoin at the moment. A 50-day correlation coefficient for a gauge of the top 100 digital tokens and MSCI’s global equity index is at 0.65, the highest since 2022, according to data compiled by Bloomberg. A reading of one indicates assets are moving in lockstep, while minus one signals an inverse tie. BLOOMBERG