Key Insights:

• October’s ‘uptober’ trend is at risk as Bitcoin faces a 3% dip, diving below the $28,000 mark.
• Rising 10-year US Treasury yield signals potential economic challenges for the crypto sector.
• Despite challenges, Bitcoin’s Q4 is historically bullish, with a 67% surge this year post-2022’s downturn.

October commenced with optimism for Bitcoin enthusiasts as its price showed encouraging signs. However, in a surprising twist, Bitcoin’s value dipped below $28,000, marking a 3% decline within a single day. This setback has been linked to multiple factors, including traders deciding to pocket their gains and a rather complex global economic scenario that’s currently unfolding.

The beginning of Q4 2023 witnessed notable activity in the crypto market. Many anticipated the introduction of ETFs, viewing it as a potential development for the previously static crypto landscape. Historical data indicates that October often sees increased market activity. This recurring pattern during October is colloquially termed “uptober” by some in the crypto community.

However, from Yield App, Lucas Kiely offered a word of caution:

“History shows us that Bitcoin has only recorded a loss in October twice since 2013. The industry is fervently hoping that 2023 doesn’t buck this trend.”

The Shadow of Rising Bond Yields

The burgeoning growth of US bond yields is casting a shadow over the crypto market’s enthusiasm. The 10-year US Treasury yield is inching towards figures not seen since 2007. This movement signals the market’s anticipation of the Federal Reserve taking stringent measures, primarily hiking interest rates to rein in inflation.

Sharing her perspective with Bloomberg, Cici Lu McCalman of Venn Link Partners stated,

“Bitcoin’s recent price surge was short-lived. With the macro environment remaining stringent about rates and the rise of the US Treasury yield, Bitcoin’s momentum was naturally affected.”

Additionally, Loretta Mester, representing Cleveland Fed, has insinuated that another increase in the Fed funds rate might be on the horizon this year. Hence, the emphasis is squarely on tangible and measurable progress concerning the Federal Reserve’s twin objectives. The main focus areas will undeniably be the consistent and positive movement in inflation rates and ensuring that labor markets maintain their health.

Bitcoin in Q4 2023: A Closer Look

Historical data has often portrayed Q4 as a period favoring growth for Bitcoin and other cryptocurrencies. Bitcoin’s commendable 67% rise this year underscores this narrative, although it’s essential to note that it’s still far from the zenith it achieved during the pandemic.

According to Bloomberg’s archives, October has been a favorable month for Bitcoin over the past decade, with the cryptocurrency registering an average price surge of 24%. Moreover, Kaiko’s data reveals that Bitcoin’s dominance in the US crypto trading sector is on an upswing, capturing 71% of trading volumes in September, a marked increase from the 66% recorded in March’s tumultuous period.

One plausible explanation for this shift might be the institutional traders gravitating towards Bitcoin. Factors like the increasing real yields and mounting global concerns about risk influence their decision, as posited by Kaiko.