Last Updated on February 23, 2024
Apart from a few optimistic predictions here and there, these past few months didn’t bring much positive news for crypto. The price of most digital assets continued to remain low and move sideways for the most part, and there were no clear signs of recovery in sight to bring back hope and confidence in the market. But in the unpredictable crypto space, the next rally might be just around the corner.
For those who have made the decision to invest in crypto and know where to buy Bitcoin, the month of October could be the right time to finally make the move. After going weeks without any significant oscillation, with prices holding steady inside the $25,000 – $27,000 range, Bitcoin kicked off the month of October, or Uptober as crypto enthusiasts like to call it, with a bang, surging almost 4% in only 15 minutes.
The sudden and unexpected price swing saw the flagship crypto rally past the $28K mark and reach the highest value since mid-August, trading at $28,494. At the time of writing, Bitcoin’s price was hovering around $ 27,605, after a price correction caused the asset to go back under the $28K threshold. The original crypto was joined by other digital currencies in its short but intense rally. Ethereum, the second-largest cryptocurrency by market cap, climbed above $1,700 for the first time in almost five weeks, before dropping to $1,662 a few hours later.
Although the price appreciation didn’t last long, it was more than enough to spark bullish predictions for the crypto market and give crypto analysts and experts a new subject of discussion. So, was this brief surge a signal of a potential bull run in the near future or are we reading too much into it?
What caused the bullish momentum?
In order to make an accurate assessment of the event and unravel its significance, one has to look at the events it coincided with. Although correlation doesn’t necessarily imply causation, in the highly volatile crypto market events tend to be linked to one another. Therefore, it’s worth taking a closer look at the latest developments in the cryptocurrency sphere.
The most notable event taking place within the same time frame was the recent aversion of a government shutdown by the U.S. Congress through a last-minute deal. Both the House and Senate agreed on a short-term deal that guarantees funding for the federal government until 17 November. The bill was signed by President Joe Biden late Saturday, just a few hours before the midnight deadline when funding for federal agencies would have run out, causing governmental operations to shut down.
Another notable occurrence was represented by the liquidation of $70 million in short positions in only two hours, amounting to a total of $270 million worth of short positions cleared up over the past week. This could potentially indicate that a short squeeze might have contributed to the sudden price rise.
A short squeeze, also commonly known as a bear squeeze, happens when the price of an asset experiences a rapid surge, prompting a significant number of short sellers to close their positions by repurchasing their assets at a higher price.
Others have found a much simpler explanation for the price increase, linking it to the arrival of Uptober. Looking back at historical patterns, the month of October has generally been a good month for digital currencies, making many analysts feel bullish about the crypto market. In fact, according to data from CoinGlass, apart from two isolated instances, Bitcoin hasn’t experienced any losses during the month of October since 2013. Bitcoin’s positive price performance during this period of the year led to the popularization of the humorous parlance Uptober within the crypto community.
Could Bitcoin appreciate further in the upcoming weeks?
After Bitcoin’s five-week high gave us a taste of a potential bullish trend, many hope that October will once again live up to its reputation as a month of positive gains for the asset.
However, before we get ahead of ourselves and start dreaming of another bull run emerging on the horizon, we need to remember that past trends offer no guarantee of a similar evolution. One would require much more solid reasons to make optimistic predictions about the Bitcoin price.
The market sentiment is definitely improving, which could help the asset break away from its longstanding stagnation once again and with a little bit of luck, Bitcoin might be able to hold above $28K this time, or even surge further beyond $30K, according to the most hopeful forecasts.
The crypto community is also optimistic about the U.S. Securities and Exchange Commission’s (SEC) decision on spot Bitcoin ETF filings, although the agency has rejected all previous applications so far and has delayed the ruling several times already. A positive decision could lead Bitcoin one step further to mainstream acceptance, boosting its legitimacy and reliability, and skyrocketing the assets’ value in the future.
On the downside, the recent uptick, although welcome after such a long period of sideways movements, was short-lived and Bitcoin couldn’t consolidate above $28,000. It’s difficult to say whether this was the result of improper timing or insufficient confidence from traders and investors, or it was simply a sign that Bitcoin is still not strong enough to sustain a new bull run.
Final thoughts
Bitcoin’s latest foray beyond the $28K resistance level shows that the asset still has many surprises in store, although no one really knows how these unexpected events will unfold. As always, one should keep in mind that as much as analysts try to make their forecasts come as close to the truth as possible, there’s nothing certain about crypto except for uncertainty. Critical thinking and thorough research are a must before making any crypto-related decisions.