Despite last week’s massive liquidation event, the crypto market is still on a bullish trajectory for October, according to analysts and experts who compared it to other crypto black swan events.
“We were expecting a big deficit in October after the largest liquidation in crypto history,” crypto podcaster Scott Melker said on Wednesday.
But Melker said the market is still holding up and “it feels like a small miracle, to be honest,” before adding, “I don’t think we’re in a bear market.”
Cryptocurrency market capitalization quickly rebounded to $4 trillion after the weekend crash, but has cooled off slightly since then as Bitcoin (BTC) failed to capitalize on the momentum and fell back below $111,000 on Tuesday.
Melker added that there were no major external influences on the market in 2017 or 2021, such as “ICO mania, Chinese mining ban, FTX”.
“What happened last week was purely structural. This kind of event forces everyone to pause, reprice risk, and rethink what is actually possible (and broken) in this market.”
Expect short-term volatility
Tim Sun, senior researcher at Hashkey Group, said in comments to Cointelegraph that the path to the top of the cycle is likely to be volatile.
“Following last weekend’s aggressive deleveraging, crypto market sentiment has yet to fully recover and overall risk appetite remains subdued. Price movements remain relatively sensitive to headline-driven catalysts.”
“Short-term volatility is expected, but excessive pessimism is unwarranted,” he said, adding that from a medium- to long-term perspective, “policy easing, easing tensions and restoring liquidity should remain the key themes.”
Seasonal effects are still relevant
October has earned the nickname “Uptober” because Bitcoin has recorded a rally in October in 10 of the past 12 years. It is currently down 0.6% since the beginning of the month, but past trends suggest it could turn positive by the end of the month.
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Historically, Bitcoin has had its biggest gains in the second half of the month. October 2024 was up 16% since October 15th, 2023 was up 29%, and 2020 was up 18% in the second half of the month.
Melker also pointed to gold’s epic rally to all-time highs last week, which is typically followed by a rotation into Bitcoin.
“Investors are not panicking, they are reallocating. And if gold is going to rally this hard, imagine what will happen when capital starts moving back into Bitcoin.”
Other Uptober influences
Concerns about trade tariffs that contributed to the weekend selloff appear to be fading as White House officials confirmed that President Trump and Chinese President Xi Jinping are scheduled to meet to discuss trade.
“Trade tensions are not a zero-sum game. Ultimately, both sides seek a greater share of the benefits, suggesting the final outcome is likely to be more benign than current sentiment suggests,” Sun said.
Other reports, including further Fed interest rate cuts this year and falling trading, also strengthen the view that Uptober policy is still on track.
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