BTC Uptober Depends on Fed Rate Cut Odds and Stocks

The key takeaways 

• Bitcoin fell 4.3% in October, despite historically high monthly returns.

• CME FedWatch shows that a 25-percentage rate reduction is 96.7% likely, which fuels optimism.

• The correlation between spot Bitcoin ETFs, and the equities market suggest a possible rebound.

BitcoinBTCThe historically bullish month of October is still intact, despite the fact that. Bitcoin’s October gains have averaged around 20% since 2019, with a return median of about 15%. Although this year’s performance has been lagging, participants in the market are considering macroeconomic policy changes as a potential source of fuel.

CME FedWatch shows that the odds of the Federal Reserve cutting interest rates are now high. stands at A reduction of 25 basis-points brings the rate down to 96.7%. Reduced interest rates are generally a sign of more liquidity in the market, which reduces borrowing cost and encourages a positive risk-on feeling across different asset classes. 

The narrative was dominated by institutional flows. The net flows into spot Bitcoin ETFs (exchange-traded funds) in the first 2 weeks of October were nearly $5 Billion, which indicates renewed confidence among large investors. 

Cointelegraph reported Total institutional holdings of public companies now total $117 billion. This is a 28 percent quarterly increase. Over one million BTC are held collectively in corporate treasuries. The cohort grew by 48 entities in the third quarter, extending institutional reach into digital assets.

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Bitcoin Stock Correlation: Bitcoin Next Move?

Bitcoin’s recent weakness is also linked to US equity markets. Jesse Colombo is a macroeconomic analyst said Bitcoin is a cryptocurrency because of its 92% Nasdaq correlation. “leveraged play on tech stocks.” This was on display last Friday when the S&P 500 fell 2.7%, the Dow Jones 1.9%, and the Nasdaq 100 Composite over 4.2%, their sharpest daily drops since April, dragging Bitcoin down alongside them.

This was due to renewed trade tensions with China after the US. reports The risk sentiment was rattled by the possibility of 100% tariffs being imposed on Chinese imports. As markets stabilised early in the week, US stock prices began to recover, although Bitcoin’s recovery has been lagging. 

The Director of Global Macro at Fidelity. Jurrien TimmerThe recent retreat resembles the 1990s “super bull” Phase when assets experienced sharp, but temporary declines prior to surging again.

The earnings season could be favorable if US stocks continue to recover. BitcoinA new rally in tech and growth stocks, bolstered by easier monetary policy, could help extend’s upside recovery. The recent rally in growth and tech stocks could help to extend “Uptober” The optimism will lead to an improved month-end.

Related: Bitcoin metric shows ‘euphoria’ as $112.5K BTC price squeezes new buyers

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.