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Crypto outlook for October amid the worrisome US economic market data

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TL;DR

  • October is infamously known to be a red market both in crypto and traditional markets – with the present data, the month won’t be any different from history.
  • The US stock markets have been in a downward trend for the past two months, and this trend is expected to continue into October. 
  •  October saw the occurrence of the Bank Panic of 1907, the Stock Market Crash of 1929, and Black Monday 1987.
  • The Crypto Market Fear and Greed Index is dipping into “fear.” 

Bitcoin (BTC) and ether (ETH) prices remained relatively stable over the past 24 hours as traders speculated that major cryptocurrencies were beginning to exhibit correlations with U.S. equities.

As reported, the price of bitcoin (BTC) remained under pressure on Tuesday at $26,200 as the notion of higher rates for a prolonged period gained traction in the financial markets. Traders appear to be pricing in inflationary concerns, which may affect crypto assets.

Crypto markets could downtrend with the shacky crypto markets

The bears are gaining strength on both the crypto and stock markets, with the main US indexes now confirming their respective downward trends. In addition, October is typically a red month for markets, so there may be additional losses prior to gains. 

The US stock markets have been in a downward trend for the past two months, and this trend is expected to continue into October. 

On Tuesday, the major indexes on Wall Street took a significant blow, falling by more than 1%. This shift is primarily attributable to 10-year Treasury yields reaching multi-year highs, prompting investors to reevaluate their strategies in light of the impending threat of prolonged high interest rates. 

In particular, the Dow experienced a significant decline of 1.14%, and neither the S&P 500 nor the Nasdaq Composite were spared.

On the technological front, Amazon.com performed poorly. Following the U.S. Federal Trade Commission’s filing of an antitrust litigation, the retail giant’s stock fell by 4%. These corporate actions, in conjunction with economic data, play a crucial role in the market’s trajectory.

The current economic landscape is characterized by uncertainty. A shortfall in August’s new home sales and a wane in consumer confidence have raised brows. The possibility of a partial U.S. government closure adds fuel to the fire for many market observers who are alarmed by the failure of economic indicators to meet projections. 

According to Moody’s, such a closure could negatively impact the nation’s credit rating, throwing another wrench into the works.

September has historically been a volatile month for the markets, and this year appears to be no exception. Currently, major indices, including the S&P 500, the Dow, and the Nasdaq, are all in the red. Analysts are preparing for this trend to continue into October, given the manifest seasonal weakness.

What is the October way forward for the crypto industry?

According to one analyst, the positive correlation between crypto assets and the stock market has temporarily resumed. In addition, despite the turmoil in the equity markets, the crypto market remains tranquil, losing only 0.3% in 24 hours to reach $1.045 billion.

This year, crypto markets have been marginally correlated with tech stocks but have largely consolidated. 

After an initial growth surge in the first quarter, crypto markets have been relatively stable since mid-March. In addition, they have declined 19% since their mid-April 2023 peak, demonstrating a downward trend.

Note that the Crypto Market Fear and Greed Index is dipping into “fear” territory, indicating that the crypto market has not become a safe haven overnight. The index assumes that anxiety drives stock prices lower and greed drives stock prices higher.

Historically, October is the most volatile month of the year for U.S. and global markets. With a confirmed downtrend already in place, it is likely that everything, including crypto, will fall further into the negative during the following month. 

Due to its history of market crashes, October is the most dreaded month in the financial calendar. October saw the occurrence of the Bank Panic of 1907, the Stock Market Crash of 1929, and Black Monday 1987.

In the bear market of 2022, crypto markets were flat for the majority of October before gaining a small amount at the close of the month. The bull market of 2021 saw significant gains for crypto in October, while 2020 was comparable to 2022. 

At the end of October 2019 experienced a fleeting upswing, but all gains were erased the following month. The bear market in 2018 continued to be unchanged in October. 

If history repeats, crypto markets will remain flat next month, but be aware that November is usually much more volatile for this asset class. 

The market on the opposite side of the globe appears different. Wednesday’s gains on the Asian markets brought solace to crypto bulls as major markets recovered some of Tuesday’s losses. During the Asian morning hours, BTC was traded at $26,300 and ETH at $1,580.

Elsewhere, alternative tokens exhibited sluggish development, with only a few exhibiting growth. Maker protocol’s MKR token increased by 5.5%, while Shiba Inu ecosystem’s BONE token increased by 10%, the most of all actively traded tokens.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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