Bitcoin on track for October gains despite China ban, Fed tapering scare

Bitcoin Trading by Mohamed Hassan on Stockvault
Bitcoin Trading by Mohamed Hassan on Stockvault

Key Takeaways:

  • Bitcoin welcomed Oct by rising 10.37% between low to high levels.
  • BTC prices broke above resistance to nearly reach $48k levels before correcting.
  • The pioneer crypto seems unfazed by China ban and Fed taper concerns.

NEW DELHI (CoinChapter.com) — Bitcoin recorded its highest single-day performance Friday for the first time since July 21, 2021.

The flagship cryptocurrency rose by more than 10%, jumping from $43,405 to as high as $47,905. The second-largest cryptocurrency Ethereum surged 9%, while its top rival Cardano soared by 7%. On the whole, the total market capitalization surged by 8.3% on Friday to cross over $2 trillion.

Bitcoin appears to have shrugged off recent events such as China’s recent hard-handed ban on cryptocurrency trading and mining, the Evergrande crisis, and the Fed tapering fears. In detail, tapering is the gradual slowing of Fed’s assets purchases. The goal is to remove monetary stimulus slowly.

Moreover, the central bank announced tapering would precede any increase in its short-term interest rates. As such, tapering is seen as a warning of tighter monetary policy. This year, the financial regulator has ensured the markets are well prepared to avoid a taper tantrum like in 2013.

In 2013, tapering led to a period of high volatility and rising rates in the bond markets.

Historically, September has been a bearish month for cryptocurrencies, and 2021 did not break the trend.

However, despite Sept’s losses, Bitcoin ended the third quarter of 2021 with a gain of 24.96%. Compared to the 43.2% loss in Q2, the Q3 numbers take a whole new meaning thanks to May’s market crash. The sudden jump has left traders wondering about the reason behind it.

Bitcoin Jump

Some traders believe Federal Reserve Chief Jerome Powell’s statement that the central bank is not looking to ban cryptocurrencies might be why BTC gained on Friday. The Fed chair’s comments come a day after SEC chairman Gary Gensler affirmed his support for Bitcoin futures-based exchange-traded funds. ETFs allow investors to trade BTC without owning it.

Leah Wald, CEO of crypto-asset manager Valkyrie Investments, believes stock market weakness combined with October being a bullish time for cryptos historically ‘could signal a shift to risk-on trading in crypto markets for the next several weeks.’

Bitcoin monthly returns since 2013. Source: bybt
Bitcoin monthly returns since 2013. Source: bybt

While Sept has historically been bearish for Bitcoin, October has often been bullish for Bitcoins and cryptos in general. As the data from Bybt shows, since 2013, Sep has been consistently bearish for Bitcoin. Meanwhile, Bitcoin has closed Oct on a high seven times since 2013, a success rate of 77.78%.

Recommended: Bitcoin is on its way to $100K in Q4, says executive; 3 reasons why.

The month’s performance has earned it the moniker of ‘Uptober.’

2021’s third quarter saw the first-ever adoption of Bitcoin as a legal tender. Additionally, El Salvador became the world’s first country to give BTC the status of legal tender. Furthermore, increased institutional interest in Bitcoin also added bullish tailwinds to Bitcoin’s third-quarter rally.

According to a report by market intelligence outfit Blockdata, 55 out of the world’s top 100 banks had cryptocurrency exposure. Visa’s recent NFT investment also worked in favor of crypto adoption.

Union Investment, a Frankfurt-based $500 billion asset manager, announced early Sep it was considering adding BTC to a small number of investment funds available only to private investors.

In Aug, Paypal extended its crypto services to UK customers after its success in the US. In addition, the MML Investment Services (MMLIS) collaborated with NYDIG to create a Bitcoin fund, which has raised $16.95 million as per a Sep 17 SEC filing.

What Lies Ahead

Bitcoin’s upcoming Taproot update is likely to boost BTC prices in November further. The update will improve the efficiency and privacy of the Bitcoin network. Moreover, the update would bring smart contracts capability to the Bitcoin blockchain.

Also Read: Ethereum bull pennant predicts massive rally as ETH reclaims $3K.

As per a report from Finder, many financial experts believe BTC would end the year at near $100,00 per coin. Many panelists believe institutional interest to be the main driving force behind Bitcoin’s growth. Furthermore, Bloomberg’s Crypto outlook report also forecasted BTC to end the year near the $100,000 price level.

Countries like Paraguay, Panama, Mexico, etc., might follow El Salvador’s example and bring laws supporting crypto payments or investments, further boosting adoption.

BTC MACD charted bullish crossover. Source: BTCUSD on Tradingview.com
BTC MACD charted bullish crossover. Source: BTCUSD on Tradingview.com

Meanwhile, Bitcoin’s jump on Oct 1 has brought its prices above its 50-Day and 200-Day Moving average. As such, BTC is bullish across all time horizons at the time being.

Bulls have flipped resistance at $43,791 to support, indicating the bullish momentum is strong for the pioneer crypto. The next target for BTC is resistance at $48,423 while trying to move prices above the $50k mark. In addition, trend-based momentum oscillator MACD painted a bullish crossover on the daily charts.

A bullish crossover occurs when the MACD line (difference between 12-day and 26-day EMA) moves above its signal line (9-day EMA of MACD). As a result, BTC’s MACD became bullish for the first time since Sept 6.

At the time of writing, BTC was trading at $47,741, up 8.8% on the day.

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