Bitcoin Records Worst October Since 2018 Amid Rising Sell Pressure and ETF Outflows

In a surprising turn of events, Bitcoin recorded its poorest October performance since 2018, creating anxiety amongst traders. The situation has led to a renewed caution on the outlook of Bitcoin as well as the return of Exchange Traded Fund (ETF) outflows and increased hedging risk from derivatives traders.

Bitcoin’s Performance

The flagship cryptocurrency traded at about $110,000 during the last Saturday of October, representing a somewhat bearish inclination from traders. This downtrend was exacerbated by the “Uptober” predictions failing to materialize. It was expected that Bitcoin would recover the losses it accrued from Friday’s Wall Street trading session, but this did not happen. The bearish predisposition of Bitcoin commenced with selling pressure, a common phenomenon throughout the week, including on both US exchanges and spot Bitcoin exchange-traded funds (ETFs). These ETF outflows offer insights into the mounting selling pressure from investors and a renewed faltering in institutional demand. According to information obtained from Farside Investors, Friday’s ETF outflow came in at a substantial $191 million, following an even more significant $488 million in outflows for Thursday.

Bitcoin & The Federal Reserve Rate Cut

Regrettably, the US Federal Reserve’s interest rate cut, which was expected to have a positive influence, did not produce tangible effects. The rate cut failed to lift mood as was anticipated due to the hawkish tone predicted for December, thereby cooling the optimism. Given the prevailing circumstances, traders have developed caution. Some traders have suggested time-based capitulation for Bitcoin. For this to be accomplished, Bitcoin needs to consolidate around $100,000. Thus, a definitive move would only be feasible once Bitcoin records drastic change at either the upper or lower boundary of its resident range. As such, the two fundamental levels of importance are $107,000 and $116,000.

The October Facts

With a 3.7% loss for BTC/USD, October hosted the worst result for Bitcoin since 2018. This development has led to many traders and investors referring back to the performance of Bitcoin in the previous years, and with good reason. Historically, November is noted for being Bitcoin’s best-performing month. Since 2013, Bitcoin’s average rise in November is a substantial 42.5%.

Volatility on the Horizon

The Bollinger Bands volatility indicator indicates that unprecedented volatility is fast approaching. The monthly Bollinger Bands have hit the most excessive levels in Bitcoin’s history. This narrowing of the Bollinger Bands has been an area of intense focus for market followers for some time. In fact, last month, John Bollinger, the creator of the indicator, suggested that it was time for investors to pay close attention to the volatility on Bitcoin and other bigger altcoins.

Investor’s Take Away

The scenario described above does not contain investment advice or recommendations. Every investment and trading move comes with risks. Readers are therefore urged to conduct due diligence when taking a decision. In closing, it should be fully understood that financial trends are shaped by a variety of variables. Given that no one can predict with precision what will happen in the financial sector, it is essential to err on the side of caution and make financial decisions based on in-depth research and understanding. Disclaimer: The above information should not be treated as investment advice; individuals should seek registered financial advisors to guide them through their investment choices. The article represents the views of the author and not those of any financial institution.