Crypto’s uptober: Why is Bitcoin going up?

As "uptober" drew to a close, Bitcoin surged to new heights, capping off what has historically been a strong month for the cryptocurrency. Bitcoin pushed past $73,000 this week, coming within striking distance of its all-time high. The rally is attributed to election-related optimism and a favourable market environment for crypto, which have lifted not only Bitcoin but also the broader cryptocurrency market.

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Bitcoin’s impressive uptober run

October, often called "uptober" by crypto enthusiasts, has traditionally been a lucrative month for Bitcoin, and 2024 is no exception. Last month alone, Bitcoin has risen over 12%, thanks to a combination of historical trends, ETF inflows, and growing excitement around the upcoming U.S. election. Over the past week, Bitcoin jumped 8%, momentarily surpassing the $73,000 mark on Tuesday before settling between $71,000 and $73,000. This rally positions Bitcoin close to its all-time high, which was previously reached in March.

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Bitcoin Surge: Election optimism drives the rally

Much of the recent rally can be attributed to the anticipation surrounding the U.S. election, with many in the crypto community viewing Republican candidate Donald Trump as a pro-crypto advocate. Trump’s support for the industry has been evident in his pledge to make the United States “the crypto capital of the planet,” his speaking engagement at this year’s Bitcoin conference in Nashville, and his promise to fire SEC Chair Gary Gensler, a figure often criticised by crypto enthusiasts.

According to the crypto prediction platform Polymarket, Trump currently has a 67% chance of winning, though traditional polls show a much closer race with Vice President Kamala Harris slightly ahead. Trump's election platform and direct appeal to the crypto community have invigorated crypto bulls, who believe a Trump victory could accelerate Bitcoin’s growth trajectory.

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Broader market follows Bitcoin’s lead

As Bitcoin surged this week, other cryptocurrencies joined the rally. Ethereum and Solana saw respective gains of 4% and 5%, while Dogecoin shot up 23% after Elon Musk mentioned the memecoin at multiple Trump rallies. Musk also hinted at a possible role in Trump’s proposed Department of Government Efficiency, or D.O.G.E., further energising Dogecoin fans and the wider crypto market.

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The impact of BTC spot ETF inflows

Bitcoin’s climb this week was also fueled by substantial inflows into spot Bitcoin ETFs, which were approved in early 2024. Tuesday alone saw $870 million flow into these ETFs—the third-largest inflow since their approval in January. Since October 11, spot Bitcoin ETFs have drawn nearly $4 billion, reflecting strong demand from institutional investors seeking exposure to Bitcoin ahead of the election.

The growth of Bitcoin ETFs has been a major factor behind Bitcoin’s performance in 2024. These funds provide an accessible way for investors to buy Bitcoin without directly holding the asset, bringing greater liquidity and stability to the market. Analysts believe that the consistent ETF inflows suggest continued demand that could support Bitcoin’s price, even as it hovers near its all-time high.

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OTC activity suggests support for continued price stability

In addition to ETF inflows, data from CryptoQuant highlights an increase in Bitcoin held by over-the-counter (OTC) desks, which cater primarily to large investors wanting to trade privately without impacting the public market price. OTC desks now hold around 416,000 BTC, worth $30 billion—a substantial increase from the average of less than 200,000 BTC held in the first quarter.

The lower amount of Bitcoin flowing into these OTC desks, which dropped to the year’s lowest in October, has reduced potential selling pressure. This limited supply has allowed Bitcoin to rally without heavy sell-offs, creating an environment that could enable U.S.-listed ETFs to make large purchases without significant price impact.

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Post-Uptober prediction: Analysts upbeat regardless of election outcome

As Bitcoin’s rally continues, analysts are confident in its momentum. According to Michael Terpin, CEO of Transform Ventures and a longtime Bitcoin advocate, the market has reached a point in the cycle where Bitcoin historically gains strength, suggesting that the currency could see sustained growth. Terpin acknowledges that a Trump win could boost Bitcoin's price more quickly, yet he believes that even a Harris victory won’t disrupt the current momentum.

“There’s just too much momentum right now,” Terpin told Fortune. “We’re at the point of the cycle where it usually does go up quite a bit. I just think that Trump winning would make it quicker and faster and higher.”

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Bitcoin technical analysis: Looking ahead

As "uptober" wraps up, Bitcoin is well-positioned for continued gains. Although the market experienced a slight dip on Wednesday, with Bitcoin pulling back after its $73,000 high, the combination of strong ETF inflows, increasing OTC holdings, and bullish sentiment around the election has laid a solid foundation for growth. According to analysts, if the historical trend holds and inflows continue, Bitcoin could reach a new all-time high just in time for the election.

With the broader crypto market following Bitcoin’s lead, October has proven to be a bullish month across the board. Investors now look to the next few weeks with cautious optimism, hoping that Bitcoin’s upward trajectory will carry the market to even greater heights as 2024 comes to a close.

At the time of writing, BTC is holding around the $72,400 mark, with bullish signals evident as the price stays above the 100-day moving average. However, the price touching the upper Bollinger band as RSI breaches the 70 mark hints at overbought conditions. This means that a slowdown could be in the offing.

Buyers looking to test all-time highs could struggle to go past the upper Bollinger band at $72,800. Sellers, on the other hand, could find support at the $68,700 and $66,500 price levels.

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