Believe it or not, cryptocurrencies have consistently risen in the month of October, to the point that several investors have dubbed the month ‘Uptober.’ This year is no different. On Tuesday, Bitcoin experienced a 6 percent surge, reaching $35,198, marking its highest value in nearly 18 months.
In the early days of October, Bitcoin saw a 2.5 percent increase, reaching approximately $26,500, while the Nasdaq 100 index rose by only 0.1 percent during the same period. Over the past month, the leading cryptocurrency has increased by about 7.4 percent, compared to the Nasdaq 100’s 4.2 percent decline.
For some time, Bitcoin and other cryptocurrencies have behaved similarly to tech stocks, thriving when interest rates are low but suffering when rising rates impact investments without steady cash flow.
However, Fundstrat analyst Sean Farrell suggested that Bitcoin might benefit from higher interest rates this time. In his research note, Farrell pointed out that Bitcoin prices had risen in March when financial institutions like Silicon Valley Bank collapsed. In the past few weeks, some investors likely purchased cryptocurrencies in anticipation of higher rates leading to more banking crises.
The current rise in crypto was driven by growing speculation about the imminent launch of a bitcoin exchange-traded fund (ETF). This followed a substantial 10 per cent increase on Monday, which was Bitcoin’s most impressive performance in almost a year, and this bullish sentiment extended to the broader cryptocurrency market and related stocks.
The approval of a bitcoin ETF by the US Securities and Exchange Commission (SEC) is expected to drive demand. The argument for a spot bitcoin ETF is that it would provide investors previously cautious about crypto access to the asset through the stock market, potentially attracting a new influx of capital to the sector.
As per a report by Barrons, Steen Jakobsen, CIO at Saxo, emphasized that the value of any asset is closely tied to the number of people using it, and an ETF would expand the audience and boost liquidity.
The second-largest cryptocurrency, ether, has reached its highest value since August. Crypto-related stocks like Coinbase Global and MicroStrategy experienced gains in after-hours trading.
Major financial institutions like BlackRock have pending applications for bitcoin ETFs, and speculation regarding their approval increased after BlackRock’s iShares ETF appeared on the DTCC’s listing. It’s worth noting that the SEC is reportedly not appealing a court ruling that previously rejected an ETF application from Grayscale Investments, adding to the anticipation of ETF approval.
