Wednesday morning's crypto market rebound is fuelled by ETF demand, a dovish Fed, and a historically bullish Q4 trend, experts told Decrypt.
In brief
Bitcoin has pushed above $116,000, tipping the total crypto market capitalization over the $4 trillion mark.
Analysts cited ETF flows, macroeconomic optimism, and a historically bullish fourth quarter trend as key drivers.
A sharp drop in the options skew shows traders are abandoning downside protection.
'Uptober' is off to a good start. Bitcoin surged past $116,000 Wednesday morning, erasing most of its losses from the past two weeks and propelling the total market capitalization of all cryptocurrencies to $4.09 trillion.
At time of publication, Bitcoin is trading at $116,441, up 3.1% on the day, per CoinGecko data.
The bullish momentum ignited a cascade of liquidations, wiping out roughly $60 million in short positions during the London session, according to Coinalyze data. The rally has also boosted Bitcoin’s year-to-date gains, climbing from 15% last Friday to 25% as of October 1.
Bitcoin’s dominance rebounded from 57% to 59% as the price broke through the $114,000 hurdle, which “suggests a healthier market structure,” Glassnode noted in an October 1 Telegram post. Based on their analysis, Bitcoin-led rallies are more sustainable than altcoin-driven uptrends.
On prediction market Myriad, launched by Decrypt’s parent company DASTAN, users put a 63% chance on Bitcoin dominance surging to 63% rather than dropping to 53%.
Bitcoin's Q4 outlook
A confluence of factors is driving the uptick, experts told Decrypt.
Bitcoin's rise stems from "structural demand, sustained exchange-traded fund flows, and a strong positioning from institutions," Shawn Young, MEXC’s chief analyst, told Decrypt.
This optimism is further reflected in options data. A 55% decline in Bitcoin’s 25 delta skew signals a significant decrease in demand for downside protection, reflecting growing investor confidence.
“Traders may be anticipating a bullish fourth quarter for crypto,” Derek Lim, head of research at Caladan, told Decrypt, suggesting this may be becoming a self-fulfilling prophecy.
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Over the past 12 years, the fourth quarter has consistently returned a median gain of more than 50% for Bitcoin, per Coinglass data.
Broad macroeconomic conditions are also being interpreted optimistically by the market, according to Lim. He noted that the U.S. government shutdown, the subsequent pause in data releases, and the Fed’s dovish stance are creating a favorable environment.
The slight decline in the S&P 500 during today’s electronic trading hours amid Bitcoin’s uptick suggests a potential capital rotation into crypto, Lim added.
Indeed, predictors on Myriad have turned markedly more bullish on Bitcoin’s price outlook, placing a chance of over 65% on it topping $125,000 rather than dropping to $105,000—up from just 53% the day before.
