Optimism for Bitcoin in the traditionally bullish month of October faces a crucial test. Its performance now depends on the decisions of the U.S. Federal Reserve. According to data from the CME FedWatch tool, the market is pricing in a high probability of a rate cut, a factor that could inject liquidity and favor risk assets like Bitcoin. This scenario highlights the cryptocurrency’s close relationship with traditional markets.
Macroeconomic analyst Jesse Colombo has pointed out that there is a strong 92% Bitcoin’s correlation with Nasdaq. This effectively turns the cryptocurrency into a leveraged bet on technology stocks. Consequently, recent dips in major U.S. stock indices, affected by trade tensions, also dragged down BTC’s price. However, the recovery of stocks could provide a boost for Bitcoin, once again demonstrating its behavioral dependence.
The global economy is closely watching monetary policies. If a rate cut materializes, it would reduce the appeal of Treasury bonds, pushing investors toward assets with higher return potential. Furthermore, institutional interest continues to grow. During the first half of October, spot Bitcoin ETFs saw net inflows of nearly $5 billion, raising total holdings to $117 billion. This capital flow underscores the market’s confidence in the digital asset’s future.
Can Bitcoin Overcome the Influence of Tech Stocks?
The current situation poses a significant challenge to Bitcoin’s narrative as a safe-haven asset. While its design is decentralized, its price reacts strongly to global macroeconomic events, a behavior more typical of growth stocks. Jurrien Timmer, Director of Global Macro at Fidelity, suggests that the current market pullback might be temporary. He compares the present moment to the super bull phase of the late 1990s.
For investors, this means that analyzing the stock market is essential for predicting the future price of Bitcoin. As long as this high correlation persists, good news for the Nasdaq will be good news for Bitcoin. The market is eagerly awaiting the next Fed meeting, as its decision could be the catalyst that defines Bitcoin’s direction for the remainder of “Uptober” and the rest of the year, confirming if the month’s historical bullish trend will finally prevail over
