YEREVAN (CoinChapter.com) — Bitcoin (BTC) “Uptober” is here!
The papa cryptocurrency rallied nearly 5.7% in the first two days of October, crossing the $28,000-mark for the first time in two months. Nonetheless, its gains succeeded a bloody Q3/2023 — in fact, the first loss-making quarter in 2023 — indicating that bearish catalysts remain in place entering Q4/2023.
US Government Shutdown Behind Bitcoin Rally
The ongoing buying sentiment in the Bitcoin market started after US lawmakers agreed on a last-minute deal to keep government funded until mid-November. In other words, crypto traders saw an upside opportunity as the US government averted — literally — a shutdown.
Bitcoin History: In the past, Bitcoin and other cryptocurrencies have typically fallen around the US government shutdown crisis. For instance, BTC's price fell 9.8% between Dec. 22, 2018 and Jan. 25, 2019, when the lawmakers' debated whether or not to approve the federal spending.
Similarly, a year before that, BTC's price was down 15.7% during the government shutdown threat.
However, this time, the prospects of a US government shutdown had a straightforward impact on Bitcoin markets. Suppose the shutdown would occur. Then, it may have driven the U.S. Securities and Exchange Commission (SEC) to delay its decision on nine pending spot Bitcoin ETF applications, including BlackRock.
ETF Hopes Rekindled
Bitcoin ETF is a religious topic for BTC bulls these days. An approval raises the Bitcoin market’s prospects of attracting $600 billion worth of capital, according to a report by analysts at Bernstein. So, if averting a US government shutdown could mean faster approval for a spot Bitcoin ETF, the BTC price should rise.
And so it has in the past, as illustrated below via BlackRock’s Bitcoin ETF application and its positive impact on the BTC price.
That explains the ongoing euphoria in the Bitcoin market entering October. However, let’s not treat the fundamentals overly bullish as other bearish catalysts lurk.
Bitcoin Week and Q4 Ahead
The Federal Reserve’s promise to keep interest rates high in 2023 and all across 2024 has reduced investors’ appetite for riskier assets like stocks and Bitcoin. Instead, these investors are more likely to gain exposure in higher-yield US Treasury notes and the US dollar.
This week, Fed Chairman Jerome Powell will provide further guidance on interest rates. Nonetheless, he will likely reiterate the central bank’s restrictive stance, given inflation remains far away from their 2% target.
Listen to our homie, Yung-Yu Ma, BMO Wealth Management’s chief investment officer, for instance:
“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now. Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”
In other words, expect the Bitcoin price to correct in the coming weeks, if not the current one.
BTC Technical Analysis Chart
Technically, on a weekly timeframe chart, Bitcoin’s price has entered the breakdown stage of its prevailing rising wedge pattern.
Rising wedges form when the price rises in a range defined by two ascending, converging trendlines. Meanwhile, it mostly resolves after the price breaks below the lower trendline (support) and falls by as much as the wedge’s maximum height.
As of Oct. 2, BTC’s price breakdown showed signs of exhaustion. That is due to the ongoing price rebound toward the wedge’s support trendline near $30,000, hinting traders’ efforts to confirm the breakdown.
Simply put, BTC’s price may rise to $30,000 in October, but that does not mean a long-term bullish trend. Instead, the cryptocurrency’s likelihood of retreating toward its falling wedge target in Q4/2023 remains high (also due to rate hike fears).
The rising wedge target is near $15,540, down 45% from current price levels.