Bitcoin’s October Comeback?

Investor anxiety appears to be on the rise, as the Crypto Fear and Greed Index registers its lowest reading since March. This unease surfaces even as both Bitcoin and Ethereum are attempting to regain lost ground.

According to data released on September 29 by CryptoQuant’s JA Maarturn, market sentiment has taken a significant downturn. The index plummeted from a neutral score of 40 in August to a level of “extreme fear” at 28. The last time the index dipped to this range was in March, when Bitcoin’s price hovered around $80,000.

This decline in sentiment coincided with significant selling pressure affecting major cryptocurrencies. Bitcoin and Ethereum both briefly dropped below critical psychological thresholds of $110,000 and $4,000, respectively, last week, which exacerbated concerns.

However, the downturn appears to have been short-lived. At the time of this report, the Bitcoin price has rebounded to $114,000, and Ethereum is trading above $4,100. This suggests that the initial wave of panic selling may have subsided, leading to a more stabilized market.

Market bottom?

According to asset management firm Bitwise, this environment of heightened fear could indicate that the market is nearing a bottom. In a recent analysis, Bitwise suggested:

“Over the past week, the market experienced ‘extreme fear’ levels on two separate occasions. Despite this, Bitcoin has demonstrated relative strength, maintaining a price around $108,000. This level coincides with the cost basis for short-term holders, suggesting robust support for Bitcoin as selling pressure diminishes.”

Bitwise further noted that despite the recent volatility, Bitcoin is still showing a nearly 3.7% gain for September. This is particularly noteworthy, as September is traditionally a weaker performance month for the leading cryptocurrency.

Historically, the fourth quarter often brings positive momentum, with November being Bitcoin’s most profitable month on average.

Bitwise argues that this historical trend suggests that the current weakness in the market might present a buying opportunity rather than a cause for alarm.

Data provided by Glassnode supports this argument. Their analysis indicates that short-term holders are currently realizing net losses, a pattern that has often preceded periods of renewed accumulation. These periods of capitulation, where recent buyers sell their holdings at a loss, have frequently laid the foundation for subsequent market rallies.

Bitcoin prepares for Uptober

Given the flagship cryptocurrency’s demonstrated resilience, crypto trading firm QCP is speculating that BTC traders are anticipating an “Uptober” rally.

According to the firm, a measured level of optimism has returned to the perpetual futures market. Leveraged long positions have reappeared following the liquidations that occurred last week.

QCP reports that Bitcoin open interest has increased from $42.8 billion to $43.6 billion. Simultaneously, funding rates remain positive, and positioning on platforms like Hyperliquid has shifted notably back toward long positions.

However, the firm cautions that a sustained upward trend will only be confirmed if BTC successfully surpasses the $115,000 mark. They elaborated:

“Options markets reflect this caution. Put skew and open interest in both BTC and ETH are gradually normalizing as traders regain confidence.”

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