Bitcoin investors who had been betting on a seasonal rebound in October were dealt an early shock after escalating tensions in the Middle East sparked a bout of caution in markets.
The digital currency fell 4.7% on Tuesday, its biggest drop in about a month, after Iran fired about 200 ballistic missiles at Israel, sparking a sharp but brief escalation between the warring sides. However, the currency partially recovered on Wednesday, trading at around $61,430 at 6:30 a.m. London time.
Bitcoin has fallen about 4% in the first two days of October, bucking its historical pattern of an average 20% gain in the month over the past decade, according to Bloomberg data. This historic performance has boosted traders’ hopes of surpassing the record high set by the currency in March when it reached $73,798, but the major geopolitical tensions have cast a shadow over these positive expectations.
Shane McNulty, head of trading at liquidity provider Arbelos Markets, believes that this decline is just a “temporary setback,” especially as the Federal Reserve begins to cut interest rates. He added that the next US government after the presidential elections in November will likely be more open to cryptocurrencies, and McNulty confirmed that “the seasonal trend that makes October a strong month for Bitcoin is still in place.”
