The crypto markets are still on track for a bullish October despite a major liquidation event last week, according to analysts and experts, who have compared it to other crypto black swan events.
“After the largest liquidation in crypto history, I expected October to be deep in the red,” said crypto podcaster Scott Melker on Wednesday.
However, Melker said the markets are still holding on, “which honestly feels like a small miracle,” before stating that “I don’t think we’re entering a bear market.”
The crypto market capitalization rebounded quickly to reclaim $4 trillion after the weekend rout, but has since cooled off slightly as Bitcoin (BTC) failed to build on its momentum and retreated below $111,000 again on Tuesday.
Melker added that this wasn’t 2017 or 2021 when there were major external influences on markets such as “ICO mania, China mining ban, or FTX.”
“What happened last week was purely structural. The kind of event that forces everyone to stop, reprice risk, and rethink what’s actually possible (and broken) in this market.”
Near-term volatility is to be expected
The path to the cycle top is likely to be volatile, said HashKey Group senior researcher Tim Sun in comments to Cointelegraph.
“Following last weekend’s aggressive deleveraging, sentiment in the cryptocurrency market has yet to fully recover, and overall risk appetite remains subdued. Price action is relatively sensitive to headline-driven catalysts.”
“Near-term volatility is to be expected, but excessive pessimism is unwarranted,” he said before adding that from a medium-to-long-term perspective, “policy easing, de-escalation of tensions, and liquidity repair should remain the dominant themes.”
Seasonal influences remain relevant
October gained the moniker ‘Uptober’ as Bitcoin has clocked gains in October in ten of the past 12 years. It is currently down 0.6% since the start of this month, but historical trends suggest it could still turn positive by the end of the month.
Bitcoin has seen the most upside in the second half of the month historically. In October 2024, it gained 16% after Oct. 15, and in 2023 it climbed 29%, while in 2020 it rose 18% in the second half of the month.
Melker also pointed to gold’s epic rally to an all-time high last week, noting that there is usually rotation into Bitcoin that follows.
“Investors aren’t panicking, they’re reallocating. And if gold can rally that hard, imagine what happens when capital starts rotating back into Bitcoin.”
Other Uptober influences
The trade tariff scare that contributed to the weekend crash appears to be waning as a White House official confirmed that President Trump and Chinese President Xi Jinping are scheduled to meet to discuss trade.
“Trade conflict is not a zero-sum game; both parties ultimately seek larger shares of the gains, suggesting the eventual outcome is likely to be more moderate than current sentiment implies,” said Sun.
Other narratives, such as further Federal Reserve rate cuts this year, and the debasement trade, are also fuelling the sentiment that Uptober is still on track.