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Bitcoin could be on the verge of reaching a new record high of over $74,000 this month, with several factors contributing to a bullish outlook for the largest cryptocurrency by market capitalization.

According to some analysts, historical trends, macroeconomic factors, and increasing investor sentiment all point to a potential surge in Bitcoin’s value as October progresses.

October has historically been Bitcoin’s best-performing month, with the cryptocurrency posting an average return of 19.4% since 2014, according to Dow Jones Market Data.

Bitcoin has only recorded negative performances in two Octobers since 2014 and has not posted a loss in any October since 2018.

Analysts at crypto trading firm QCP Capital highlighted this trend and noted that if Bitcoin repeats its historical performance this month, it could surpass its all-time high of $73,798, which was last reached in March 2021.

Bitcoin’s resilience in October can be attributed to a combination of seasonality and the general market sentiment that tends to favor cryptocurrencies toward the end of the year.

With Bitcoin up over 1.4% so far this month, many traders are optimistic that these historical patterns will continue, boosting the price beyond the $74,000 mark.

Another critical factor supporting Bitcoin’s bullish trajectory is the macroeconomic setup, which seems increasingly favorable for the cryptocurrency.

Many investors are betting on increased global liquidity as central banks, particularly the U.S. Federal Reserve, are expected to deliver further interest rate cuts.

The Federal Reserve recently reduced the fed-funds rate by 50 basis points, bringing it to a range of 4.75% to 5%.

Additionally, Fed-funds futures traders are pricing in a 49% likelihood that the central bank will cut rates further by up to 75 basis points by the end of the year. This increase in liquidity would likely provide a boost to Bitcoin, which has historically benefited from such monetary policies.

Bitcoin’s potential to act as a hedge against inflation and currency debasement has made it attractive to many investors in a low-interest-rate environment.

As central banks around the world adopt more accommodative policies, Bitcoin is expected to gain favor as an alternative store of value.

The upcoming U.S. presidential election in November is another factor influencing Bitcoin’s potential rally.

Former President Donald Trump, who is the Republican nominee, has signalled strong support for Bitcoin, even pledging to build a Bitcoin reserve in the US Democratic nominee and current Vice President Kamala Harris has also shown support for the crypto industry.

This political backing could further bolster Bitcoin’s appeal to investors looking for long-term opportunities in the crypto space.

Political rhetoric surrounding the crypto sector has already made headlines, and further endorsements could increase demand for Bitcoin as an alternative financial asset.

Despite the favourable factors, Bitcoin is not immune to risks.

On Tuesday last week, Bitcoin’s price fell sharply after Iran launched a missile attack on Israel, highlighting its volatility and vulnerability to geopolitical events.

Bitcoin’s reaction to global conflicts suggests that it continues to behave like a risk asset rather than the “safe haven” or “store of value” many of its proponents hoped it would be.

David Lawant, head of research at FalconX, pointed out that this behaviour is a concern for Bitcoin bulls.

“The market’s response to geopolitical tensions shows that Bitcoin is still perceived as a risk asset, and its ability to act as a hedge in times of crisis remains in question,” said Lawant.

Despite these challenges, optimism remains high among traders, as evidenced by the volume of Bitcoin call options on the market.

Kaiko Research analysts noted that call options with strike prices at $70,000 and $75,000, expiring on October 25, have seen significant trading volume.

A call option gives the owner the right to buy Bitcoin at a specified price before the expiration date, and the volume indicates that many traders are betting on a significant price increase in the coming weeks.

The surge in call options volume suggests that market participants expect further upward momentum for Bitcoin in the near term, with many speculating that the cryptocurrency will break past $70,000 and potentially hit $74,000 or higher before the month ends.

Bitcoin is currently positioned for a potentially record-breaking October, supported by historical trends, favourable macroeconomic conditions, and political factors.

However, risks remain, particularly in the form of geopolitical tensions that could introduce volatility to the market.

Still, with investors showing optimism through the options market and a strong likelihood of further rate cuts by central banks, Bitcoin may well be on its way to surpassing $74,000 this month.

The post Here’s why analysts think Bitcoin will top $74,000 in October appeared first on Invezz

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