Bitcoin’s notable ‘Uptober’ trend encounters obstacles as futures interest rises and spot purchases decline.

Bitcoin’s (BTC) typical robust performance in October is at risk due to elevated open interest in futures contracts and a decline in purchasing activity from spot investors, as noted in the Sept. 30 edition of the “Bitfinex Alpha” report.

The report emphasized that October has historically yielded strong outcomes for Bitcoin, with an average return of 22.9% and a median return of 27.7% since 2013.

This trend has led the industry to label the month as “Uptober,” which generally results in a prolonged upward trajectory throughout the fourth quarter, with the market achieving an average return of 88.8% during this timeframe.

Bullish indicators for ‘Uptober’

The report indicates that the Federal Reserve’s potential interest rate reductions contribute to positive sentiment as Bitcoin approaches the final quarter of the year.

Notably, Fed Chair Jerome Powell mentioned during his address at the National Association for Business Economics on Sept. 30 that another 50 basis point cut is anticipated this year.

Further enhancing the bullish outlook, Bitcoin has risen 26.2% since its sharp decline on Sept. 6 to $52,756, surpassing the $65,000 threshold and exceeding the local peak of $65,200 recorded on Aug. 25. This represents the first instance of Bitcoin exceeding a local peak since March.

Additionally, Bitcoin’s consolidation within the range of $50,000 to $68,000 reflects its pre-halving pattern from 2020, where an October surge led to substantial price increases.

Warning indicators

Despite the various encouraging signs pointing to a potentially bullish fourth quarter, the report also pointed out several warning indicators that could impact Bitcoin’s performance.

The first indicator is the decline in aggressive purchases in the spot market. Since Sept. 6, spot investors have been accumulating BTC significantly, but this trend has shown signs of weakening since last week.

This implies a temporary equilibrium in the market between buyers and sellers, possibly linked to the hesitance of traders to engage in aggressive actions prior to the fourth quarter.

The second indicator pertains to Bitcoin futures, which recorded $35.3 billion in open interest. The report noted that this level is frequently associated with local market peaks, raising concerns about potential “overheating” in the market.

Nonetheless, Bitfinex analysts are of the opinion that a 5% to 10% pullback would be sufficient to temper the market and would not disrupt Bitcoin’s recent upward trend.

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