October is traditionally a strong month for crypto assets, but options traders are anticipating further downside in the coming weeks, with a potential rally expected after the U.S. elections, according to market maker Wintermute.
Over the past 24 hours, Bitcoin has dropped 3.7%, while major altcoins such as XRP, ADA, DOT, and LINK have seen declines exceeding 5%. In contrast, SOL and ETH have held up better amidst the market downturn. Despite this, Bitcoin remains on track to finish September with a nearly 7% gain, marking its best monthly performance since 2013. Charlie Morris of ByteTree questioned whether the widespread expectation of a strong October could disrupt the usual trend.
Cryptocurrency prices plummeted on Monday, with Bitcoin nearing $63,000 during U.S. trading hours, concluding what was otherwise a stellar September for the asset class on a sour note. While Bitcoin dipped 3.7%, Ethereum (ETH) and Solana (SOL) saw more modest declines of 2.8% and 1.9%, respectively. Several major altcoins from the CoinDesk 20 index, including Ripple (XRP), Cardano (ADA), Polkadot (DOT), and Chainlink (LINK), dropped over 5%.
Crypto-related stocks also took a hit, with Bitcoin miners like Marathon Digital (MARA), Bitdeer (BTDR), Hut 8 (HUT), and CleanSpark (CLSK) falling between 5%-10%. Meanwhile, Coinbase (COIN) fell over 6%, and MicroStrategy (MSTR) was down more than 3% by the close of trading.
In traditional markets, U.S. equity indexes remained flat before declining towards the end of the session, while European markets sold off by 1%-2%. Japan’s incoming prime minister, Shigeru Ishiba, emphasized the need for accommodative monetary policy following his unexpected rise to power, which triggered a 5% drop in the Nikkei on Monday.
In the U.S., Federal Reserve Chair Jerome Powell signaled that future interest rate cuts might not be as aggressive as the 50 basis point reduction seen in September. “If the economy evolves as expected, policy will gradually shift toward a more neutral stance. But we are not on a preset course,” Powell said, adding that the Fed’s decisions would be made “meeting by meeting.” He affirmed that the economy is in solid shape and that the Fed intends to use its tools to maintain stability.
However, ByteTree’s Charlie Morris suggested that widespread anticipation of a strong October might cause some investors to second-guess the trend. “Contrarian investors are often wary when an idea becomes too popular because it indicates that much of the capital may already be committed,” Morris wrote in a report. He also noted that Bitcoin’s price historically consolidates for about six months after halvings before reaching new highs. With this year’s halving having occurred on April 19, Bitcoin could break out to new highs by late October if the pattern holds.
Options traders, however, are forecasting that a significant rally will only come after the U.S. elections in November. According to Jake Ostrovskis, an OTC trader at Wintermute, the market is currently positioned for further weakness in the near term. “With spot trading falling below $65,000, the volatility surface shows a bias towards the downside until late October and November, when the market is expected to favor calls over protective puts,” Ostrovskis explained. “Current positioning suggests we could see a post-election rally.”
