If you’re keeping an eye on the crypto market right now, you’re showing great resilience. Historically, this time of year has been challenging for crypto, with September often being a slower month. It’s a period when many people might feel less optimistic, so focusing on maintaining your well-being is crucial. Consider adopting a longer-term perspective and perhaps even taking a short break from trading to recharge. By staying mindful and patient, you’re setting yourself up for success in the long run.
Those who can succeed with this challenge are typically handsomely rewarded, as October is one of the best-performing months in crypto history, and Q4 itself is also the best-performing quarter. So it is more important than ever, during this time of year, to not get burned out and demoralized.
To that end, here are four upcoming catalysts I see that could provide a tailwind for the crypto markets as we head into October. I think it is important to consider these points because September is exactly when we need the morale boost the most.
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Catalyst #1: ETF Behavior
The first catalyst that we should be watching is crypto ETF volume. Despite Bitcoin and Ethereum exchange-traded funds (ETFs) having already been approved earlier this year, almost all the trading volume within these instruments remains small, for retail investors. This has been surprising to many of us because these instruments finally invited institutional investors and Wall Street firms to the table, but so far, they haven’t shown up.
So you might be asking: why is this bullish? The answer is simply that it means we haven’t reached market saturation yet. If these ETF’s had already reached their maximum potential, that would be a bearish sign for crypto; it would mean there isn’t much “runway” left for increased demand.
So, we can conclude that when Bitcoin price does finally start trending up, we could see a lot of institutional and Wall Street interest finally come flowing into the ETFs, meaning we have quite a bit of runway still ahead of us for market tailwinds. I’ve also recently discovered that many Wall Street firms are still in the approval process for offering these products to their clients, and those approvals should start flowing in during Q4. What a great catalyst.
Catalyst #2: Global Liquidity
There’s no doubt that crypto is what we call a “risk on” asset. This asset class also includes tech stocks and growth stocks. The reason crypto and these kinds of stocks are considered “risk on” is that they don’t pay a dividend, meaning that any gains come in the form of price appreciation. This can be contrasted with “risk off” assets that include safe bets like dividend stocks and income-producing real estate.
Something that has not been given due attention in the crypto space is that global liquidity is starting to INCREASE again. This results from looser monetary policy and cutting interest rates, and is occurring not just in the USA, but worldwide. Higher liquidity environments tend to favor risk-on assets like crypto. So we can expect to see this act as a tailwind for crypto markets as we head into Q4.
Catalyst #3: US Dollar Index
One of the most important factors for people who trade crypto denominated in U.S. Dollars, is the U.S. Dollar Index, also sometimes called $DXY or “Dixy.” This is just the price of U.S. Dollars (USD) measured against a basket of foreign currencies. If you are buying crypto in USD, you are actually hoping that $DXY goes down, because then crypto is worth more relative to dollars. If this concept seems a bit tricky, just remember that “when DXY goes down, crypto goes up.”
One of the prime factors for DXY seeing a downtrend is happening right now. And that is decreasing interest rates in USA. The DXY chart is showing signs of beginning a sustained downtrend, which should directly benefit those who trade crypto in USD.
Even if you live in a different country and don’t trade crypto in USD, this can still benefit you because the US trading market is so large that it can set the course for the rest of the world. This is yet another bullish catalyst no one is talking about.
Catalyst #4: The Crypto Cycle
One thing that sets crypto apart from other asset classes is the definitive 4-year cycle. I’m sure this isn’t your first time learning about the cycle. While we don’t know for sure if crypto will always continue to follow this cycle, we know that it certainly appears to be doing so. The price of $BTC after the last halving earlier this year is following historical patterns almost exactly when compared to prior crypto cycles. Even the most skeptical of analysts cannot deny this. So if you are betting against crypto in late 2024 and early 2025, you are certainly going against the grain and betting that this cyclical behavior will somehow come to an end.
So there you have it: The 4 catalysts that I’m keeping an eye on as we head into Q4. Those with patience and understanding of the current market conditions will be rewarded! See our other article on the chains to keep an eye out for in Q4.
See you in the next article.
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