Bitcoin and Ethereum Rally, Liquidating $70M in Shorts

The crypto market sees green as investors pay close attention to the launch of the Ethereum futures exchange-traded fund (ETF).

Bitcoin (BTC) and Ethereum (ETH) kick off October with impressive price surges. The largest cryptocurrency broke through $28,000 as October begins. Bitcoin is now trading around $27,990, up to 3.3% in the last 24 hours, according to data from CoinMarketCap.

The price of Ethereum surged from $1,595 to $1,750 before hovering around $1,723 at the time of writing. It remains unclear if the market has made a turn, or if this is just a flash in the pan.

Bull Run or Bull Trap?

The sudden rally came amid the market’s anticipation of the first Ethereum futures ETF product within this month. Last Friday, the community was abuzz with news that Valkyrie would be the first to offer the futures ETF.

Additionally, the SEC reportedly approved other Ethereum futures ETFs from VanEck, Bitwise, ProShares, Kelly ETFs, and Vol Shares. These 9 products will come on October 2.

Apart from Ethereum ETFs, Bitcoin spot ETFs are also in the spotlight, even though the U.S. Securities and Exchange Commission (SEC) could continue to extend the deadline for a decision on whether to approve them.

The SEC has delayed a decision on Bitcoin spot ETFs several times, citing concerns about market manipulation and investor protection. However, there is growing pressure on the SEC to approve a Bitcoin spot ETF. Crypto members are optimistic about a potential approval in early 2024.

On a day when the two largest coins celebrated the new month, other altcoins also heated up. Over the past 24 hours, Solana (SOL) surged by 12.05%, THORChain (RUNE) was up to 12.35%, and Polygon (MATIC) increased by 5.64%. Other top altcoins, such as Cardano (ADA) and Avalanche (AVAX), also recorded gains of 1% to 3%.

With the sudden return of bullish momentum, “Uptober” is now the trending keyword across the crypto members. Historically, the price of cryptocurrencies has mostly rallied in October.

The unexpected price move has benefited spot and long positions, but it has been painful for short sellers. According to Coinglass, $70 million in short positions were liquidated within two hours, with nearly $36 million worth of BTC shorts and $23 million worth of ETH shorts liquidated.

On-chain analytics firm Santiment expected the Bitcoin bull run could continue in October. According to Santiment’s report, Bitcoin whales that own between 10 to 10,000 BTC have accumulated their highest holdings in 2023, currently at 13.03 million BTC.

These whales have also been quietly buying Tether (USDT) over the past six weeks. The accumulation of Bitcoin and USDT by whales and sharks suggests that they are confident in the long-term prospects of Bitcoin.

What to Expect this October?

Two significant macro events this month are U.S. unemployment rate on October 6 and CPI reports on October 1. The data provide insights into the health of the economy and the level of inflation, which are both key factors that the Federal Reserve (Fed) considers when making decisions about interest rates.

While the Fed took a pause in its interest rate hikes in September, many financial experts and analysts are of the opinion that this pause is temporary. They believe that the Federal Reserve is inclined to resume raising interest rates, possibly as early as its upcoming meetings in November or December.

The rationale behind this expectation is the Fed’s ongoing efforts to control and reduce inflation, which has been running above its desired 2% target. Of course, the Fed is limited, and more rate hikes will put more strain on the global financial system.

Given this scenario, the crypto market could experience some effects from the federal agency’s decision. However, its significance may be minor. Analysts and observers believe that the broader economic outlook is pivotal in shaping the crypto market’s direction.