Bitcoin (CRYPTO: BTC) is showing early signs of a potential October bottom as improving on-chain demand and the approaching U.S. midterm elections fuel expectations of a recovery.
Why an October Bottom?
CryptoQuant data highlighted that as of Oct. 12, markets priced in roughly an 18% probability of a Fed rate hike in October, while Brent crude had retreated from nearly $110 to around $103.
However, crypto market conditions are improving despite persistent macroeconomic headwinds, elevated Treasury yields and slowing spot Bitcoin ETF inflows.
Three on-chain indicators suggest Bitcoin could be approaching a bottom:
- Exchange reserves: Bitcoin balances on exchanges remain relatively low despite a recent rebound, potentially limiting immediate selling pressure.
- Apparent Demand: Demand has recovered sharply from deeply negative levels, although it remains below zero.
- Whale accumulation: Large holders have increased their combined holdings to almost 3 million BTC, maintaining elevated balances through the correction.
CryptoQuant noted that "Uptober" does not necessarily mean uninterrupted gains, as a market correction could lay the groundwork for the next rally.
Bitcoin Rally Before Midterms, Correction After?
Crypto trader KillaXBT outlined two possible Bitcoin scenarios ahead of the U.S. midterm elections on Nov. 3, citing historical price patterns and recent liquidations.
His preferred scenario involves Bitcoin rallying into the elections, sweeping previous highs and squeezing short sellers before correcting afterward. Historically, Bitcoin experienced bearish price action within one to two months after three of the previous four U.S. midterm elections.
KillaXBT expects a similar post-election correction this year but believes Bitcoin will establish a higher low rather than a new bear-market bottom.
Alternatively, if Bitcoin declines ahead of the elections, he expects a post-election recovery toward $95,000.
The trader noted that nearly $2 billion in long positions were recently liquidated, potentially setting the stage for a short squeeze before another correction catches bullish traders off guard.
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