Bitcoin speculators counting on a seasonal October rally face an early reality check as heightened tensions in the Middle East spark caution in global markets.
As of press time, Bitcoin rebounded and then fell back, trading at around $61,166.81.
The digital asset fell nearly 5%, its biggest drop in nearly a month, on Tuesday after Iran fired about 200 ballistic missiles at Israel in a sharp but brief escalation of hostilities between the two countries.
Bitcoin has gained an average of 20% in October over the past decade, according to data compiled by Bloomberg. That historical pattern had fueled hopes that Bitcoin could surpass its all-time high of $73,798 hit in March, but the biggest geopolitical fault line in global markets has poured cold water on optimists.
Sean McNulty, director of trading at liquidity provider Arbelos Markets, believes the sell-off is just a “temporary setback” now that the Federal Reserve has begun cutting interest rates. He said the government that comes to power after the U.S. presidential election in November is also likely to be more friendly to cryptocurrencies.
McNulty added: “October was Bitcoin’s best month and this seasonal trend remains strong.”
For now, markets are wary of an escalation in the conflict as Israeli Prime Minister Benjamin Netanyahu vows to retaliate against Iranian attacks.
The digital asset has recently moved more in sync with stocks, suggesting that macroeconomic drivers such as monetary policy are currently critical to Bitcoin.
The 50-day correlation coefficient measuring the top 100 digital tokens and the MSCI Inc. index of world stocks is 0.65, the highest since 2022, according to data compiled by Bloomberg. A reading of 1 means assets move in sync, while a reading of -1 indicates an inverse correlation.
Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for digital asset derivatives trading, said: “The geopolitical crisis environment looks unfavorable for risk assets.#加密市场急跌 #大A香还是大饼香 #非农就业数据即将公布 #BTC #ETH $BTC $ETH $BNB 
