Bitcoin BTC
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and U.S. equities have both experienced one of their best Septembers in many years, with analysts outlining several factors that could maintain this risk-on sentiment moving forward.
“As the third quarter concludes, both equities and bitcoin have outperformed their expectations, defying their usual September downturn,” QCP Capital analysts said.
The S&P 500 rose approximately 1.5% in September and 5.1% in the third quarter, making this its strongest year-to-date performance since 1997. Meanwhile, bitcoin has increased by over 7% this month — on track for one of its strongest September performances on record — according to Coingecko data. Historically, September has seen an average loss of around 6% for the largest digital asset by market capitalization.
A positive September has historically led to bitcoin closing higher in October, November, and December. In contrast to September’s usual downtrend, since 2013, there have only been two Octobers where bitcoin finished with negative monthly returs, in 2014 and in 2018, according to Coinglass data.
Bitcoin’s monthly returns over the years indicate there have only been two instances when the asset closed October with a negative monthly return. Image: Coinglass.
Potential for risk-on sentiment in October
Looking ahead to October, QCP Capital maintains a positive medium-term outlook for bitcoin, stating that a breakout above $70,000 could trigger further upside momentum.
Several factors are expected to sustain risk-on sentiment in the coming weeks. The analysts pointed to China’s benchmark stock index posting its largest daily gain since 2008 after Beijing introduced a range of economic stimulus packages. Additionally, a recent Goldman Sachs report noted that hedge funds are buying U.S. tech and media stocks at their fastest pace in four months, driven by the Federal Reserve’s recent monetary policy pivot.
“China’s China Securities Index (CSI) 300 Index jumped by 9% on Monday after introducing its largest property support package in years, and Goldman Sachs’ prime brokerage desk showed hedge funds positioning with three times as many bets on rising IT stocks compared to falling ones,” QCP Capital analysts added.
However, the QCP Capital analysts tempered their bullish forecast for October, noting that the recent equity rally may face challenges when quarterly earnings kick off in mid-October, as traders reassess speculative valuations. “Nevertheless, we expect bitcoin to benefit from any equity retracement due to its nature as a risk-on asset amidst global monetary easing,” they added.
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