Background on Bitcoin and Its Significance
Bitcoin, the world’s largest cryptocurrency by market capitalization, experienced a 3.9% decline in October, influenced by rising global uncertainty and increased risk aversion.
According to Investing data, Bitcoin closed October at $109,602.80, marking its first monthly drop since 2018 and ending a seven-year streak of gains that had earned October the reputation as “lucky month” for the crypto sector.
Market Performance and Analyst Insights
At the start of October, cryptocurrencies mirrored gold and stocks’ performance, both nearing historical highs. However, when uncertainty emerged, traders did not return to Bitcoin, according to Adam McCarthy, senior research analyst at digital market data firm Kaiko.
Throughout the month, Bitcoin fell from $126,000 to $104,782.88 between October 10th and 11th after reaching a new historical high. McCarthy noted, “That day’s plunge reminded investors of the limited nature of these assets. Even Bitcoin and Ethereum can drop 10% in mere minutes.”
Contributing Factors to Bitcoin’s Decline
The retreat coincided with the largest crypto liquidation in history, following U.S. President Donald Trump’s announcement of a 100% tariff on Chinese imports and threats to impose controls on critical software exports.
Additionally, growing uncertainty surrounding U.S. monetary policy, due to a partial government shutdown preventing access to key economic data and reducing expectations for further interest rate cuts by the Federal Reserve, fueled volatility.
Impact and Current Standing
Despite October’s setback, Bitcoin has still gained approximately 18% this year, reflecting that appetite for digital assets remains strong.
Cryptocurrencies have seen a surge this year as Trump has embraced digital assets.
Key Questions and Answers
- What caused Bitcoin’s October decline? The drop was influenced by global uncertainty, increased risk aversion, and significant crypto liquidation following Trump’s tariff announcement and export control threats.
- How did U.S. monetary policy uncertainty affect Bitcoin? Uncertainty surrounding U.S. monetary policy, caused by a government shutdown preventing access to key economic data and reducing expectations for further interest rate cuts, contributed to Bitcoin’s volatility.
- What is Bitcoin’s performance this year? Despite October’s decline, Bitcoin has still gained around 18% this year, indicating ongoing interest in digital assets.
- Why is Bitcoin significant? As the world’s largest cryptocurrency by market capitalization, Bitcoin plays a crucial role in the digital asset sector and has garnered attention from investors, including U.S. President Donald Trump.
