Bitcoin (BTC-USD) jumped above $122,000 per token as investors flocked to crypto amid a government shutdown uncertainty and seasonal tailwinds added to risk-on momentum.
The rally throughout the week — its best since April — has left the world’s largest cryptocurrency trading just a stone’s throw away from its August all-time high, which was just north of $124,000.
October has historically been bitcoin’s strongest month, as the crypto has risen in 10 of the past 12 years, according to Compass Point Research, leading many in crypto markets to refer to the month as “Uptober.”
Seasonality also favors the fourth quarter, with the token gaining in four of the past five Q4 periods.
That performance often follows September weakness. But this year, bitcoin closed out the month 4% higher, therefore “raising the bar for October gains,” Compass Point analyst Ed Engel wrote on Tuesday.
Volatility in recent weeks briefly pushed bitcoin toward $108,000 before markets bounced back. Engel argued that “false downside breakouts often provide a bullish setup, particularly ahead of a seasonally strong October.”
Read more about today’s market action
Wall Street analysts also see catalysts outside the calendar that could contribute to a strong October setup.
For now, the Treasury General Account — equivalent to the government’s checking account — is largely topped up, easing concerns that liquidity would be drained from assets such as crypto and redirected into bonds. Meanwhile, stablecoin activity since the passage of landmark legislation in July has added another layer of support to crypto.
“I believe that the next wave of crypto adoption will come from stablecoin adoption. And that’s going to be very positive for crypto overall,” Samir Kerbage, chief investment officer at Hashdex, told Yahoo Finance this week. “This is a trend that might take 6 months to one year to start to reflect on prices.”
The supply of stablecoin issuer Circle’s (CRCL) USDC token has increased 19% quarter over quarter to $73.6 billion, a sharp acceleration from just 2% growth in the second quarter, Seaport Research Partners analyst Jeff Cantwell noted.
Read more: How stablecoins work
“Bottom line, the expansion in USDC in circulation looks very strong in Q3 — and it also comes at an opportune time ahead of Q4, which historically has been a strong period for crypto,” Cantwell wrote in a client note on Tuesday.
Cantwell noted that Circle’s stablecoin demand is spread across various blockchains, or digital ledgers, with 62% on ethereum (ETH-USD), 14% on Solana (SOL-USD), and 8% on Hyperliquid (HYPE).
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