September proved volatile for Bitcoin, though the digital asset regained momentum late in the month. From Sept. 24 to Oct. 6, it rose 14%.
Increasing interest from institutional investors is sending a positive signal to the market, reflecting the confidence of the world’s largest institutions in digital currency. Additionally, pro-crypto moves by the Trump administration and the digital currency’s growing ties to the broader financial ecosystem are another key tailwind for the asset.
Bitcoin’s volatility has been a constant theme this year, led by trade war uncertainties. However, the fundamental drivers of digital currencies are expected to remain robust and support the anticipated stability ahead.
Lower Rate Expectations Fuel Crypto Optimism
Further Fed interest rate cuts could boost investor risk appetite, potentially leading to increased exposure to digital currencies. Additionally, lower interest rates would leave investors with more capital, often leading to increased interest in cryptocurrency.
According to the CME FedWatch tool, markets are anticipating a 92.5% likelihood of an interest rate cut in October and a 99% likelihood of a rate cut in December. Additionally, the possibility of a weaker greenback adds to the digital currency’s appeal.
The greenback’s value tends to move inversely with interest rate adjustments by the Fed. Interest rate cuts by the Fed make the dollar less attractive to foreign investors, as this weakens it. Cryptocurrency, an alternative to traditional currencies, could benefit from a weaker U.S. dollar.
Uptober Patterns Point to Stronger Bitcoin Moves
Cryptocurrency sentiment is turning upbeat this October, with analysts eyeing a potential “Uptober” rally, as quoted on TradingView. The optimism stems from historical data, which indicates that October is traditionally the strongest month for the asset.
Per the abovementioned article, since 2011, Bitcoin has posted gains in the month 83% of the time and recorded losses only twice, setting the stage for another bullish October. Past trends indicate that a green September usually sets the stage for October rallies. Following an 8% increase last month, the digital asset appears set to extend its rally.
ETFs to Consider
Below, we have mentioned a few ETFs for investors to increase their portfolios’ exposure to digital currencies, taking advantage of the favorable macroeconomic landscape and the long-term optimistic outlook for digital assets.
However, investing in digital currencies does require increased risk appetite and tolerance for extreme volatility. It’s important for investors to stay alert and track the developments. Despite short-term price swings, the long-term outlook for digital currencies remains optimistic.
Investors can consider funds like IShares Bitcoin Trust IBIT, Grayscale Bitcoin Trust GBTC, Fidelity Wise Origin Bitcoin Fund FBTC, ARK 21Shares Bitcoin ETF ARKB and Bitwise Bitcoin ETF Trust BITB.
With a one-month average trading volume of 48.02 million shares, IBIT is the most liquid option, ideal for active trading strategies. IBIT has also gathered an asset base of $96.2 billion, the largest among the other options.
ARKB is the cheapest option among the above-mentioned funds, charging 0.21%, and is more suitable for long-term investing. Investors can also look at Grayscale Bitcoin Mini Trust BTC, which is a cheaper alternative to Grayscale Bitcoin Trust. BTC charges an annual fee of 0.15%.
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This article originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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