October has not been kind to the cryptocurrency market, which has lost 3.29% of its overall value in just 24 hours. The global market capitalization of digital assets now stands at $2.16 trillion, a noticeable decline that reflects increasing uncertainty among investors.
Bitcoin, the world’s most prominent cryptocurrency, is also facing difficulties. At the time of writing, it is trading around $61,500, a drop from the highs of September when it frequently exceeded $65,000. Despite being the leading digital asset, bitcoin’s performance in October appears to be under pressure from both global and market-specific factors.
Investors Turning to Gold and Traditional Assets
A significant shift among crypto traders is becoming evident as many turn their attention to gold. Known for its stability and long-standing reputation as a safe-haven asset, gold is often seen as a hedge against inflation and economic instability. This makes it an appealing alternative for those looking to avoid the current volatility in cryptocurrencies like bitcoin.
Gold’s appeal is partly due to its inverse relationship with the U.S. dollar. As global instability increases, particularly in the Middle East, both oil and the dollar have seen a rise in value, further pressuring riskier assets like bitcoin. Chris Kline, co-founder of BitcoinIRA, pointed out that after a strong performance in September, bitcoin is expected to face a rocky October due to a variety of global factors. The anticipated lingering effects of bitcoin’s April halving and the upcoming U.S. election are creating an uncertain market environment, pushing some traders to seek more stable investments.
Geopolitical Tensions and Market Uncertainty
The ongoing conflict in the Middle East is another significant factor influencing the cryptocurrency market. As tensions rise in the region, the overall market for risk assets, including bitcoin, is likely to see increased volatility. While bitcoin possesses certain qualities that theoretically make it a safe-haven asset, such as its limited supply and decentralized nature, it is still treated by most investors as a speculative investment. According to Alexander Blume, CEO of Two Prime, further escalation of hostilities in the Middle East could have a negative impact on bitcoin prices in the near term.
In addition to geopolitical issues, changes in U.S. monetary policy are also affecting the market. The Federal Reserve’s recent actions, including interest rate cuts and an increased money supply, have contributed to what some experts are calling a “currency war.” This combination of political instability, economic policy shifts, and global tensions is setting the stage for what could be a highly volatile month for the cryptocurrency market.