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Bitcoin and ether are seeing positive seasonal momentum heading into October, historically crypto's strongest month. Expectations that policymakers will keep interest rates steady, along with declining two-year real yields, could support crypto prices. However, stress in sovereign bond and credit markets may trigger a short-term pullback, though resilience could improve future risk-reward.
Bitcoin and ether year-to-date "Seasonality is also becoming a tailwind," said Fundstrat's head of digital assets, Sean Farrell on Thursday. Farrell noted October has historically been crypto's strongest month, with the highest median and average returns, and around an 80% win rate.of market participants now expect policymakers to hold rates steady at their October meeting, providing an added tailwind for risk assets.
However, the strategist pointed out that continued stress in sovereign bonds and credit could lead to a short-term drawdown in crypto.
"The 'glass half full' perspective is that the more stress that gets priced in without breaking BTC, the better the forward risk/reward becomes," said Farrell in a separate note on Friday. The strategist also pointed to a recent decline in 2-year real yields, which measure the inflation-adjusted return investors earn on 2-year Treasury bonds. If real yields continue to fall, that could help support bitcoin by reducing the relative appeal of holding short-term government debt.
Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.
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