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Bitcoin and the cryptocurrency market experienced a mixed performance in the third quarter, as concerns about the Federal Reserve and tariffs persisted. Bitcoin, Ethereum, and XRP prices jumped to a record high and then pulled back. Let’s explore some of the top reasons why Bitcoin price and the crypto market will rebound in the fourth quarter.
Bitcoin price and the Crypto Market to Rally Because of the Federal Reserve
One key aspect that will help drive the crypto market in the fourth quarter is the Federal Reserve, which has already begun cutting interest rates. It slashed the rate by 25 basis points to between 4.00% and 4.25 %, citing the recent performance in the labor market.
Most importantly, the bank’s dot plot indicated that most officials expect the bank to cut interest rates twice this year, a move that will bring the benchmark rate to 3.5% by year-end.
Cryptocurrency prices do well. The Federal Reserve is cutting interest rates, as it did during the COVID pandemic, when Bitcoin and the crypto market surged to a record high.
One reason why this happens is that aggressive Fed cuts push down the US Dollar Index (DXY). Indeed, the hopes of a cut explain why the greenback has dropped against most currencies.
Even if the Fed fails to cut rates this year, odds are that it will do so next year, as Donald Trump is expected to replace Jerome Powell as the Federal Reserve chair. Stephen Moran, his recent appointee, was the lone person to vote for a 0.50% rate cut in the last monetary policy meeting.
Altcoin ETF Approvals by the Securities and Exchange Commission
The other main reason why Bitcoin and the crypto market are expected to surge in the fourth quarter is that the Securities and Exchange Commission (SEC) is set to approve spot altcoin ETFs.
The agency has set in place the deadline for most altcoin ETF filings for October and November, and most analysts expect it to approve most of them as early as in October.
Recent data indicate a strong demand for crypto ETFs. For example, all spot Bitcoin ETFs have added over $57 billion in inflows since their approval in 2024. Ethereum ETFs have had over $13 billion in inflows. Notably, these ETFs now hold approximately 5.5% of the respective market capitalizations.
Most recently, some ETFs of coins like XRP, Solana, and Dogecoin have had substantial inflows from American investors, a sign that investors are willing to invest in these assets, which have now become liquid alternative assets.
Fourth Quarter is Normally a Strong Period for the Crypto Market
Meanwhile, historical data shows that the fourth quarter is usually the most bullish for the crypto market.
The Bitcoin price jumped by 47% in the fourth quarter of 2024, following a 56% increase in the previous year.
The average Bitcoin return in Q4 since 2013 is 85%, higher than Q3’s 5.9% and Q2’s 27%. Bitcoin’s average return in the first quarter is 51%.
While seasonality does not always work out, it is likely to be successful this year due to the catalysts mentioned above.
Bitcoin Price Technical Analysis Points to a Rebound
Technical analysis of the Bitcoin price suggests that it will rebound and reach a record high this year.
The daily timeframe chart indicates that the coin has formed a double-bottom pattern at this month’s low of $108,237, with a neckline at $117,800. This pattern often leads to a bullish reversal
Bitcoin price has remained above the 50-day and 100-day Exponential Moving Averages. Most importantly, it remains above the major support and resistance level of the Murrey Math Lines tool.
Therefore, Bitcoin price will likely rebound and move to the extreme overshoot level of the Murrey Math Lines tool at $131,200. Such a move is likely to push the broader cryptocurrency market higher.
