Analysis: Bitcoin Shows Signs of an October Bottom as Whale Holdings Top 3 Million BTC

Bitcoin may be forming a bottom in October, with exchange reserves staying low, demand recovering and whale holdings rising to about 3 million BTC, according to a CryptoQuant analysis.

A CryptoQuant Quicktake note cited on October 12 quoted XWIN Japan as saying signs are emerging that Bitcoin is forming a potential bottom.

The macro backdrop has also improved somewhat. Market-implied odds of a Federal Reserve rate hike in October have fallen to about 18%, while Brent crude has retreated to around $103 a barrel from nearly $110.

The analyst pointed to three shifts in on-chain indicators. Bitcoin held on exchanges has rebounded slightly in recent days but remains at a low level. Apparent Demand, a gauge of new Bitcoin demand, has also recovered quickly from deeply negative territory. Still, it remains below zero, suggesting demand has not fully recovered.

Whale holdings have also increased. Large investors' Bitcoin holdings climbed to about 3 million BTC and have stayed elevated even during the recent price correction.

The analyst said uncertainty around the U.S. midterm elections on November 3 could gradually ease as the vote approaches. If political uncertainty recedes after the election, investors may reassess their asset allocation.

Still, the analyst stressed it is too early to conclude that Bitcoin's bottom has been confirmed. That would require continued inflows into spot exchange-traded funds, stronger buying in the U.S. spot market and a further recovery in Bitcoin demand.

The analyst also said "Uptober," a term for Bitcoin's typically strong October performance, does not mean prices must rise throughout the month. The current pullback could instead help lay the groundwork for the next advance.