Why is it called Uptober?

CRYPTODAY 138

1. gm, welcome to October. Or Uptober, as the crypto world likes to call it. If you’ve been hanging out with the community recently, you’ll probably have heard the term “Uptober” at least once, referring to this interesting phenomenon where the Bitcoin price always goes green during the month of October. As with many things in crypto, this nickname is both hyperbolic but also rooted in some statistical truth, so let’s dive in to the data!

2. Here’s the main idea. Since 2017, every October has closed with a positive month-on-month price gain for Bitcoin. The gains have ranged from a modest 5% in October 2022 to a whopping 48% in October 2017. There is just one exception: October 2018 saw a lowly -5% dip overall. Six out of seven years is a pretty strong pattern, but what’s most fascinating about this data is that there is no other month in the year that shows such consistency. It is a statistical anomaly, which is why it got the “Uptober” nickname. The precise reason for Uptober is heavily debated but the simplest one is just that the US summer has ended and investors are returning to work and making their biggest bets of the year. The meta reason is that people have started to anticipate Uptober because of previously established patterns, and thus take long positions, which drives the price up, which manifests the returns they were anticipating. Self-referential markets sure are fun.

3. So what can we expect for Uptober 2024? Let’s discuss the prediction mechanism first. Based on the historical data, we know that Uptober doesn’t stand on its own — it’s actually somewhat momentum-based. What that means is that the relative combined strength of August and September tends to predict the outcome of Uptober. In 2017, August saw a massive +65% rally followed by a -8% dip in September, which resulted in our strongest Uptober with +48% gain. In 2018, both August and September saw losses (-9% and -6% respectively), which gave us our weakest Uptober with -5%. Our middle-of-the-road sample is 2020. August was at +3% and September was at -7%, and Uptober ended up with +28%. Remember though that 2020 was an election year, which tends to amplify investment trends. Neither August nor September need to be strong in order for Uptober to print big numbers, but the closer they are to positive numbers, the better.

4. As a reminder, August 2024 was at -8% and September ended at +9%. So with all that in mind, we can probably expect the October 2024 Bitcoin price to be close to the 7-year-average of +22%. It’s $63,500 as I write this, so the most likely Uptober outcome for Bitcoin is in the $75,000 range. There are several caveats here: the biggest one is that the Uptober data only looks at the monthly closing price, meaning that it ignores the highs and lows within the month itself. It’s entirely possible that we’ll see a meaningful ATH breach in the high $70k or low $80k range, but it’s less likely that it will sustain till the end of the month. Two more caveats. We’re in an election year (which usually has a positive price impact) but also in a quasi-recession (which usually has a negative price impact). It’s not clear which of these will win out, they might even cancel each other out.

5. The USD/PHP exchange rate is making our ATH calculations a little weird. Recall that our last price peak in July 2024 was $69,800, which is far below the ATH. However, that dollar amount was equivalent to 4.1M PHP because of the sky-high exchange rate (58.6 at the time). This time around, the USD exchange rate has softened by nearly 5%, so we’ll need to be at $72,000 levels before Bitcoin will start trading over 4M PHP again. It’s gonna be a weird 4th quarter, cryptofam!