According to a report from The Block, JPMorgan analysts have identified several key factors that could impact the cryptocurrency market in the coming months, mentioning some potential technical, geopolitical, and structural events that may drive price movements, including the seasonal "Uptober" trend, interest rate cuts by the Federal Reserve, the approval of Bitcoin exchange-traded fund (ETF) options, and the upcoming Ethereum Pectra upgrade.
October is often a bullish month for cryptocurrencies
The JPMorgan report highlights a strong historical trend for October, commonly referred to as "Uptober." Analysts emphasize that Bitcoin has achieved positive returns in October in multiple years (over 70%). The analysts wrote:
"While past performance does not predict future results, we believe the 'Uptober' narrative may influence behavior and lead to positive returns for Bitcoin this October."
Federal Reserve's interest rate cut cycle has yet to impact cryptocurrency market capitalization
Despite the recent interest rate cuts by the Federal Reserve, JPMorgan analysts noted that the broader cryptocurrency market has not yet shown the anticipated positive effects. They stated that while a declining interest rate environment typically supports risk assets, the correlation between total cryptocurrency market capitalization and the federal funds rate remains weak at only 0.46.
The analysts wrote: "Since the Fed's rate cut on September 18, we have not seen the expected rise in cryptocurrency prices driven by lower rates." The market may be waiting for more sustained stability before making a decisive shift.
Additionally, the analysts acknowledged that due to a lack of historical data, it is difficult to predict how cryptocurrencies will respond to interest rate cycles. They stated:
"Cryptocurrency assets actually emerged in the early to mid-2010s, and for most of their existence, interest rates have been close to zero. Stable rates, rather than just low rates, may be most beneficial for these markets."
Bitcoin ETF options could deepen market liquidity
Another potential catalyst is the recently approved Bitcoin spot ETF options trading. In September, the U.S. Securities and Exchange Commission (SEC) approved BlackRock's Bitcoin spot ETF (iShares Bitcoin Trust, IBIT) for trading on Nasdaq. However, final approval still depends on the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).
Analysts expect this will deepen market liquidity and attract new participants. They noted: "With options, investors now have a more flexible way to engage with the ETF and drive liquidity for the underlying asset." The analysts added that this development could trigger a positive feedback loop, strengthening market structure and making it easier for institutional investors to adopt digital assets.
Pectra upgrade may have long-term effects on Ethereum
The upcoming Ethereum Pectra upgrade is also seen as a significant development. Combined with the Prague and Electra upgrades, Pectra will implement over 30 Ethereum Improvement Proposals (EIPs) to enhance network efficiency, validator operations, and account abstraction.
JPMorgan analysts stated: "Pectra is expected to have a transformative impact on Ethereum's functionality, but we believe this upgrade is more structural than an immediate price catalyst." They think the long-term impact of Pectra will be to improve Ethereum's operational efficiency and adoption rates, but it is unlikely to trigger a short-term surge in Ether (ETH) prices.
Overall, JPMorgan analysts summarize that the cryptocurrency market is in a wait-and-see mode, looking for clearer macroeconomic or structural catalysts to drive sustained growth. They stated:
"We continue to see the cryptocurrency ecosystem becoming increasingly sensitive to macro factors, so we are waiting for the next major catalyst for development to enhance retail participation for long-term growth of the ecosystem."