Market analysis

The State of Crypto Report: October 2023 Edition

6 min read

Another month has come to an end and we’re pleased to report that “Uptober” lived up to its reputation. Buoyed by growing hopes for an imminent spot bitcoin ETF approval in the US, the crypto market finally embarked on a meaningful rally, which sparked speculation that the “Crypto Winter” is finally coming to an end. In our monthly State of Crypto Report, we dissect all the positive news that sent digital assets soaring and evaluate the last month’s performance of the six newly-listed altcoins on Yield App.

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October brought far more positive than negative crypto news, which is reflected in the strong price movements across major cryptocurrencies. Living up to its nickname, the month saw ETH, BTC and all the largest altcoins by market cap finish in the black. The main driver of price movement was, of course, the mounting excitement about an imminent spot bitcoin ETF approval. However, headlines were also dominated by the live coverage of Sam Bankman-Fried’s high-profile trial for the collapse of his FTX exchange, which is still ongoing.

🫣 The bad: Geopolitics, regulatory pressures and Ethereum centralization

While negative headlines in the crypto market were few and far between, global risk assets were hit by escalating tensions in Gaza. The geopolitical news also briefly affected digital assets, though overall bitcoin remained relatively resilient.

However, cryptocurrency itself did face some negative news. In particular, the UK saw Chase Bank close its doors to crypto customers due to scam fears. Similarly, Binance recently ended its service for European Visa debit card users – a service allegedly only used by 1% of its customers – as regulatory pressures in Europe intensified.

Also in the UK, a long-anticipated law to allow authorities to seize digital assets used for criminal purposes finally went into force. Notably, a conviction isn’t required. This development may well turn out to be good news for digital assets in the end, but it remains to be seen how lawmakers will implement it in practice.

For Ethereum, more criticism came from JP Morgan. In a report, the bank said the biggest smart contract blockchain had become more centralized following last year’s Merge and its Shanghai Upgrade in April 2023.

😀 The good: Spot bitcoin ETF hopium and fresh regulatory victories

The rhetoric around ETH has been mixed over recent months, which might explain why the approval of ETH futures ETFs failed to spark a stronger rally. However, the euphoria around a potential spot BTC ETF approval has spread to the rest of the crypto market and ether is up 6.7% over the last 30 days.

October brought with it a dress rehearsal for how the market would react to a spot bitcoin ETF approval, after Cointelegraph mistakenly published a tweet announcing the positive verdict. Bitcoin immediately rallied by 10% toward the $30,000 mark, and even the swift retraction of the news failed to push the price back down to the previous levels.

The following week, markets went into a frenzy after a ticker for BlackRock's iShares Spot Bitcoin ETF appeared in the Depository Trust & Clearing Corporation (DTCC) directory and rumors started circulating that BlackRock had started buying bitcoin to seed the fund. This appeared to suggest that the world’s largest asset manager expects an imminent approval from the SEC, though the listing was quickly removed to avoid attracting undue attention. As a result, bitcoin shot up to $35,000 and is currently hovering around the $34,000 level, marking a 26% increase over the past month.

October was also marked by several crypto victories against the SEC. The watchdog threw out its case against Ripple’s CEO and Executive Chairman, while it also decided not to appeal the decision in the Grayscale lawsuit. This could pave the way for Grayscale to finally gain permission to convert its bitcoin trust into an ETF, though this is not a given at this stage.

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📊 Uptober altcoin review

Over the past month, Yield App listed no fewer than six new assets, which means we now have eight new altcoins on our platforms. And we’re pleased to say Uptober has been kind to all of them, helping all eight finish the month higher than they started.

The standout winner was Solana, which is up 68% this month to trade around the $35 mark, recouping almost all of its losses from the past year. The rally appears to have been driven by many factors, not least the fact that previous worries over the effect of FTX selling its SOL tokens were overblown. An increase in activity on Solana and a recent tech upgrade are also likely contributors. The rally was also helped by a report from asset manager VanEck, which predicts that, if its optimistic scenario plays out, SOL’s price could soar to $3,211.28 by 2030. This would represent growth of 10,600%.

Chainlink has also enjoyed a strong month, with its LINK token up nearly 42% over the period. Its token has enjoyed support ever since the launch of its Cross Chain Interoperability Protocol (CCIP) in July, while October saw the Vodafone Digital Asset Broker (DAB) join the network as a node operator.

Avalanche’s token AVAX and Polygon’s MATIC are also up more than 20% over the past month. The former began climbing in September after announcing a partnership with Dreamus, a subsidiary of Korean multinational SK Group, while the latter is making good headway towards Polygon 2.0, a network of Layer-2 chains that aims to achieve scalability and interoperability using zero-knowledge technology.

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🍂 November outlook

To sum up, Uptober 2023 held true to its name. All the crypto assets listed on Yield App, which are some of the largest cryptocurrencies in the world, finished the month in positive territory, with many posting double-digit percentage gains. With bitcoin shooting past several support levels, many market commentators are now calling the end of the long “Crypto Winter”.

However, future returns are still highly dependent on the SEC’s next move, which could take longer than the market is hoping. The securities watchdog is expected to make its final decision by 10 January 2024 – so we may still end the year without a final verdict on the spot BTC ETF in the bag.

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