The escalating tensions in the Middle East have triggered a cautious sentiment in global markets, causing a downturn in the crypto market. Bitcoin fell approximately 4% in the first two days of October, in stark contrast to the average 20% increase seen in October over the past decade. Sean McNulty, trading director at liquidity provider Arbelos Markets, believes that given the Federal Reserve has begun to lower interest rates, this sell-off is a "temporary setback," and the government post the November U.S. presidential election may be more favorable towards the cryptocurrency industry. Recently, the movements of digital assets have been more closely aligned with the stock market, indicating that macroeconomic drivers such as the Federal Reserve's monetary policy outlook are currently critical for Bitcoin. The 50-day correlation coefficient between the top 100 cryptocurrencies and MSCI Inc.'s global stock index is 0.65, the highest level since 2022. A reading of 1 indicates synchronous movements of assets, while a reading of -1 indicates opposite trends.

Odaily Planet Daily reported that the escalating tensions in the Middle East have sparked cautious sentiment in global markets, leading to a decline in the cryptocurrency market. Data shows that Bitcoin dropped approximately 4% in the first two days of October, in stark contrast to an average increase of 20% for the entire month of October over the past decade.

Sean McNulty, Head of Trading at liquidity provider Arbelos Markets, believes that this sell-off is a "temporary setback" given that the Federal Reserve has begun to cut interest rates, and the government after the November U.S. presidential election may also be more favorable to the cryptocurrency industry.

McNulty added, "October is often the best-performing month for Bitcoin, and this seasonal trend remains intact."

Recently, the performance of digital assets has become more synchronized with the stock market, indicating that macroeconomic drivers such as the Federal Reserve's monetary policy outlook are currently crucial for Bitcoin. The 50-day correlation coefficient between the top 100 cryptocurrencies and the MSCI Inc. global stock index is 0.65, the highest level since 2022. A reading of 1 indicates that the assets move in sync, while a reading of -1 indicates the opposite movement. (Bloomberg)

Analysis: Over the past 10 years, Bitcoin has averaged a 20% increase in October, indicating that the seasonal trend of being "the best month for performance" still exists.