Bitcoin ( BTC ) moved to an intraday high of $62,338 on Oct. 4 as stronger-than-expected jobs data for September and bullish onchain metrics added tailwinds to the idea of a rally in quarter 4. 

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BTC/USD daily chart. Source: TradingView

Bitcoin’s price action occurred as September’s US nonfarm payrolls print came in at 254,000, significantly higher than the expected 147,000. The unemployment rate slid to 4.1% from 4.2% in September, versus forecasts for 4.2%.

As a result, market participants have begun pricing in a whopping 97% possibility of a 25 basis point interest rate cut at the Federal Reserve’s next meeting on Nov. 7 following an aggressive half-point move in September, as per data from CME Group’s FedWatch tool.

Another possible driver behind the idea of an “Uptober” and a fourth-quarter rally for Bitcoin is the continued decrease in BTC held on centralized exchanges. 

Data from CryptoQuant suggests there are over 2.8 million BTC in total on centralized exchanges, the lowest number since November 2018 and 500,000 less than the amount seen in March.

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Bitcoin balance exchanges. Source: CryptoQuant

Bitcoin reserve on exchanges indicates the number of BTC coins held in known exchange wallets. A low balance shows a decreased amount of available liquidity and, in some scenarios, is followed by bullish price movements. 

The data shows that the balance on exchanges has plunged by 12% in the past six months, while Bitcoin has been stuck in a wide range stretching from $50,000 to $72,000. The drop in balances is relatively similar to that seen between March 2020 and November 2020 before Bitcoin embarked on an extended rally to the 2021 high of $69,000. If history repeats itself, the declining Bitcoin reserve on exchanges could be a precursor to BTC price rising to new record highs. 

Another possible headwind for Bitcoin as Q4 unfolds is increasing institutional demand through the US-based spot Bitcoin ETFs. 

Related: Buying this Bitcoin dip is a ‘no-brainer’ — Hedge fund manager

Additional data from CryptoQuant reveals that institutional investors went from selling a net 5,000 BTC on Sept. 2 to buying an average of 7,000 BTC by the end of September. This is the highest daily purchase of these investment products since July 21, when net buying was above 9,000 BTC. This demand boosted Bitcoin prices to the current all-time high of $73,835 in Q1, 2024.

“If this trend continues, prices may rise further in Q4 2024.”
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Daily change in total spot Bitcoin ETF holdings. Source: CryptoQuant

Before embarking on the much-awaited Q4 rally, crypto analyst Timothy Peterson believes Bitcoin price may first drop to rest the adoption curve at $57,000. 

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Source: Timothy Peterson