In crypto markets, October is sometimes referred to as "Uptober," and for good reason. Last October, for example, was a particularly good month that saw popular cryptos approach their all-time-highs and the overall crypto market reach a $3 trillion market capitalization. So what can we expect this year?
The good news is that, despite all the recent hoopla about interest rate hikes by the Federal Reserve and deteriorating equity markets, there are some cryptos that could be poised for a major breakout in October. The top cryptocurrencies to watch in October include Bitcoin (BTC -0.19%), Solana (SOL 0.68%) and XRP (XRP -0.34%). The performance of each of these is key to understanding the current condition of the crypto market. If all three cryptos post solid gains in October, then we could be headed for a very exciting 2023.
Bitcoin, of course, is the market linchpin. While some altcoins are starting to separate from Bitcoin in terms of performance, it's almost inconceivable that we will see a major bull market rally without the participation of Bitcoin.
For the past five months, Bitcoin has been locked into a relatively narrow trading range of $18,000 to $25,000. Bitcoin is currently testing the $20,000 support level, and what happens in October will be critical.
We're still in an inflationary, rising-rate economic environment, and large institutional investors are looking to Bitcoin to show signs of strength with each new Fed rate hike. I'm not looking for major price gains for Bitcoin this month, but I am looking for signs of momentum and a breakout from a very narrow trading range.
Last month, crypto investors focused on Ethereum, which pulled off one of the most eagerly anticipated technological feats in crypto history: The Merge. Unfortunately, this was a classic case of "buy the rumor, sell the news." Over the past 30 days, the price of Ethereum has dropped about 16%. For that matter, nearly every other major Layer 1 blockchain -- including Avalanche and Cardano -- is down double digits for the month.
But the one crypto that has held up surprisingly well is Solana, which is widely regarded to be the top Layer 1 blockchain behind Ethereum. Solana is up about 5% over the past 30 days, suggesting that investors may be looking for another crypto to take over from Ethereum to lead the market higher. New data indicates that Solana is rapidly gaining ground on Ethereum in the non-fungible token market.
In addition, Solana has been on fire of late with all of its new innovations, including the announcement of the world's first-ever crypto phone over the summer. The official launch of this crypto phone is slated for January 2023, so keep an eye on what Solana might announce as part of its mobile crypto strategy in October.
Finally, we have XRP, which was actually one of the top crypto performers of September, thanks largely to positive news about its pending litigation with the Securities and Exchange Commission. The market currently thinks that XRP will get positive news surrounding a possible settlement with the SEC by the end of the year, and that has led to XRP skyrocketing in value. Over the past 30 days, XRP, a payments and remittance system, is up a staggering 45% to about $0.48. Is XRP overbought as a result of all the speculative froth surrounding the legal news? We'll find out in October.
October crypto indicators
Given the fact that people keep talking about a "crypto winter," it may be difficult to shift the narrative about crypto if we don't see some positive signs of a market rebound before the weather turns a lot colder. That's why I'm focused primarily on how Bitcoin and Solana perform in October.
How Bitcoin fares will tell me a lot about how crypto is going to fare during a difficult macroeconomic situation. Solana's performance could hold the key to which blockchain ecosystem is going to lead the way in 2023. XRP will give me insights into how speculative altcoins could fare for the remainder of the year. Is there enough strength in the crypto market for a long, sustained rally? Let's just hope that crypto is not too spooky for investors this October.