Bitcoin Soars Past $120,000: What's Fueling the Market’s Seasonal Upswing?

Bitcoin (BTC) has surged past the $120,000 mark, signaling a major milestone for the cryptocurrency market. Following a period of recalibration, the ecosystem appears to be regaining its balance, supported by ETF inflows, a refreshed options market, and stable on-chain metrics. With eyes on the seasonal Q4 rally—popularly known as “Uptober”—investors are eagerly assessing whether this could be the beginning of another historic upswing.

Short-Term Holders’ Cost Basis Provides Robust Support

Data from Glassnode, disclosed on October 3, underscores the importance of the Short-Term Holder (STH) Cost Basis as a foundation for Bitcoin's resiliency. In 2023 alone, this metric has provided reliable support on five separate occasions. Even when Bitcoin retreated to $109,000 last week, buyers stepped in aggressively around the $111,600 level, demonstrating a collective confidence that ignited the rebound we see today.

The recent push past $120,000 reaffirms the STH Cost Basis as not merely a technical indicator but a psychological anchor for market participants. Nonetheless, sellers within the $114,000–$118,000 range—predominantly recent speculative buyers—have created resistance zones. To fully cement confidence in “Uptober,” analysts indicate Bitcoin must decisively clear the $130,000 milestone.

ETF Inflows Drive Demand as Long-Term Selling Wanes

One of the key drivers of Bitcoin’s recovery has been an easing of selling pressure from Long-Term Holders (LTH). While months of profit-taking earlier in the year led to excessive supply, the market has now shifted to a more neutral position. This moderation has calmed fears of persistent downward pressure, allowing the cryptocurrency greater leeway to climb sustainably.

Additionally, U.S. spot Bitcoin ETFs are seeing renewed capital inflows, which have catalyzed a balanced supply-demand dynamic. This influx of institutional participation is critical for reducing market volatility and bolstering upward momentum.

Investor sentiment, as measured by the Fear & Greed Index, has transitioned to a neutral-to-cautious zone after hovering in “extreme greed” territory earlier in the year. Such moderation suggests consolidation rather than speculative overheating, a positive signal for sustainable growth. Moreover, Realized Value to Transaction Volume (RVT) metrics reveal a decline in short-term realized profits—a sign that speculative trading is giving way to renewed accumulation by long-term believers.

Options Market Rebounds with Bullish Sentiment

After witnessing the largest-ever liquidation of expiring contracts just last week, the options market has undergone a significant reset. Open Interest (OI) initially dropped sharply but has since rebounded, with call options gaining traction over puts. This shift in sentiment points to a cautiously optimistic outlook for Bitcoin as investors position for future gains.

Of notable interest is the $136,000–$145,000 price range, where call contracts have been clustered, signaling strategic bets on a Q4 rally. However, market participants are approaching this cautiously, favoring balanced risk-reversal strategies, such as combining put selling with call buying, to limit exposure while participating in the upside momentum.

An equilibrium in options dealers’ gamma exposure has further contributed to market stability. With no major options expirations looming, short-term volatility has decreased, providing the perfect runway for direction-driven price movements in the derivatives segment.

What’s Next? $130,000 as the Pivotal Threshold for Uptober

Bitcoin’s breakout past $120,000 isn’t just a price milestone—it’s a culmination of improving market dynamics. From robust ETF inflows to receding LTH selling pressure and the stabilization of the options market, multiple factors are converging to create a favorable backdrop for the anticipated "Uptober" rally.

Market sentiment has also recalibrated to a healthier baseline. Chris Bemish, an on-chain specialist at Glassnode, remarked, “Bitcoin is entering a new phase. The moment it breaches $130,000, we’re likely to see the seasonal Q4 bullish trend gain full momentum.”

The coming weeks will be pivotal for Bitcoin as it tests its ability to turn this optimism into a sustained upward trajectory. As the cryptocurrency eyes $130,000 and beyond, the market’s mix of cautious optimism and strategic recalibration sets the stage for what could be an exciting close to the year.