The Uptober effect: Is Bitcoin’s $110K dip really a set-up for $160K?

Key Takeaways

Is Bitcoin’s $110k dip capitulation?

Bitcoin’s dip looked more like a leverage flush, with HODLers steady and overexposed longs squeezed.

Can the Uptober effect play out again?

Yes, Bitcoin’s September weakness aligns with history. Uptober averages +21.89%, and flows plus liquidity sweeps suggest a setup for a rebound toward $160k into Q4.

Investor patience seems to be wearing thin.

After a week-long pause, Bitcoin [BTC] couldn’t hold $115k to kick off a fresh leg into price discovery. The 2.17% intraday pullback dragged it to near a two-week low, with the market showing clear signs of FUD.

Moreover, BTC’s Open Interest (OI) dropped over $3 billion in just three days, trimming September’s ROI to 4.38%.

But with the shakeout hitting overleveraged longs, is this just a strategically engineered dip?

The Uptober effect on trader psychology

Bitcoin’s historical cycles show a clear price-action pattern. 

Source: CoinGlass

September tends to bleed, averaging -3.14%, making it BTC’s historically weakest month.

But October flips the sentiment with average gains of 21.89%, while Q4 delivered cumulative 85.42% since 2013.

This pattern, known as the “Uptober effect,” has delivered nearly 50% gains in the past two cycles (2023 and 2024), following a weak or red September. Notably, flows suggest traders are pricing in a repeat run. 

Fed expectations skew bullish

Source: CME Fed Tool

On the macro front, positioning is skewed bullish. 

CME FedWatch data showed 91.9% probability of a 25 bps rate cut at the 29th of October FOMC, lowering the target to 375–400 bps. That marked a 17.6% jump in cut odds from last week.

In this setup, BTC’s September weakness looks like a classic seasonal flush.

Last week’s 25 bps cut barely moved the needle, suggesting the Fed may need to deliver a full 50 bps to trigger stronger risk-on flows.

Bitcoin liquidity sweep raises engineered dip speculation

On-chain flow showed Bitcoin HODLers were still in the game. 

The Net Realized Profit/Loss (NRPL) hasn’t flipped red, even with BTC trading 11.3% below its $124k all-time high. Underwater holders are holding strong, showing conviction for the next leg up.

Meanwhile, realized profits compressed, showing “in-the-money” holders avoided taking gains.

This marked a key divergence from September 2024, when STH NUPL went negative, signaling weak-hand capitulation.

Source: Glassnode

In short, traders are leaning into Uptober psychology.

Meanwhile, BTC swept a long-liquidity cluster at $114k, stacked with $60 million+ in long leverage, triggering a clean 3% drawdown in 24 hours. It was a textbook flushout, not weak-hand capitulation.

Therefore, with HODLers holding through the FUD, overexposed longs squeezed, and October as a historical pivot, Bitcoin’s $110k dip looks like a setup for a seasonal rebound toward $160k into year-end.