Bitcoin: Should We Fear a Black Monday for Cryptocurrencies?

France wakes up with a hangover. After the black Saturday of the mobilization on October 17, another specter looms over the week ahead: that of a black Monday on the stock market. This Monday, October 19, marks the 39th anniversary of the 1987 crash, and calls for a new "Black Monday" have been spreading on X since Saturday. October has never had a good reputation among speculators. Mark Twain categorized it among the "particularly dangerous" months for stock trading, before mischievously adding the other eleven.

Bitcoin, however, is holding around $81,600 this Sunday morning. It had dipped below $81,000 mid-week in a wave of liquidations, and Wall Street has just recorded its worst week since June. Should we fear a black Monday right at the opening?

Key Points

• The anniversary of the 1987 crash falls amid a stock market slump.
• The Nasdaq lost 4.5% over five sessions, and WTI crude oil surpassed $101.
• Bitcoin has fluctuated between $79,700 and $84,400 since last Monday, without capitulation.
• The first test comes Sunday at midnight Paris time, with the reopening of U.S. futures contracts.

Wall Street Emerges Weary from Its Worst Week Since June

On Friday evening, the S&P 500 closed at 7,659 points, down 1.1% for the session and 1.9% for the week according to AP agency figures. The Nasdaq dropped 2.1% on Friday and 4.5% over five sessions. It had been on a four-week upward streak.

The fuse was lit by AI. CoreWeave, which rents graphic servers to industry giants, plunged 11.9% on Friday. Its over $51 billion in debt is concerning, and its bonds maturing in 2031 now yield over 16%. Semiconductors have recorded their eighth consecutive session of decline, their longest streak since 2008 according to Bloomberg.

Oil isn't helping either. WTI finished at $101.41, up 3.5%, following Iranian strikes near the Strait of Hormuz. Brent is nearing $110, and the yield on 10-year U.S. Treasury bonds remains above 5%. The VIX volatility index surged 21% on Friday, nearing 20 points.

CNN's Fear & Greed index has shifted from fear to extreme fear in a week. This feeds into the crash prophecies, which The Kobeissi Letter counters. For this American financial analysis letter, the frenzy of calls for Black Monday rather signals an S&P 500 at 8,000 points, or 4.4% above its Friday close.

The Crypto Market Holds Up Better Than the Nasdaq

Bitcoin is trading at $81,616 this Sunday morning, about 2.6% below its weekly opening last Monday ($83,773 on Binance). The Nasdaq lost 4.5% over the same period. On Thursday, the cryptocurrency briefly fell below $80,000, hitting $79,694 before climbing back above $82,000 during the day. Bitcoin hit $79,694 on Thursday, October 15, on Binance before rising back above $82,000. Source: TradingView (BTC/USDT, Binance)

A portion of the fuel for a crash has already burned. According to CoinGlass, $929 million in positions were liquidated within 24 hours on Thursday, including $777 million in bullish bets. A liquidation is a leveraged position forcibly closed by the platform when the market goes in the wrong direction. The fewer that remain, the less fuel there is for a cascade.

Ether is suffering further. At $2,407, it has fallen about 10% since October 1. Listed crypto values have fared worse than the tokens themselves, with a Strategy down 9.2% in Friday's session.

Crypto investors did not follow Wall Street's panic. The Crypto Fear & Greed Index shows 53 this Sunday, in neutral territory, down from 63 on Friday.

Black Monday or a Damp Squib for Bitcoin

The first verdict will come before Wall Street even opens. Futures on the S&P 500 and those on Bitcoin at the CME reopen Sunday at 6 PM in New York, which is midnight in Paris. Asian markets will follow. On Thursday, the Kospi plummeted 9% during the session in Seoul, triggering a circuit breaker. The Kospi plummeted on Thursday, October 15 in Seoul, triggering a circuit breaker. Source: TradingView (KOSPI, KRX)

The week is not short of detonators. Netflix will release its earnings on Tuesday, followed by Tesla and Meta on Wednesday, two direct tests for spending in AI that are shaking the market. The Fed will then meet on October 27 and 28, with a status quo widely anticipated by the CME FedWatch and a rate hike still feared for December.

The $80,000 level remains the support to defend on the chart. CoinGlass records clusters of liquidations between $80,000 and $80,800 below the price, and between $84,400 and $84,800 above. A break of either of these zones will escalate quickly.

The situation is not comparable to 1987 at this point. The Dow Jones lost 22.6% in a single session, without any safeguards. Since then, Wall Street suspends trading whenever the S&P 500 drops 7%, then 13%, then 20% in a day. On October 19, 1987, the Dow Jones lost 22.6% in a single session. Source: TradingView (DJI)

The crypto market has neither circuit breakers nor weekend closures. If there is to be a Black Monday, Bitcoin will price it in first, as it did on Thursday during the new Kospi crash.

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