Bitcoin rose 42.71 percent in the third quarter, posting its highest third-quarter return in nine years. Ethereum also gained 70.8 percent over the period, logging its best third-quarter performance on record.

On Oct. 1, blockchain media outlet Cryptopolitan reported that the cryptocurrency market showed a clear rebound in the third quarter after falling in both the first and second quarters this year. Major cryptocurrencies and altcoins rose together as institutional money returned and policy expectations added to sentiment.

The altcoin market also posted a marked recovery. TOTAL3ES, a market capitalisation gauge for cryptocurrencies excluding bitcoin, ethereum and stablecoins, rose in the third quarter to about $547 billion from about $364 billion. That was an increase of about $183 billion over one quarter, or roughly 50 percent growth.

By token, Zcash (ZEC) surged more than 260 percent and Uniswap (UNI) rose more than 200 percent. Chainlink (LINK) nearly doubled and Hyperliquid (HYPE) set a record high. Solana rebounded after about 10 months of weakness, and Quant (QNT) also climbed sharply late in the quarter.

A key factor behind the rebound was the return of institutional money. According to Sosovalue, spot bitcoin exchange-traded funds saw $6.49 billion of net inflows in the third quarter. Unlike June, when $4.51 billion flowed out, August saw $3.52 billion flow in, reversing the direction of flows. Spot bitcoin ETFs thus shifted back to net inflows after three consecutive quarters of net outflows.

Spot ether ETFs also saw inflows. Net inflows in the third quarter were $3.11 billion, the third-highest quarterly result on record. Combined net assets in related products were tallied at $17.79 billion, more than doubling.

Corporate buying based on treasury strategies also resumed. Strategy resumed bitcoin purchases in the third quarter. An expansion of long-term Treasury bond buybacks by the U.S. Treasury Department and a U.S. Securities and Exchange Commission (SEC) "innovation exemption" measure related to tokenised stocks also affected investor sentiment.

Still, it is uncertain whether the third-quarter strength will extend into the fourth quarter. The market sees the Oct. 27-28 Federal Open Market Committee (FOMC) meeting as a key variable. After the personal consumption expenditures (PCE) inflation data released on Sept. 30 came in below expectations, expectations of an October rate hike weakened. If inflation pressures persist or employment data come in strong, Treasury yields could rise and the dollar could strengthen, weighing on the cryptocurrency market.

On price action, whether bitcoin holds support at $80,000 is being cited as important. If it holds that level, $87,400 and $90,000 could be the next upside targets. If it slips below $80,000, an analysis said selling pressure that was weak during the third quarter could strengthen again.

Past seasonality supports expectations of a fourth-quarter rise for bitcoin. According to CoinGlass, bitcoin's median fourth-quarter return since 2013 was 26.59 percent, the highest among the four quarters. By contrast, ethereum's median fourth-quarter return was just 0.15 percent, showing a difference in the assets' patterns.

Whether regulatory uncertainty eases and ETF inflows continue is expected to determine the durability of the third-quarter rebound. With past seasonal strength requiring both the interest-rate environment and institutional demand to support it, market attention is focused on upcoming economic indicators and policy changes.