- Bitcoin is showing signs of weakening demand as September, a month often associated with declining prices, approaches
- Possible interest rate cuts in the U.S and other bullish catalysts could stir volatility
August was a volatile month for Bitcoin’s (BTC) price. BTC started trading at around $63k on 1 August and barely one week into the month, the crypto’s price tanked to around $49,000. While the price later rebounded to touch $65,000 in late August, it has since dropped to trade at $59,190 at press time.
Despite Bitcoin being down by nearly 8% over the past month, traders anticipate further declines in September if the coin follows past price actions. In fact, according to popular analyst Ali Martinez,
“If you think August was tough for Bitcoin, keep in mind that September often brings negative returns as well.”
For instance, back in September 2023, the crypto’s price oscillated between $24,000-$27,000, without making any significant gains. A sharp 17% drop in price was also seen in September 2021.
So, will history repeat itself or will Bitcoin break this pattern?
A look at key metrics
Several key metrics are already showing that bears are taking over and positioning themselves for a potential drop in September.
For instance – Data from CryptoQuant revealed a significant increase in exchange inflows since late August. The inflows came shortly after BTC’s price rebounded above $64k.
(Source: CryptoQuant)
This indicator could mean that after the recent rebound in prices, a significant number of traders chose to sell and minimize risks in case of further dips ahead.
Buyers are also showing hesitance to get back into the market. Several key indicators, the Relative Strength Index (RSI) and the Chaikin Money Flow (CMF), showed waning buyer interest at press time.
The RSI at 43 suggested sellers are still in control, and buyers are unwilling to enter at its prevailing prices. The CMF has also oscillated in the negative region since 26 August – A sign of bearish dominance.
(Source: Tradingview)
On 30 August, the U.S announced that the core PCE price index for July came in at 2.6% year-on-year. This was lower than the expected 2.70%.
Such positive macro factors usually lead to a bounce in Bitcoin’s price. However, that failed to happen yesterday.
According to QCP, with the recent macro news having barely any effect on crypto prices, BTC will continue to trade rangebound within $58k-$65k in the short term.
Furthermore, inflows to spot Bitcoin exchange-traded funds (ETFs) have weakened. In the last four consecutive days, for instance, BTC has seen consistent outflows, as per SoSoValue data.
Will September 2024 be different?
Weakening demand for Bitcoin appears to be traders hesitating to enter the market in case September turns out to be another gloomy month.
However, several bullish factors could stir a rally in September. The positive data around the U.S economy has fuelled speculation that the U.S will trim interest rates in the next Federal Open Market Committee (FOMC) meeting.
Data from the CME FedWatch Tool showed that a majority of investors anticipate the Fed to abandon monetary policy tightening for the first time since March 2020. If that happens, it will fuel a rally in risk assets such as Bitcoin.
Another bullish catalyst is the release of former Binance CEO Changpeng Zhao from prison. His release date is set for 29 September, and some already anticipate it might ignite a bull run.
Finally, former U.S President Donald Trump will debate U.S Vice President Kamala Harris in September. If there is any mention of crypto, it could spike volatility.
Bitcoin’s funding rates have also flipped positive and risen significantly over the last few days. This implies a surge in long positions – A bullish signal as traders anticipate future gains.
(Source: Coinglass)
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