As we are now in September, Traders and investors are waiting for the long-anticipated bull run. So, what can we expect from this month and how Bitcoin will perform?
Key Takeaways
- Market Sentiment: Bitcoin has seen an 8.8% drop, raising concerns about further declines if it breaks the $57,000-$58,000 range.
- Historical Trends: September has historically been a down month for Bitcoin, ending negatively 72.73% of the time over the past 11 years.
- U.S. Elections Impact: The upcoming U.S. elections could play a crucial role in Bitcoin’s performance, with speculation that a Trump victory could push Bitcoin prices higher.
- FED Monetary Policy: Anticipation of a possible rate cut by the FED in September could boost Bitcoin and other risk assets.
- Global Liquidity: There’s a positive trend in global liquidity, with the M2 money supply and stablecoin supply ratio showing signs of potential for a Bitcoin rally.
- BTC Miner Activity: Bitcoin miners’ selling pressure has decreased, indicating a potential stabilization of Bitcoin prices.
- Increased U.S. Demand: A rise in the Coinbase Premium suggests growing demand for Bitcoin among U.S. investors, typically a bullish signal.
- On-Chain Data: There has been no significant profit-taking in recent weeks, indicating the potential for further price gains
Market Sentiment
Price has been performing poorly on the last days of August, stepping into September. Bitcoin experienced an 8.8% downfall last week of August into the weekend. This downturn reflects huge BTC outflow from ETFs and decreased activity on Bitcoin Network.
Bitcoin is currently sitting at $58,514. The question for us is, these factors are fully priced in and how much further Bitcoin’s price might fall if the 57,000-58,000 range breaks.
Crypto Fear & Greed Index is reading fear at 26 degrees. History hasn’t also been kind to Bitcoin in September; over the past 11 years, it has ended the month on a downtrend 72.73% of the time. However, there is a chance that this September could end the streak.
US Elections
One reason for optimism is the upcoming U.S. election, which is just around the corner. This year’s Bitcoin bull market is closely tied to the 2024 election. Polymarket Bets suggests public sentiment is towards Donald Trump winning the 2024 Presidential election. Speaking to BNN Bloomberg 4 months ago, Geoff Kendrick, head of digital assets research at Standard Chartered, forecasted bitcoin could climb to $100,000 as the November presidential election nears, potentially reaching $150,000 by year-end if former U.S. President Donald Trump wins the election. Although it is highly unlikely we will reach those prices this Year, a bet on Polymarket puts a majority of votes on BTC reaching $70k before October.
Why do Crypto and the Stock market care about elections?
The link between elections and the economy has been known for a long time. Work from the 1970s pointed out that politicians often boost the economy before elections to gain favor, only to follow up with tough measures like inflation control via higher interest rates afterwards. The Political Business Cycle
While investors may closely monitor election processes and results for their potential effect on market performance, it’s important to recognize other more long-term factors are also in play here.
The historical data suggests that economic and inflation trends, more so than election outcomes, tend to have a stronger, more consistent relationship with market returns.
FED Monetary Policy
Generally speaking, rising economic growth and falling inflation have been associated with returns that are considered above long-term averages, while falling growth and rising inflation have corresponded to positive but below average market returns.
U.S. inflation continues to be steady, reinforcing market expectations of a likely FED rate cut in September. According to the CME FedWatch tool, interest traders are now pricing odds of 70% likelihood of a 25 bps rate cut on 18th September. This rate cut is expected to help boost BTC and other risk assets.
Bitcoin’s price remains weak, but not for long?
Global Liquidity and Money Supply
Recent data revealed that global liquidity is recovering and is now at new highs. While Bitcoin has not received a huge share of that liquidity so far, the fact that liquidity is back on a positive trend is positive for the market.
One of the key bullish arguments for Bitcoin has been that global liquidity, namely the global M2 money supply, is beginning to increase.
Similar to global liquidity, the stablecoin supply ratio, or SSR, also indicates how much liquidity is available in terms of stablecoins that can be used to buy Bitcoin.
Currently, the SSR ratio is down to early February 2024 levels, which means a lot of liquidity is available in the market, potentially triggering a rally soon.
BTC miner’s selling pressure slows down
Bitcoin miners have been selling BTC through exchanges as their net flow decreased in the second quarter of 2024. However, the selling pressure has flattened out over the past two weeks as miners’ reserves are beginning to show signs of a trend reversal toward accumulation.
The chart shows that the miner’s selling pressure decreased significantly in August, suggesting that BTC could stabilize at its current price range before next month.
A CryptosRus analysis suggested that a combination of rate cuts, growing liquidity, the halving and the U.S. elections closely resembled Bitcoin in 2016 and 2020. BTC went through a robust rally in both instances.
BTC Increased Demand in the U.S.
The increase in Bitcoin demand from U.S. investors was evident in the spike in the Coinbase Premium, which surged to 0.11%, its highest level since July. The rise of this metric indicates that the local trading platform is seeing higher demand from U.S. investors than exchanges outside the country.
CryptoQuant said it was a sign that BTC had begun to flow from non-U.S. trading platforms to Coinbase, a movement usually seen during bull markets and an indication of an upward trend in bitcoin’s price.
Crypto Quant also stated that Apparent demand is still negative. “Apparent demand has slowed considerably since early April when Bitcoin was trading at $70K. We would need to see apparent demand expanding again for prices to fully recover and hit fresh highs.”
Onchain Data indicates there has been no significant profit-taking
CryptoQuant On-chain data shows no significant profit taking. Realized profits after the price rally of the last weeks amounted to $536 million, significantly lower than the ones seen at local market tops this year, $10 billion on May 27 and $9 billion on March 12. A low realized profits may signal there is still no sign of a local top in this rally.
Now is the time to closely monitor the developments and prepare for potential opportunities in the coming weeks.
