Bitcoin experienced a turbulent month in August, with the leading cryptocurrency sliding by 10.25%, marking its worst performance since April. Ether also faced challenges, dropping by 23.66% in its third monthly drawdown, the worst month since June 2022. This discrepancy has highlighted the struggles within the crypto market, with Bitcoin showing isolated success thanks to ETFs in 2024, while the rest of the market is struggling to follow Bitcoin’s rally to all-time highs.
Chart analyst, Rob Ginsberg from Wolfe Research, commented on the current state of the crypto market, stating that Bitcoin is still stuck in a descending trading range with a gradual decline in price since the March high. Ginsberg emphasized the importance of considering the trend, highlighting the series of lower highs and lower lows that Bitcoin has been experiencing since March. This trend indicates a bearish outlook on the near-to-mid-term direction of Bitcoin’s price.
Bitcoin’s trading action during the holiday weekend approached $58,000, signaling a downward trend. Historically, September has been a challenging month for Bitcoin, with the coin finishing lower in eight out of the last 11 Septembers. The month of September has the largest average loss of the year for Bitcoin at 4.8%, according to CoinGlass. Bitcoin has been trading in a range between $50,000 and $70,000 since April, and it is predicted to remain within this range for at least another month.
The supply overhangs in Bitcoin have posed challenges for the market, despite many of them being resolved or abated by now. Alex Thorn, head of research at Galaxy Digital, pointed out that most of the remaining U.S. government Bitcoin supply has been recovered from theft and is likely to be returned rather than sold. The market conditions, from a supply standpoint, appear to be favorable moving forward.
Market Catalysts and Outlook
Thorn highlighted potential positive catalysts that could impact the market, such as FTX cash distributions, which are expected to be initiated over the next six months. These distributions could see a significant amount of cash delivered to a pool of creditors, potentially prompting reinvestment in the sector. The looming U.S. presidential election is expected to weigh heavily on investors, with Bitcoin likely to remain range-bound until as late as November. The election outcome could serve as a market catalyst, with a Trump victory potentially being an upside catalyst.
Uncertainty and Factors Affecting Market Direction
Market analysts, such as John Todaro from Needham, emphasized the uncertainty in the market as investors await further clarity on rate cut expectations and the election outcome. The current market pricing reflects expectations of significant rate cuts, but the impact of these cuts and the election results remain uncertain. Thorn suggested that only a surprise event could significantly affect the near-term price of Bitcoin. The Federal Reserve’s next two-day policy meeting scheduled for September 17-18 could provide further insights into the market direction.