On 9 September 2024, Greg Cipolaro, Global Head of Research at New York Digital Investment Group (NYDIG), shared an update on the state of the Bitcoin market. According to NYDIG, August was a tough month for Bitcoin, with returns falling 9.8%. Cipolaro highlighted that August has historically been a weak month for Bitcoin, with an average return of 0.1% and a median of -8.5% before 2024. NYDIG noted that Bitcoin had only produced positive returns in August 38.5% of the time since 2011.
NYDIG also emphasized that September is not historically better for Bitcoin, with average returns falling by 5.9% and a median return of -6%. Cipolaro pointed out that this creates a challenging seasonal backdrop. However, NYDIG remained optimistic about Bitcoin’s performance in Q4, particularly in October, when Bitcoin has historically performed well.
NYDIG discussed the influence of large sellers over the summer, citing the impact of bankruptcy resolutions and government-held Bitcoin sales, including those from Mt. Gox, Silk Road, and German authorities. According to NYDIG, with the exception of U.S. government holdings, these major sellers have now largely exited the market.
In terms of spot Bitcoin ETFs, NYDIG highlighted that spot Bitcoin ETFs saw positive inflows of $2.5 billion during Q3, though recent outflows have totaled $1.0 billion over the past seven trading days, potentially weighing on Bitcoin’s price. NYDIG connected these outflows to broader sell-offs in equity markets.
Macroeconomic factors are also playing a role, according to NYDIG. Cipolaro noted that investors are preparing for the Federal Open Market Committee’s (FOMC) first rate cut since March 2020, which is expected to be 25 basis points, with a 30% chance of a 50 bps cut. NYDIG emphasized that concerns about a slowing U.S. economy and potential recession are contributing to market volatility.
NYDIG also commented on Bitcoin’s trading cycles, noting that despite recent price action, Bitcoin’s current cycle aligns with previous ones. According to NYDIG, the introduction of Bitcoin ETFs this cycle has created a unique dynamic, but concerns about whether Bitcoin will reach new highs in this cycle remain.
Finally, NYDIG touched on trader positioning, noting that traders are cautious, with funding rates on perpetual swaps flipping negative. Cipolaro highlighted that this signals reduced demand for leveraged long trades, and the put/call ratio on Deribit shows increased caution, suggesting traders are hedging against downside risks.
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