Bitcoin’s weak trading may continue for another month as cryptocurrency traders continue to await clarity on Federal Reserve rate cuts and the upcoming presidential election.
August was a tough month for cryptocurrencies, with Bitcoin falling 10.25%, its biggest monthly drop since April, while Ethereum fell 23.66%, its third monthly drop and its biggest monthly drop since June 2022.
It is worth noting that despite Bitcoin's partial success in 2024 due to the emergence of spot ETFs, other cryptocurrencies have not followed Bitcoin's rally to set new all-time highs, but have struggled. Rob Ginsberg, a chart analyst at Wolfe Research, said:
“The situation in the entire cryptocurrency space is not optimistic at the moment. Bitcoin is still trapped in a downward channel and the price is gradually falling from the highs in March. Although a short-term breakthrough will be very positive, we still respect this general trend. Bitcoin may return to the bottom of the range, that is, the low $50,000 area in the coming weeks.”
“Since topping out in March, the trend for Bitcoin has been deteriorating, with a series of lower lows and lower highs,” Ginsberg added. “Unless this trend changes, either with a breakout or a more gradual reversal, we will continue to remain bearish on Bitcoin’s price in the short to medium term.”
Bitcoin fell over the weekend, approaching $58,000. Historically, September is the worst month for Bitcoin and other markets, such as U.S. stocks. According to CoinGlass data, Bitcoin closed lower in eight of the past 11 Septembers, and the month had the largest average annual decline for Bitcoin, at 4.8%.
However, Bitcoin ended its six-year losing streak in September last year. Since April, Bitcoin has been hovering between $50,000 and $70,000 and will remain in this range for at least the next month. In addition to the early declines, another reason that made August so difficult was the oversupply of Bitcoin, which is now said to have largely subsided or resolved, according to Alex Thorn, head of research at crypto asset management company Galaxy Digital.
"Most of the bitcoins the U.S. government retains are from thefts and will likely be returned rather than sold, the German government has already completed its sale, we believe the estate from Mt. Gox has been largely distributed, and all bankrupt companies have returned available tokens to creditors," Thorn said. "From a supply perspective, the outlook for bitcoin is bright. The estate distribution from the defunct FTX exchange could be a positive catalyst, and we expect that repayment to begin within the next six months,"
Thorn added that “the distribution will provide a significant amount of cash to a creditor group of known crypto investors who may consider reinvesting in the industry.” According to Thorn, Bitcoin may remain range-bound until November as the U.S. presidential election has a huge impact on investors. He said that a Trump victory could be a positive catalyst, while any negative impact from a Harris win is likely to be minimal. “I expect volatility in the market until we know more about rate cut expectations and the election.”
Needham analyst John Todaro said. "At this stage, there doesn't seem to be a clear front-runner in the U.S. presidential election. While the market has priced in a significant rate cut, the question is how much the Fed will cut and when."
Thorn said that only unexpected events can really affect Bitcoin's short-term price at this point.
The article is forwarded from: Jinshi Data