September is historically the worst month of the year for trading. Worrying economic indicators raise the likelihood of a recession, and billions of dollars in leveraged longs are being liquidated. Hundreds of millions of dollars in “historic” outflows hit Bitcoin ETFs for days in a row. Analysts warn that Bitcoin will fall to as low as $40,000 when it trades at $54,000. Talkers who hyped up the Bitcoin bull run a few months ago now say there are no catalysts to push the price higher this year.
Panic is reaching higher levels, negatively impacting Bitcoin and the cryptocurrency market. Sentiment is so low that influencers have changed their titles from “Get Rich” to “Get Lost.” No wonder the Fear & Greed Index is hovering at its lowest level this year.
If you think Bitcoin is bad, then you are definitely going to be miserable if you hold altcoins. Times like these make Bitcoin Maxis look like a genius, while altcoins are generally called "shitcoins". The Ethereum ETF has been declared a failure. Pump.fun has withdrawn millions of dollars in degen funds, and leveraged losses have absorbed most of the rest. Multiple high-cap altcoins such as Dogecoin, Avalanche, Cardano, Chainlink, and Polkadot have given back their huge gains from earlier this year.
Why it makes sense to be skeptical
Today, skepticism about Bitcoin and the broader cryptocurrency market is understandable. Wall Street was supposed to be unleashing a flood of capital, and Bitcoin luminaries like Cathie Wood and Michael Saylor were throwing out their million-dollar predictions. The halving has already happened, and based on history (which always repeats itself unless it doesn’t), Bitcoin should be trading at or near its all-time high.
Presidential candidate Kamala Harris has threatened to raise taxes and manipulate prices, suggesting her team may not be friendly to the economy. In addition, the current administration (Kamala is Vice President) has launched a predatory attack on the US cryptocurrency market, attacking cryptocurrency exchanges, NFT platforms, and other decentralized applications after suffering huge losses from Ripple and orchestrating a multi-billion dollar fraud by Sam Bankman-Fried and other cronies.
We all feel like we're getting poorer. Personal savings rates are near record lows, credit card balances are at record highs, and the government can't seem to report any economic data accurately. Inflation is supposedly down, but it's hard to know when you buy anything or pay a bill, and it seems like everything is going up.
As retail cryptocurrency investors, we face several problems:
We feel poorer because we are poorer.
We are used to getting hope from influencers and analysts, and now they are spreading fear because only greed or fear can get clicks and views.
Bitcoin is now approaching its last line of support, after which it could suffer another sharp drop.
Why Now Is Not the Time to Give Up on Bitcoin
I’ve written six paragraphs explaining why it’s smart not to buy or sell Bitcoin right now. Now, I’m going to explain why that thinking is short-sighted, wrong, and dangerous unless you’re a short-term thinker.
I could discuss how the amount of Bitcoin on exchanges continues to decline, how Bitcoin is trading below the short-term holder realized price (a historically bullish indicator), or point out Michael Saylor’s massive Microstrategy purchases or the continued accumulation of Bitcoin by Mr. 100. I could also dive into how the Crypto Fear and Greed Index has historically been a contrarian indicator, and how Donald Trump’s presidential victory brought massive capital inflows to risk assets.
In fact, I could highlight multiple other bullish data points and talking points to support why Bitcoin has huge buying potential right now.
But I won't do that.
I'm going to make a simpler argument. The Fed is changing direction. Below is the simplest and most accurate chart of when the price of Bitcoin is accelerating. The blue bars indicate when the money supply of major economies (US, China, EU, and Japan) is increasing. You'll quickly notice that when the money supply is not increasing rapidly (red circles), Bitcoin goes sideways or down. #美降息25个基点预期升温