Bitcoin rose in September, while many traditional assets suffered significant losses, highlighting the diversified nature of cryptocurrencies. The pressure on the global market seems to be due to rising government bond yields and rising oil prices
- Bitcoin rose in September, while many traditional assets suffered significant losses, highlighting the diversified nature of cryptocurrencies. The pressure on the global market seems to be due to rising government bond yields and rising oil prices.
- With the improvement of indicators on the Bitcoin chain this month, strong fundamentals have played a crucial role. The market value of stable coins has stabilized after a decline last year, and the digital asset market still focuses on the development of Layer2 blockchain and the potential for spot Bitcoin ETFs to be approved in the US market.
- Despite encouraging signs in the cryptocurrency industry itself, the broader financial market context may still be challenging at present. However, the recent stability of Bitcoin suggests that once the macro background improves, its valuation may begin to recover.
Bitcoin (BTC) rose 4% in September, a sharp contrast to the significant losses of many traditional assets that month.Cryptocurrencies are now more relevant to other markets, but in this challenging market environment,They continue to provide investors with a certain degree of diversification.
The latest pressure on global assets seems to come from the US bond market:The Federal Reserve can provide some explanation for this. At the mid September meeting,The central bank has stated that it may raise interest rates again later this year, and the rate of rate cuts next year may be slower than previously expected. The updated guidelines from the Federal Reserve will help push up short-term bond yields and boost the value of the US dollar.
However, the greater challenge facing the fixed income market may be the surplus of long-term government bonds.The 30-year treasury bond bond yield rose nearly 50 basis points (bp) in September, reaching the highest level since 2011. Long term bonds (such as bonds with a remaining maturity of more than ten years) are usually less sensitive to minor changes in the Federal Reserve's interest rate guidance.
On the contrary, the bond market seems to be working hard to absorb a large amount of borrowing from the US Treasury - a result of the government's huge budget deficit. Although the budget deficit has been significant for a period of time, in the pastThe Federal Reserve's purchases ("quantitative easing") have absorbed some of the bond supply. Now, the Federal Reserve is shrinking its balance sheet ("quantitative tightening"), and more government borrowing is hitting the open market, putting upward pressure on interest rates.
The rise in bond yields and oil prices seem to have put pressure on the stock market and most other risky assets.The S&P 500 index fell nearly 5% in September, with sectors related to the health of the US economy leading the decline: residential builders, industrial, and retail related companies.
Bitcoin is largely unaffected by traditional asset shrinkage and performs better than most other large cryptocurrencies.Although transaction volume continued to decline this month, various on chain indicators of Bitcoin have improved: financing addresses, active addresses, and transaction volume have all increased.
Given the progress made in spot Bitcoin ETFs at the end of August, the rebound in on chain activity may represent new investors' positions before regulatory approval.Bitcoin may also receive support from the following messages:The trustee of MtGox, a cryptocurrency exchange that no longer exists, will postpone the repayment of creditors until October 2024. The decision to hold approximately 138000 Bitcoins, currently worth $3.7 billion, may temporarily prevent this supply from entering the market.
Meanwhile,The price of Ethereum (ETH) tokens has slightly decreased compared to last month, and the ETH/BTC ratio has dropped to a one-year low.The price volatility of the second largest cryptocurrency is also extremely low:As of September 30th, the 30-day annualized price volatility of ETH is only 25%, lower than the volatility of BTC during the same period, while the average volatility since January 2022 is about 60%.Unlike Bitcoin, ETH's on chain fundamentals have not changed much. Later this month, market attention was focused on potential ETH futures ETF approvals,The ETH/BTC ratio has partially rebounded.
In addition to BTC and ETH, a significant fundamental development in September was that the market value of stable currencies stabilized after a long-term decline. According to DeFiLlama's data, stableThe total market value of fixed currency remained stable at around 124 billion US dollars after almost continuous decline last year.Since mid August,The circulation of DAI and TrueUSD (TUSD) has significantly increased, while the supply of Tether (USDT) has slightly increased since early September.
The continuous development of the second layer blockchain - grayscale research - was discussed in a recent report. It is worth noting that,The total fees charged by the social media application friend. tech on BASE (Lyear2) in September exceeded those of Uniswap, a decentralized exchange.From a price perspective,Other strong performers include the main DeFi tokens AAVE, CRV, and MKR, as well as the oracle protocol token LINK, which we believe has benefited from recent announcements related to partnerships with Swift and BASE.
Despite these encouraging signs, the broader financial market background may still be challenging for the time being:
Note: All content only represents the author's personal views and is not investment advice. It should not be interpreted in any way as tax, accounting, legal, commercial, financial or regulatory advice. Before making any investment decision, you should seek independent legal and financial advice, including advice on tax consequences.
Author: More Content Official Account KeplerResearch
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