Bitcoin's Weak Trading Pattern May Continue for a Month: Market Awaits Fed Rate Cut and Presidential Election OutcomeBitcoins weak trading pattern is likely to persist for another month as crypto traders await clarity on the Federal Reserves interest rate cuts and the upcoming presidential election. August was a rough month for crypto, with Bitcoin dropping 10
Bitcoin's Weak Trading Pattern May Continue for a Month: Market Awaits Fed Rate Cut and Presidential Election Outcome
Bitcoins weak trading pattern is likely to persist for another month as crypto traders await clarity on the Federal Reserves interest rate cuts and the upcoming presidential election. August was a rough month for crypto, with Bitcoin dropping 10.25%, its biggest monthly decline since April, while Ethereum fell 23.66%, marking its third monthly decline and its largest monthly drop since June 2022.
It's worth noting that while Bitcoin achieved a local peak in 2024 due to the launch of spot ETFs, other cryptocurrencies haven't followed suit, struggling to reach new highs.
The overall picture for the crypto space is not positive at this point. Bitcoin remains stuck in a downtrend, progressively declining from its March highs. While a short-term breakout would be very bullish, we are still respecting this major trend. We could see Bitcoin retest the bottom of this range, the $50,000 area, in the coming weeks, says Rob Ginsberg, chart analyst at WolfeResearch.
Since topping in March, the trend for Bitcoin has continued to deteriorate with lower highs and lower lows, Ginsberg adds. Unless this trend changes, either with a breakout or a more gradual reversal, we will remain bearish on the price of Bitcoin in the short to medium term.
Bitcoin dipped over the weekend, nearing the $58,000 mark. Historically, September is a poor month for Bitcoin and other markets like US equities. According to CoinGlass, Bitcoin has closed lower in eight out of the last eleven Septembers, and the month is the worst performing on average for Bitcoin with an average decline of 4.8%. However, Bitcoin broke a six-year streak of declines in September last year.
Bitcoin has traded between $50,000 and $70,000 since April and is expected to remain within this range for at least another month. According to Alex Thorn, head of research at crypto asset management firm GalaxyDigital, the early declines in August were partly due to Bitcoin supply overhangs, but these are reportedly diminishing or being addressed.
Most of the US government reserves of Bitcoin were seized from theft cases and are likely to be returned rather than sold, German government sales have been completed, we believe the Bitcoin legacy from Mt. Gox has largely been distributed, and all bankrupt companies have returned available tokens to creditors, says Thorn. From a supply standpoint, the outlook for Bitcoin is bright.
The allocation of assets from the defunct exchange FTX could be a positive catalyst, with the repayment process expected to begin within the next six months, Thorn adds. This distribution will provide a significant amount of cash to a creditor group of known crypto investors who may consider reinvesting in the industry.
Bitcoin could be in a rangebound state until November, according to Thorn, as the US presidential election will have a significant impact on investors. He says a Trump victory could be a bullish catalyst, while any negative impact from a Harris victory is likely to be minimal.
I expect the market to be volatile until we get more clarity on rate cut expectations and the election, says John Todaro, an analyst at Needham. At this stage, the US presidential election doesn't seem to have a clear frontrunner. While the market has priced in significant rate cuts, the question is how much and when will the Fed cut rates.
According to Thorn, only unexpected events are likely to materially impact Bitcoin's short-term price.
Here are some key takeaways:
- Bitcoins weak trading pattern is likely to persist for another month as the market awaits clarity on the Federal Reserves interest rate cuts and the presidential election outcome.
- August was a rough month for crypto, with Bitcoin dropping 10.25% and Ethereum falling 23.66%.
- While Bitcoin achieved a local peak in 2024 due to the launch of spot ETFs, other cryptocurrencies havent followed suit, struggling to reach new highs.
- Analysts believe Bitcoin's price will remain bearish in the short to medium term unless there's a breakout or reversal.
- Historical data suggests that September is one of the worst-performing months for Bitcoin.
- Bitcoin supply overhangs are reportedly diminishing or being addressed, and the supply outlook is positive.
- The allocation of assets from the defunct exchange FTX could be a positive catalyst, injecting significant capital into the market.
- The US presidential election outcome will have a significant impact on Bitcoin prices.
- Only unexpected events are likely to materially impact Bitcoin's short-term price.
Overall, the future trajectory of Bitcoin is still uncertain, and the market will be closely watching key factors like the Federal Reserves interest rate cuts and the presidential election outcome.
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