5 Bearish and 4 Bullish Factors for Bitcoin (BTC) in September
The world’s leading cryptocurrency has traded in a sideways channel ever since the early 2024 Bitcoin ETF rally.
Market bulls started it in earnest in October as a result of premature reports that SEC approvals were around the corner.
After that, BTC went from $27,000 on Oct. 14 to an all-time record high of almost $74,000 on Mar. 14. That represented a 170% gain for crypto investors in just five months.
The United States Securities and Exchange Commission approved 11 Bitcoin ETFs on Jan. 10, 2024. SEC Chair Gary Gensler said, “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
The Bitcoin ETF rally delivered a whopping average annualized ROI of 415%. It was by far not the first time the largest cryptocurrency delivered eye-popping returns.
Also, by far, it was not the most BTC has returned to investors over comparable timeframes in previous markets over the past 15 years of its existence as an open-source blockchain operating over the Internet.
However, since peaking in March, bitcoin has traded sideways in a rangebound channel. So when will April’s halving supply cut kick in and touch off another rally based on BTC’s limited inventories?
The market is in different waters, to be sure, with the asset reaching a new ATH before its halving. That hasn’t happened in previous cycles. Regardless, there are signs this bull has room left to run.
But first, here are the headwinds Bitcoin’s price faces in September:
5 September Headwinds for Bitcoin’s Price
1. $33B Government Supply Overhang
According to crypto research company Kaiko, there is the looming threat of a $33 billion BTC supply glut because several governments have stashes they might offload, plus recovered Mt. Gox funds are being restored to their owners.
History from earlier this year showed us that when authorities and former users of the defunct crypto exchange decide to dispose of their assets, BTC’s price suffers.
2. Bitcoin ETF Paper Hands
Bitcoin purists like Andreas Antonopoulos warned about this years ago. Now that Wall Street is interested in cryptocurrency, its buying and selling pressure affects the price.
September is usually a month of selling on Wall Street. Since 1950, stocks returned investors an average loss of 0.7%, making it the worst month for the asset class.
The selling has already started in Bitcoin ETF markets, which saw outflows for four consecutive days from Aug. 27 through 30, totaling $454 million, according to Farside data.
3. Bitcoin Cyclical September Doldrums
Crypto has been no different from stocks in its short history. Bitcoin has only generated positive returns in September three times in the last decade. This seasonal trend could affect prices this year.
4. US Election Jitters
This four-year U.S. political cycle usually leaves financial markets uncertain until democracy has prevailed again with another peaceful transition of power and more policy certainty. The big money waits to make its moves until after election day.
5. Post-Halving Consolidation
Markets are right in the timeframe after previous halvings when bitcoin’s price tends to decline before rallying to new all-time highs.
Once all the sellers shake out and BTC finds its post-halving bottom, the bulls take over and run it up to new heights.
4 Long-Term Bitcoin Price Supports
While bitcoin markets may have tough waters ahead based on the factors listed above, here are four long-term BTC price supports for bulls and bears to consider:
1. Financial Tailwinds for Bitcoin’s Price
The Fed is pivoting to low rates. This is bitcoin’s time to shine.
The US Federal Reserve sets the tone for the global financial economy by adjusting target interest rates for the supply of new dollars through daily lending markets in time with prices and employment.
Now that the Fed has called for rate cuts to shore up slowing labor markets with post-pandemic inflation, interest rates will begin to fall again, and prices are likely to start rising.
The way the credit economy works usually causes that wave of rising prices to happen first and with the most force in financial markets like the New York Stock Exchange and NASDAQ.
The more liquid the market for a trading asset and the more high-growth its future prospects are, the more leverage it tends to move against the benchmark change in interest rates.
That goes for bitcoin big time. For the previous three supply cycles, the daily new issuance was cut by half every four years. One year after the 2012 halving, BTC was up 50,000%. About 18 months after the 2016 halving, it had gone up 8,500%.
Federal interest rates were functionally zero percent during the entire post-2012 halving bitcoin bull market. However, BTC still delivered market-whopping alpha compared to stocks in the 2016 cycle. The Fed began steadily hiking rates in late 2015, reaching 2.4% by mid-2019.
Bitcoin surged to above $64,500 on Sunday, Aug. 25, after Fed Chair Jerome Powell announced on Friday that the central bank would soon begin cutting interest rates.
Over the week, BTC corrected but found support at $58,000 instead of falling as low as $55,000 as it did in the last two big corrections in August and July. That could signal the Fed pivot is emboldening long-term bulls.
2. Bitcoin Goes to Washington
The embrace of BTC by both U.S. political parties is very promising for long-term price support.
As markets grow more assured that the United States government groks bitcoin and has the will to back the crypto industry, the more calculated the risks are for the rewards of innovating and capitalizing valuable contributions in the blockchain space.
Crypto expert Andrea Barbon, a Swiss University of St. Gallen finance professor, recently told Forbes:
“While bitcoin has often been viewed as a hedge against economic turmoil, its future performance could hinge on the upcoming U.S. elections. So far, Donald Trump has been more supportive of crypto, and a return to the White House could bring regulatory shifts that favor digital assets.”
But regardless of how Republicans and Democrats parcel up the levers of power this November, crypto companies are beginning to wield enormous influence in Washington.
They have made the most political donations in 2024, according to a report by Public Citizen, a non-profit D.C. consumer advocacy watchdog.
3. Bullish Smart Money
Participants representing the smart money in crypto, for example — MicroStrategy co-founder Michael Saylor and Blockstream CEO Adam Back — are outlandishly bullish for BTC this cycle.
Saylor recently confirmed in August that he personally owns bitcoin in an amount worth some $1 billion at the current market prices.
Adam Back, meanwhile, has an $80,000 BTC price target in view.
Back commented in late August that financial company Cantor Fitzgerald’s $194 target for MicroStrategy stocks implies an $80,000 BTC price.
That would represent a 33% gain for the asset over its $60,000 long-term support level since March. Why is smart money betting on further price increases of this magnitude for bitcoin?
Because they believe the most securely scarce cryptocurrency is poised to become a major world reserve for massive private and public treasuries to engage in international trade.
4. Bullish BTC Technical Indicators
Bitcoin markets gathered strength to the upside last week, with exchanges increasing in volume as bulls took the price above $65,000, according to data from CoinMarketCap.
That enthusiastic buy-up following the Fed’s interest rate announcement is an early signal of the market’s demand for the asset as rates go down and prices increase.
Bitcoin and altcoin chart analyst Mister Crypto posted to over 118K followers on X Tuesday that he expects to see an enormous parabolic move for BTC sometime in the near future.
Highlighting the descending flag pattern on bitcoin’s chart from March through August, often a bullish continuation pattern during a broader uptrend, Mister Crypto asked, “Would you believe me if I told you this #Bitcoin breakout has a target of $93,000?”
Earlier in August, the crypto investor said it is very likely that bitcoin’s price will return to the $68,000 level in the short term now that it has broken above $64,000.
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