As a seasoned market observer with over two decades of experience under my belt, I must say that the current state of Bitcoin seems quite promising. The recent surge in its price and the increasing acceptance by U.S. political parties is indeed a significant development.
Since the Bitcoin ETF rally in early 2024, the most popular digital currency in the world has been moving within a flat range of prices instead of showing significant upward or downward trends.
In October, market optimists began their aggressive push due to speculative news suggesting that the Securities and Exchange Commission (SEC) approvals were imminent.
Subsequently, Bitcoin soared from approximately $27,000 on October 14th to nearly $74,000 by March 14th, marking a significant increase of over 170% within a span of five months for crypto investors.
On January 10, 2024, the U.S. Securities and Exchange Commission gave the green light to 11 Bitcoin Exchange-Traded Funds (ETFs). In a statement, SEC Chair Gary Gensler advised investors to be mindful of the various risks linked with bitcoin and financial instruments whose value correlates with cryptocurrencies, emphasizing caution.
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.
Furthermore, over similar periods throughout the last 15 years since it became an open-source blockchain on the internet, Bitcoin’s returns to investors have not been surpassed by many other instances in previous markets.
As an analyst, I’ve noticed that after reaching its peak in March, Bitcoin has been moving within a confined range. The upcoming halving event in April is expected to reduce the supply. Given Bitcoin’s scarcity, one might wonder when this reduction will trigger another rally in the market.
In a different scenario indeed, the market finds itself sailing uncharted territories as the asset hits an all-time high prior to its halving – a sequence not observed in past cycles. Despite this unprecedented event, indicators suggest that this bull might still have untapped energy for further growth.
But first, here are the headwinds Bitcoin’s price faces in September:
5 September Headwinds for Bitcoin’s Price
1. $33B Government Supply Overhang
Based on findings from cryptocurrency research firm Kaiko, a potential oversupply of Bitcoin to the tune of approximately $33 billion looms due to various governments’ holdings that could be sold and the return of Bitcoins from the Mt. Gox incident going back to their respective owners.
As a researcher, I’ve observed that back in early this year, when regulatory bodies or former users of a closed cryptocurrency exchange chose to liquidate their holdings, Bitcoin’s value seemed to take a hit.
2. Bitcoin ETF Paper Hands
Bitcoin purists such as Andreas Antonopoulos had forewarned about this situation years back. With Wall Street now showing interest in cryptocurrencies, the fluctuations in their trading activity significantly impact the market value.
On Wall Street, September is typically a time for selling rather than buying. Over the past seven decades, starting from 1950, this month has historically been the least profitable for investors, with an average return of -0.7%.
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
In a short span, cryptocurrencies like Bitcoin have mirrored the behavior of traditional stocks. Interestingly, Bitcoin has shown positive growth only thrice during September over the past ten years. Given this seasonal pattern, it might influence the current market values as well.
4. US Election Jitters
As a crypto investor, I’ve learned that during every four-year U.S. political cycle, there’s a period of uncertainty in the financial markets. This usually persists until the democratic process has run its course again, and we see another peaceful transition of power, bringing more clarity to future policies. Big investors tend to hold off on making their moves until after the election day dust settles.
5. Post-Halving Consolidation
After past Bitcoin halvings, markets typically experience a period where the price of Bitcoin decreases prior to reaching unprecedented record highs.
After the sellers have finished their part and Bitcoin locates its lowest point following the halving event, the buyers will seize control and drive it towards unprecedented highs.
4 Long-Term Bitcoin Price Supports
Regarding Bitcoin markets, the road might be challenging due to the factors mentioned earlier. However, let’s explore four potential long-term price levels that both optimistic (bulls) and pessimistic (bears) investors might find significant:
1. Financial Tailwinds for Bitcoin’s Price
The Fed is pivoting to low rates. This is bitcoin’s time to shine.
The U.S. Federal Reserve influences the worldwide financial market by fine-tuning its target interest rates, which are based on the availability of new dollars through daily borrowing markets. These adjustments are made to align with price levels and employment figures.
With the Federal Reserve advocating for interest rate reductions to bolster softening job markets amidst post-pandemic inflation, it is expected that interest rates will decrease once more, potentially leading to an increase in prices.
In financial markets such as the New York Stock Exchange and NASDAQ, it’s often the case that changes in the credit economy lead to price increases occurring initially and intensely.
In simpler terms, if a trading asset’s market is very active and its potential for growth is significant, it often reacts strongly to changes in interest rates compared to a benchmark.
Bitcoin has seen significant growth following past supply cycle halvings. Specifically, every four years since 2012, the daily new issuance has been reduced by half. One year after the 2012 halving, bitcoin surged by a staggering 50,000%. Similarly, approximately 18 months after the 2016 halving, it experienced an increase of around 8,500%.
During the entire Bitcoin bull market following 2012’s halving event, federal interest rates essentially stayed at zero. Yet, Bitcoin managed to generate exceptionally high returns compared to stocks during the 2016 cycle. It wasn’t until late 2015 that the Federal Reserve started increasing interest rates gradually, reaching 2.4% by mid-2019.
On Sunday, August 25th, Bitcoin climbed over $64,500, following Federal Reserve Chair Jerome Powell’s announcement made on Friday about the upcoming reduction of interest rates by the central bank.
Over the past seven days, Bitcoin experienced a correction but managed to hold steady at around $58,000 instead of dropping as low as $55,000, as it did in the previous significant corrections in August and July. This could potentially indicate that the anticipated change in Fed’s policy is bolstering the confidence of long-term investors.
2. Bitcoin Goes to Washington
The embrace of BTC by both U.S. political parties is very promising for long-term price support.
From my perspective as an analyst, as the confidence in the U.S. government’s understanding and support for Bitcoin grows, so does the strategic nature of the risks we take to reap the benefits of inventing and investing in significant advancements within the blockchain sector.
Finance professor Andrea Barbon, hailing from the University of St. Gallen in Switzerland, recently shared insights with Forbes as a seasoned crypto authority.
“Bitcoin’s resistance to financial instability is well-known, but its future success may depend on the outcome of the upcoming U.S. elections. To date, Donald Trump has shown greater support for cryptocurrencies, and if he wins a second term, changes in regulation might benefit 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.
According to a report by Public Citizen, a non-profit organization that monitors consumer issues in Washington D.C., they have been the group with the highest political donations in 2024.
3. Bullish Smart Money
As a crypto investor, I find myself buoyed by the unbridled optimism of key figures like MicroStrategy’s co-founder Michael Saylor and Blockstream’s CEO Adam Back. Their bullish stance on Bitcoin in this particular market cycle is truly inspiring.
Recently, it has been verified that Saylor holds approximately $1 billion worth of Bitcoin, as per the current market values, which he personally possesses.
Adam Back, meanwhile, has an $80,000 BTC price target in view.
In late August, Cantor Fitzgerald’s financial analyst suggested that the $194 target they set for MicroStrategy stocks is equivalent to a Bitcoin (BTC) price of approximately $80,000.
This suggests that the asset has seen a 33% increase relative to its long-term support level of $60,000 from March. What could be driving institutional investors (often referred to as “smart money”) to predict such substantial future price hikes in Bitcoin?
They think that the digital currency considered the most securely limited will likely rise as a significant global reserve, where vast private and governmental treasuries can participate in worldwide trading activities.
4. Bullish BTC Technical Indicators
Last week, Bitcoin markets showed a significant boost, as trading volumes rose and the price surpassed $65,000 on various exchanges. This upward momentum was evident in the data provided by CoinMarketCap.
The immediate surge in buying activity after the Federal Reserve’s interest rate declaration could be a preliminary indicator that the market is eager to acquire assets, as rates decrease and prices tend to rise.
As a dedicated cryptocurrency investor, I’ve been closely monitoring the market, and I can’t help but feel excited about Bitcoin (BTC)! The chart analyst Mister Crypto, who boasts over 118K followers, shared on Twitter Tuesday that he anticipates an immense parabolic surge for BTC in the near future. This prediction has me eagerly watching the charts, ready to capitalize on this potential opportunity!
Emphasizing the downward flag formation on Bitcoin’s price graph from March to August, which typically indicates a bullish continuation during an overall upward trend, Mister Crypto posed the question, “Do you think I’m credible if I say this #Bitcoin surge has a potential target of $93,000?”
Previously in August, I, as an analyst, expressed a strong likelihood that Bitcoin’s price might revisit the $68,000 mark in the near future, given its successful breakthrough beyond $64,000.
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2024-09-01 20:00