Experts weigh in on whether Bitcoin can break free from September’s bearish narrative

Bitcoin ended August in the red, but experts are divided on whether September will bring a recovery, with some citing macroeconomic changes, possible rate cuts and increased institutional interest as reasons for optimism.

Coinglass data shows that since 2013, Bitcoin (BTC) has frequently recorded losses in September, making it the worst-performing month for the digital asset. On average, Bitcoin fell by -5.36% in September and has only made gains in four of the last thirteen years. This consistently weak performance has investors on edge, and they fear the trend could continue into 2024.

Still, there are signs of a break from tradition this September. Investors are betting that a potential Federal Reserve rate cut could boost demand for riskier assets like Bitcoin. At the same time, institutional interest is higher than ever, with spot Bitcoin ETFs approved in January. Adding to this optimism, Bitcoin’s hashrate has reached an all-time high of 746 EH/s, potentially signaling a bullish outlook despite recent price volatility.

However, skepticism remains among some analysts who believe the downtrend could still continue.

Interest rate cuts and market sentiment

Georgii Verbitskii, Founder of TYMIO, suggests that a rate cut could push Bitcoin to test the upper end of its current trading range. He told Crypto.news that if central banks continue with their expected rate cuts, Bitcoin could attract more investors looking for a hedge against inflation.

“Given this [Bitcoin] “It would make sense for the stock to make a big breakout before the end of the year after trending sideways for the past six months.”

He added that legal regulations for cryptocurrencies in the US could further boost market sentiment and encourage investment.

Soulbound co-founder Casey Grooms emphasized that Bitcoin’s recent price movements have been affected by high macroeconomic uncertainty, and that the critical turning point in Federal interest rates has shaped market sentiment.

Grooms pointed to the Personal Consumption Expenditures (PCE) index, the Fed’s preferred measure of inflation, which has remained steady at 2.5%.

“Given the proximity to the 2% key target, a rate cut could occur sooner than expected,” Grooms told crypto.news.

He added that while the Federal Reserve is being closely watched, other central banks like the Bank of England and the Bank of Canada have already cut interest rates. If this trend continues, it could increase global liquidity, weaken fiat currencies and make Bitcoin more attractive as a store of value.

Bitcoin ETFs could be a potential catalyst for recovery

In contrast, Jonathan Hargreaves, Head of Global Business Development and ESG at Elastos, maintained a more cautious outlook. While he noted that stronger macroeconomic factors and new ETF developments could support Bitcoin, he noted that September has generally been a mixed-signal month with alternating phases of growth and decline. As such, he expects September to start with a decline but is hopeful for a recovery in the final quarter.

Bing Wang, Head of Legal at BasedVC, said that this year’s cycle could differ from past patterns due to the continued capital inflow into Bitcoin Spot ETFs and the expected rate cut by the US Federal Reserve.

“If institutional capital continues to flow into Bitcoin ETFs, the BTC price could remain above the key support of $60,000,” Wang told crypto.news. Similarly, analysts at QCP Capital have previously noted that Bitcoin could seek support but could range lower around $54,000 before a significant recovery occurs.

Wang also pointed to the decline in whale transactions, which are large transfers of over $100,000, saying this indicates that large holders are holding on tighter to their Bitcoin.

“They are likely holding on to their BTC, meaning there is a possibility of gains in Bitcoin this September and beyond. However, large-scale profit-taking could push BTC down, so keep that in mind.”