Cryptocurrency Market Faces Uncertainty: Bitcoin Struggles Amid Broader Downtrend”

As traders eagerly await a clearer direction on U.S. interest rate cuts and the upcoming presidential elections, the cryptocurrency market remains in flux. August proved to be a challenging month for leading cryptocurrencies, with Bitcoin experiencing a 10.25% drop—its worst month since April—while Ethereum plummeted by 23.66%, marking its third consecutive monthly decline and the steepest since June 2022.

This stark contrast highlights the prevailing sentiment that while Bitcoin has seen isolated success, partly driven by ETFs in 2024, other cryptocurrencies have not mirrored Bitcoin’s climb to record highs and continue to struggle.

Rob Ginsberg, a chart analyst at Wolfe Research, commented, “The picture across the entire crypto spectrum is far from ideal right now. Although Bitcoin remains stuck in a downward trading range, with prices gradually deteriorating from the March high, a break from this trend could trigger an explosive bullish movement.” He emphasized the need to respect the current trend, predicting that Bitcoin might retest the $50,000 level in the coming weeks.

Since reaching its peak in March, Bitcoin has followed a downward trajectory, characterized by a series of lower highs and deeper lows. Ginsberg suggests that until this trend reverses, either through a breakout or a gradual shift, the outlook for Bitcoin’s near- to medium-term price direction remains bearish.

Historically, September has been Bitcoin’s worst-performing month, paralleling trends in other markets, such as U.S. stocks. Over the past 11 years,  has ended September with losses in eight instances, making it the worst month for the cryptocurrency with an average decline of 4.8%, according to CoinGlass. Notably, last year, Bitcoin broke a six-year losing streak in September, nearly reaching the $58,000 mark.

Bitcoin has been trapped in a range between $50,000 and $70,000 since April, and it’s expected to remain within these levels for at least another month. August’s challenges, compounded by an early stock market slump, were exacerbated by an oversupply of Bitcoin. However, according to Alex Thorn, head of research at Galaxy Digital, the surplus has largely been mitigated.

“Most of the remaining Bitcoin supply recovered from U.S. government seizures has likely been returned rather than sold, and Germany has completed its sales. We believe that most of the Bitcoin held by Mt. Gox has been distributed, and various bankruptcies have returned available coins to creditors,” Thorn explained. “From a supply perspective, Bitcoin appears well-positioned for an upward move.”

Thorn also hinted at a potential positive catalyst in the form of cash distributions from FTX, expected to begin within the next six months. This distribution could see a significant amount of cash handed over to a group of creditors, primarily composed of well-known crypto investors who may be looking to reinvest in the sector.

Thorn noted that Bitcoin might remain within its current range until late November, as the U.S. presidential elections weigh heavily on investors. He added that a Trump victory would likely be a bullish trigger, while any negative impact from a Harris win would probably be minimal.

Read more Will Bitcoin Break Free from September's Historical Weakness in 2024?

While the market is already pricing in substantial interest rate cuts, the question remains how much and when. “Only a significant surprise could impact Bitcoin’s price in the near term,” Thorn concluded, with the Federal Reserve’s next policy meeting scheduled for September 17-18.

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