Global Macroeconomic Headwinds Continue Weighing on BTC Price in September

Bitcoin’s recent price action has sent a conflicting signal to that provided by the network’s fundamentals, a situation that has generated remiges on previous cryptocurrency analysts’ predictions. The BTC / USD pair plunged below $ 20,000 on several occasions this week and is currently down 6.50% over the past seven days. The drop, triggered by Fed Chairman Jerome Powell’s hawkish remarks on the pain of inflation on Friday, canceled several weeks of upside. The bitcoin price is now hovering around the June closing price.

September is historically bearish

Bitcoin (BTC) closed its second consecutive bearish week on Sunday with weekly returns -9.03%, Coinglass data shows. The negative close canceled the confidence of traders who were hoping for a trend reversal after the previous week’s -11.49% yields. Overall, the price of Bitcoin fell back 13.88% in August.

This latest show of weakness caused uncertainty in the market, where traders suffered slight losses in the wake of volatile price swings. Coinglass data shows that about $ 180 million worth of long and short Bitcoin trades have been liquidated since Monday (in nearly equal proportions).

Notably, the month of September has historically produced negative returns and if past cycles are anything to follow, the real cryptocurrency could be set for further losses. Coinglass data shows that Bitcoin has had lower monthly closes than September consecutively for the past five years. Negative returns ranged between 5% and 7%, with September 2019 seeing Bitcoin lose 13.48% being the exception. It’s also worth noting that on four of those five occasions, Bitcoin rebounded with double-digit gains, the two most significant being 47.81% in October 2017 and 39.93% in October 2020.

The ‘Hodlers’ continue to march

Resilience has remained high as investors scramble to adjust their portfolios, as far as cryptocurrencies are concerned, to cope with the bear market. Many BTC holders have resisted the pressure to sell their coins despite the sharp erosion of the asset’s value. The BTC pair is currently 70% below its all-time high in November, a decline accentuated by the 56.83% correction from the start of the year.

Cryptocurrency monitoring platform Glassnode reported Thursday that Bitcoin’s last active supply amount 5 to 7 years ago reached a 21-month high of 963,787 BTC.

A recent update also shows that the percentage offer shows that the last activity was more than five years ago is at an all-time high of 24.55%, while the percentage offer of the last activity active for more than a year was observed at a all-time high of 65.749%. This accumulation is reflected in the total volume of BTC held or lost, which is also a 21-month high of 7,456,375.793 BTC.

Hodling, if anything, appears to be strengthened by the slowdown in sales pressure as witnessed in August. Glassnode reported that BTC’s stock exchange deposits (below the 7-day moving average) fell to 1,921 BTC on August 25, the lowest figure for this metric in over two years.

The loss-making bitcoin offer records a maximum of one month

Bitcoin (BTC) price action this week indicates that holder determination remains on trial in September. The flagship cryptocurrency remained slightly above $ 20,000 amid threats of further downside following tightening of Federal Reserve action. The losing Bitcoin supply (below the 7-day moving average) was detected on September 1 at a monthly high of 18,869,044 BTC. The offer percentage in profit, on the other hand, is at a 1-month low of 52.710%.

This week’s sell-off inspired a shift in Bitcoin price forecast tune among investors, including Tallbacken Capital CEO Michael Purves, who said in an August 30 interview with Bloomberg Technology that the asset has lost its stability. This he attributed to the correlation with stocks that has continued to manifest as more institutional investors embrace cryptocurrencies. Purves, keen to point out that his view was not shaped by his fundamentals, predicted that the price will drop further towards $ 15,000.

“What really made me bearish was, again, nothing to do with a fundamentally bearish view or a fundamentally bullish view. It was simply the fact that the long-term momentum was really starting to make its way towards the end of January “, He said.

Of course, Bitcoin’s price movement has increasingly synchronized with that of traditional markets, making it less desirable as an inflation hedge. US equities performed negatively in August, while overall returns in 2022 remain insignificant. In fact, so far, 2022 has been the worst-performing year for equity markets in at least five decades, according to analysts from Bespoke Investment Group. The decline is comparatively worse as both the stock and bond markets have fallen back compared to other years in which only the former collapsed.

Bitcoin mining metrics signal confidence in a price breakout

Bitcoin started the month struggling to get off to a good start. The BTC / USD 30-day price chart shows that it has unsuccessfully attempted to break out of the resistance. Nonetheless, some argue that it has a potential short-term rally in it. The group says the recent sell off represents a decent opportunity to acquire the business before it embarks on an upward trend. This view is shared by analysts who predicted that BTC’s price was due to earnings in the fourth quarter, including Mike McGlone, senior commodity strategist at Bloomberg Intelligence.

Industry pundits in favor of a bullish outlook highlight recent mining difficulties and hash rate data. Bitcoin mining difficulty is approaching a record high according to data from the statistics and fundamentals platform on the BTC.com chain. Network difficulty rose to its second-highest level on record this week – 30.98 trillion, with a block height of 751,968 – propelled by a 9.3% increase on Aug.31. A similar trend was also observed for Bitcoin’s hash rate, which stood at 221 exahash per second (EH / s) at the time of writing – close to the record of 223 EH / s on May 11 for which the difficulty level was 31.25 trillion.

The 7-day average hash rate fluctuated at 224.7 EH / s on Tuesday according to data from blockchain.com, compared to 197.7 EH / s when the previous difficulty adjustment occurred two weeks ago.

Rising figures after a long period of capitulation indicate that miners are optimistic about long-term profitability, which can only be guaranteed by a recovery in Bitcoin’s price.

To find out more, visit our Investing in Bitcoin guide.

Leave a Comment