Will Bitcoin Break September’s Jinx? What Data Suggests

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As a seasoned crypto investor with a decade of experience navigating the volatile digital asset landscape, I find myself cautiously optimistic about Bitcoin’s prospects for September. While the historical trend of negative returns in September has been consistent, this year could be different based on several indicators.

In a predictable trend, Bitcoin – the most valuable digital currency – closed out August with a decrease of 8.73%. This is in line with its historical patterns.

In a recent tweet, Ali Martinez noted that while Bitcoin played out its historical narrative for August, similar expectations exist for September typically believed to be a negative month for Bitcoin.

Yet, as per the latest findings from Spot On Chain, presented through a series of tweets, it seems that this year could potentially differ based on these five factors.

Initially, having a positive August could potentially prevent a negative outcome in September. Additionally, significant selling pressures have subsided, and long-term investors continue to hold strong. Furthermore, Bitcoin ETFs may re-emerge as a driving force for buying, and lastly, beneficial interest rates, investment capital, and regulations might collectively contribute to market growth in September.

Bitcoin to break September’s jinx? Here are five indications

In analyzing Spot On Chain, they start by acknowledging a common trend: Often, September marks a decline, but it’s not always the case. Approximately 43% of Augusts that showed a negative performance have been followed by a positive September. Given that Bitcoin has had a down month in August this year, there’s a possibility that the most adverse effects might already have passed, potentially paving the way for an upturn.

1. Hypothetical trading tools:

— Spot On Chain (@spotonchain) September 1, 2024

Moving forward, it appears that the significant selling pressure for Bitcoin has noticeably lessened. In July and August alone, three key entities offloaded approximately 170,917 Bitcoins or a staggering $10.69 billion into the market. Among them was the German government, which divested 49,859 BTC worth around $3 billion in early July, leaving no more Bitcoin in their possession. Mt Gox repaid 95,958 BTC in these two months and still retains 44,898 BTC, valued at roughly $2.65 billion, which equates to a third of their initial holding. Lastly, GenesisTrading liquidated 24,068 BTC on August 2, no longer holding any Bitcoin in their inventory.

Nevertheless, it’s worth noting that approximately 203,650 Bitcoin, valued at around $12 billion, remain seized by the U.S. authorities. Similar to the German government’s situation, this vast amount could potentially exert significant selling pressure. However, recent indications point towards a reduced risk of immediate or near-term sell-offs.

Between 2023 and 2024, the U.S. government transferred approximately 35,516 Bitcoins valued at around $1.48 billion to Coinbase at an average price of about $41,637 each. However, these transactions had limited influence on Bitcoin’s market prices since most of the sales were conducted over-the-counter (OTC), resulting in minimal market impact.

Long-term investors, who boosted their bitcoin stash by approximately 262,000 coins in August, now holding a total of 14.82 million BTC, or 75% of the entire supply, continue to be a reassuring aspect. In addition, Bitcoin ETFs could potentially serve as a recurring buying influence, should the trend of fluctuating between positive and negative months persist.

Alternative factors influencing potential purchases involve the possibility of the Federal Reserve reducing interest rates in September, potentially increasing the appeal of high-risk assets such as Bitcoin or Bitcoin ETFs. Meanwhile, FTX’s $16 billion repayment to creditors will be in fiat currency rather than cryptocurrency, which could then be invested back into Bitcoin and the wider market.

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2024-09-01 15:01