Will Crypto Market Keep Falling In September?

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As a seasoned crypto investor with battle-scarred fingers from the rollercoaster ride that is the cryptocurrency market, I can’t help but feel a mix of apprehension and anticipation as we navigate through these volatile times. The recent bearish trend has tested my resolve more than once, but the allure of the potential riches that lie within this digital goldmine keeps me coming back for more.

This year, the crypto market experienced its steepest decline during the third quarter. Notably, Bitcoin (BTC), the leading asset in the industry, dipped to a low of $52,598.70. Consequently, BTC witnessed a drop exceeding 8% in August, perpetuating a downward trend into September.

Despite Bitcoin’s pessimistic forecast, many other cryptocurrencies haven’t shown much improvement either. For example, Ethereum (ETH) dipped to a low of $2,150.86, marking a 7.67% decline over the last month. Given the current bearish market trends, it’s uncertain if this pattern will persist throughout the rest of the month.

There are indices to judge whether a rebound is ahead. However, the crypto market’s correlation with the US Stock market might stir a major headwind to watch.

Crypto Market and Macroeconomic Influences

The cryptocurrency market, being part of the larger financial sector, tends to follow patterns set by events on Wall Street. For instance, in August, the speculation about the potential reduction in interest rates by the Federal Reserve significantly influenced market movements.

The conversation originated due to the more moderate inflation rates noticed in the U.S. According to a previous report, the Personal Consumption Expenditures (PCE) inflation for the United States remained steady at 2.5% in July, matching the figure from the previous month and falling short of market predictions. Furthermore, other economic indicators, such as employment statistics, indicated progress in the economy.

Based on these current tendencies, Chairman Jerome Powell suggested a change in direction might be necessary. In relation to potential interest rate reductions, he emphasized that any such move by the Feds would depend on consistent favorable market data. Since he made this comment several weeks ago, analysts have speculated that the initial rate cut could happen this month.

Lowering interest rates benefits investors, including those in the cryptocurrency market. This rate reduction grants investors increased access to capital, thereby increasing the money supply within the economy. The influx of U.S. dollars into the economy serves as an advantage for hedging assets such as Bitcoin. With more cash circulating, the buying power of the U.S. dollar decreases, making bitcoin and other cryptocurrencies more enticing to investors due to their perceived store-of-value properties.

The ongoing doubts regarding this major economic shift have been causing turbulence in the market, however, this could potentially ease up in the near future.

Relying on Internal Catalysts

Different types of alternative cryptocurrencies have distinctive foundations that can spark price recoveries. Recently, Cardano implemented the Chang hard fork on its mainnet as part of its push towards decentralized governance. Although this significant achievement was made, a recent analysis of ADA‘s price revealed it is currently stuck in a bearish trend. The breakout from this pattern largely hinges on Bitcoin’s performance this month.

Due to the significant impact of Bitcoin’s market trends on other cryptos, it’s crucial to have a clear signal. This could potentially originate from the upcoming Bitcoin and Ethereum ETFs in the U.S. However, recent outflows from Bitcoin ETFs have created uncertainty, but a turnaround could be imminent.

Currently, the price of Bitcoin has bounced back to $54,704, showing an increase of 1.2% within the last day. Earlier today, its lowest point was at $52,598.70, but it peaked at $54,757.45. This small surge suggests that the BTC correction might have ended temporarily, indicating a potential low point has been reached.

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2024-09-07 19:46