Bitcoin closed its second month down: what do the gurus expect for September?

The month of August was not the best for Bitcoin (BTC). The cryptocurrency closed its second month with a negative balance so far this year, the second in a row after the fall in July. In the past 31 days, Bitcoin has fallen nearly 11% and lost $4,000 in value, ending the month at $25,900. However, there are encouraging prospects for September.

Greyscale’s Impulse

And it is that bitcoin was destined for a much worse monthly closing if it were not for the surprise that it broughtto Grayscale court victory on Securities and Exchange Commission (SEC). As happened the previous month with Ripplethe court sided with the cryptocurrency company, finding that the regulator had used arbitrary reasons in rejecting Grayscale’s initial request to convert its flagship fundGrayscale Bitcoin Trust (GBTC), in a exchange traded fund (ETF) for spot bitcoin.

After the news was released, bitcoin began a climb from US$25,900 to reach US$28,000, levels it had not seen since mid-August when it began to fall sharply. And it is that the market had been waiting for such news for a long time.

Boosted by the news that BlackRock had submitted a proposal to create a spot BTC ETF, as well as numerous similar requests that followed, the bitcoin price began to climb rapidly, reaching yearly highs on the past 13 June ($31,814). The world’s largest asset manager’s internship into the cryptocurrency space excited digital asset investors, understanding that BlackRock’s reputation and track record with the SEC opened the door to a new cycle for cryptocurrencies.

However, that illusion quickly turned into doubts, which led to impatience and then disappointment. After several weeks without updates, investors began to fear that the Commission would take longer than initially expected to give these products the green light and, with risk appetite dwindling with each passing day, the price began to fall.

Bitcoin: Why that rally could be a positive sign

Matteo Greco, research analyst at Fineqia International, believes this latest rally is “a strong positive sign” for the cryptocurrency market. “BTC immediately bounced back above $27,500 and the GBTC discount dropped from around 25% to 16%,” he stresses, though he cautions that a potential SEC appeal could complicate the picture.

This expert points out that, at the current price level about 2.5 million BTC bought in the short term (bought less than 155 days ago) remain in losses. On the other hand, more than 40% of the current offer queen cryptocurrency hasn’t moved for over three years, reaching a new all-time high. In addition, smaller BTC holders – representing portfolios with less than 10 BTC – and long-term holders continue to accumulate tokens, according to the chain’s data.

“This combination of data confirms how difficult it has been for BTC to gain traction for the past few weeks, but at the same time establishes a positive long-term outlook“Greco points out.

The Fineqia strategist indicates that these data show, on the one hand, that old investors remain bullish with bitcoin and tend not to sell their assets; and on the other, that small investors are increasing their exposure to BTC, which predicts a long-term positive trend.

“From a broader perspective, and looking at the digital asset market as a whole, trading volume remains extremely low. Cumulative volume on centralized exchanges for the month of August is about $400 billion, the lowest since December 2020. If you also look at trading volume based on a weekly moving average, you can find figures Similar. Last week represented the lowest weekly trading volume on centralized exchanges since August 2020,” Greco added.

Taken together, this strategist believes that these data are nothing more than a reflection of the various macroeconomic factors that are hitting the world economy at the moment. Among them, stands out high inflation and rising interest rates and in consequence, the lack of liquidity in financial markets, especially in digital assetsthe most volatile and also the first to suffer when risk appetite fades.

“It is crucial to understand how the US will position itself in relation to the digital asset market, especially considering the force with which Asian regulators are pushing to create a favorable framework for companies in this sector. A positive response from the SEC on any application could give another strong boost to the market, while further application rejections would continue the trend of capital outflow from the US market in favor of Europe and Asia, “he said.