Bitcoin Eyes Biggest Monthly Price Loss Since May. Due to global financial market volatility, regulatory worries, and China’s decision to prohibit all crypto companies, Bitcoin seemed to be on track to conclude the traditionally gloomy month of September on a low note.
Trading at 2.8% higher on the day at $42,200 on Wed. However, the top crypto was still down 10% for the month, the worst drop since May.
The bullish market sentiment observed at the beginning of the month was stifled by increased regulatory concerns emanating from the SEC’s attempts to prevent Coinbase, a Nasdaq-listed crypto exchange, from starting a loan program with yearly rates of 4%. Gary Gensler, chairman of the SEC, reiterated his push for crypto regulation, comparing stablecoins to poker chips. Meanwhile, China’s move to deem all virtual currency-related enterprises illegal. As well as the country’s property market instability, have contributed to the misery.
Elder market players are sitting tight on their holdings
Nonetheless, experts claim that fresh investors were a major source of selling pressure. According to Blockware Intelligence’s September 17 newsletter. “What we observe here is that elder market players are sitting tight on their holdings. As seen by the average lifespan of spent outputs declining”. “High expenditure from older companies is often bearish, whereas low spending from older entities is generally bullish”.
Large traders appear to have purchased the drop, preserving the possibility of a year-end surge. According to blockchain data provider Glassnode, the supply owned by entities owning at least 1,000 BTC to 10,000 BTC increased by 60,000 BTC this month. Entities are groups of addresses under the control of the same network entity. This would cover both organisations and people, such as exchanges and custodians.
Last week, analysts predicted that China’s tighter restriction would have a limited negative impact at most. And that the cryptocurrency would be robust to the Federal Reserve taper (cutting back on stimulus) set to begin next quarter.
Congress must increase or suspend the debt ceiling
The US debt-ceiling crisis will now be the focus of attention. Congress must increase or suspend the debt ceiling, according to Treasury calculations cited by Brookings, or the government will not be able to fulfil all of its commitments.
On Tuesday, the S&P 500 dropped 2% after the Senate delayed a vote on a stopgap budget bill that included a suspension of the debt ceiling. Stocks continuing to fall might put pressure on bitcoin.
“We can see that throughout this September risk-off phase, bitcoin’s 90-day correlation with the S&P 500 has risen significantly. At the same time, bitcoin’s association with gold has weakened, according to Luno, a crypto exchange. “Despite the fact that bitcoin has many features with gold, it nevertheless operates as a risk-on asset and has a strong correlation with the stock market amid market volatility”.
The SEC’s final decision on numerous bitcoin exchange-traded fund (ETF) applications, as well as the regulators’ initial reaction on futures-based ETFs, will be closely watched by traders.
“The spot ETFs’ final decision date is quickly approaching. According to Arcane Research’s weekly report dated Sept. 28, VanEck will get the final decision by Nov. 14th, and the verdict for other funds will follow shortly. “We anticipate market activity leading up to these dates,” says the analyst.
“Futures-based ETFs will see their first reaction in the near future. According to Arcane Research, the SEC will respond to six futures-based bitcoin ETF applications over the next 40 days.