Source: The Block

Compiled by: BitpushNews Mary Liu

Bitcoin has historically performed poorly in September.

Grayscale's recent victory in the ETF case is also unlikely to prevent Bitcoin from ending August with a negative return. In early August, BTC was above $29,000, but is now hovering above $27,000.

August's performance has brought uncertainty to the upcoming September. The characteristics of August include historically low volatility, declining trading volume, and a flash crash that led to BTC prices falling to the $25,000 range.

James Butterfill, research director at CoinShares, stated that the price drop in August "highlighted Bitcoin's vulnerability in larger trades, and the current low trading volume exacerbates this vulnerability."

Butterfill predicts that volatility will continue to dominate the market in early September. He expects traders to oscillate between excitement over ETF approval and skepticism about SEC approval. Despite the favorable ruling for Grayscale by the court on Wednesday, Butterfill told The Block, "It is unlikely to expedite the timeline for SEC approval, as there is still the possibility of an appeal."

Stronger dollar suppresses risk assets

In a recent report, Butterfill questioned whether the market conditions in September can sustain Bitcoin's current value. His assessment is key to "the rise in the US dollar index, which has affected the entire risk asset."

Following more hawkish remarks from the Federal Reserve last Friday, the US dollar has strengthened recently. A stronger US dollar will reduce the risk-adjusted returns associated with Bitcoin, making digital assets less attractive.

Butterfill also pointed out that Bitcoin's trading volume is lower than the same period last year, which is a negative signal. He added, "This is not just a seasonal effect," as researchers noted that last summer, Bitcoin's average daily trading volume was $7.5 billion, while this summer it is $4 billion.

Butterfill explained that multiple factors have contributed to the current inactivity of digital assets. On-chain data shows that investors are in a holding pattern, awaiting the SEC's decision on approving a US spot ETF. He emphasized that recent regulatory crackdowns have impacted US trading volumes. He also noted that Binance's fee promotion "from March 2022 to March 2023 led to a sharp decline in trading volume."

September brings market uncertainty

Historically, Bitcoin has performed poorly in September.

Eric Crown of Krown Trading posted on X (formerly Twitter), "Of the 13 Septembers in the past, 9 had negative returns from open to close, with an average loss return of -12.80%."

Therefore, investors remain cautious of additional downward pressure.

An analyst expects trading volume and volatility to increase in September. Sergei Gorev, risk manager at YouHodler, told The Block, "We expect the volatility in September to not be as low as in August." He added that with the end of the US fiscal year next month, traders will unwind more positions.

Gorev added, "The fact of fixed general portfolio profits may affect the sale of cryptocurrencies, especially in September, which may lead to negative dynamics in the cryptocurrency market."

James Butterfill emphasized that September is "a period for fund managers to make allocations after the end of the holidays, and hawkish remarks may affect their investment decisions."

However, Butterfill has a more optimistic outlook for Bitcoin in October and November. He said, "I suspect that as macro data deteriorates, central banks may quickly start to pivot. This will be more favorable for Bitcoin. However, the timing is tricky, and we may have to wait until October and November to see this scenario unfold."

According to CoinGecko's data, as of Wednesday's US stock market close, Bitcoin's 24-hour volatility is less than 2%, with a trading price of $27,258.65.

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