Is the different September a frenzy of the bull market or a turning point? 9 things that have happened and will happen with Bitcoin
Whether Bitcoin rises or falls depends on September.This September seems to carry a different feeling. On one hand, the interpretations of interest rate cuts by major headlines and the multilateral impacts of global finance cannot be said to have anything to do with my monthly income of three thousand. Will the Federal Reserve send me money? Those who engage in verbal sparring can only find comfort in the pleasure of typing on their keyboards, unaware of the life-and-death struggle between the financial wars of the two countries, the seesaw effect of rise and fall, weakness and strength.
On the other hand, once the opportunities of time and momentum become clear, many obstacles and thresholds will be broken through. War and sanctions, confrontation and dialogue, reconstruction and cooperation, the transformation between crisis and opportunity largely depends on how we view the subsequent direction. The truth or starting point may no longer matter; making good use of the momentum is also a step forward.
From past experience, September is a relatively weak period for cryptocurrencies. However, even with historical data and strong selling pressures from liquidations, the strong power of long-term holders and the potential buying power brought by Bitcoin ETFs, combined with favorable social and economic conditions, do not guarantee that Bitcoin's price will decline in the coming month.
In September, will Bitcoin be bullish or bearish? What changes will time and momentum bring?
What happened in August:
- Bitcoin sales by the German government
The German government seized a piracy website called Movie2k in January 2024, finding about 50,000 BTC. Then, from late June to early July of the same year, they sold all these Bitcoins, totaling 49,859 BTC (worth $3 billion). This sell-off led to a drop in Bitcoin prices during the summer of this year. However, most of these Bitcoins are no longer on the market, so the selling pressure from this source has significantly decreased, reducing the likelihood of a similar impact in September.
- Mt. Gox repayments
The now-bankrupt Japanese Bitcoin exchange Mt. Gox announced in June 2024 that it would begin repaying creditors. Since then, 95,958 Bitcoins (worth $6.07 billion) have been transferred to trading platforms and custodial wallets for repayment. With only 44,898 Bitcoins (worth $2.65 billion) left to distribute to creditors, which is about one-third of the initial holding, most of the repayments and related selling pressures may have already passed, potentially alleviating the negative impact on Bitcoin prices in September.
- Genesis Trading debt repayment
In January 2023, Genesis Trading announced bankruptcy and completed most of its debt restructuring by August 2024. On August 2, the company put forward 24,068 BTC (valued at about $1.55 billion) for debt repayment, leading to a price drop in the market at the beginning of August. Since this large amount of funds has already been liquidated, the likelihood of large-scale sell-offs in September is low, which is good news for the market.
- Government-seized crypto funds
Governments like the U.S. and the U.K. hold a significant amount of seized BTC, which could pose a threat to Bitcoin prices. However, the current situation suggests that this risk may be exaggerated. The U.S. government, which holds 203,650 BTC, has transferred and sold part of its holdings, but this was done through over-the-counter (OTC) transactions, having minimal impact on market prices. The U.K. government, holding 61,245 BTC, has not touched these funds since seizing them in 2021. Therefore, the likelihood of government sell-offs in the short term seems low.
What will happen in September:
- Federal Reserve interest rate cuts
Many people predict that the Federal Reserve will lower interest rates by 25 basis points in September 2024, marking the first rate cut in 13 months. Such an interest rate environment would make traditional investments less profitable, potentially leading people to turn their attention to higher-risk but higher-return assets, such as cryptocurrencies. This shift could make Bitcoin or Bitcoin ETFs more popular, offsetting some of the historical negative trends in September.
- FTX repayment of $16 billion in cash
FTX is about to distribute $16 billion in cash to creditors, expected to be received by the end of September and early October. This could impact the cryptocurrency market. Many creditors may choose to reinvest this money in cryptocurrencies, potentially bringing significant funds into the market. Coupled with the currently low interest rate environment, this could drive Bitcoin prices up.
- U.S. elections providing support
Both U.S. political parties are increasingly supportive of cryptocurrency-friendly regulations, which could boost investor confidence. For example, Kalama Harris has received public support from crypto industry leaders and is actively involved in the sector's development. Additionally, Donald Trump has changed his stance on cryptocurrencies, now advocating for relaxed regulations and establishing a national strategic Bitcoin reserve. This bipartisan support could create a more positive and favorable regulatory environment, further driving up Bitcoin prices.
- Bitcoin ETF rebound in September
Based on trends in the charts, Bitcoin ETFs may see some positive net inflows in September. There were some slight negative inflows in August, but under the alternating pattern of positive and negative months, a rebound may occur. Considering that recoveries have followed previous downturns, a conservative estimate for September's net inflows could be between $500 million and $1.5 billion.
- Strength of long-term holders
One favorable factor for Bitcoin is the strength of long-term holders. CryptocurrencyQuant indicates that long-term holders have increased their holdings by 262,000 BTC over the past 30 days, bringing their total Bitcoin supply to 14.82 million BTC, accounting for 75% of the total supply.
At the same time, many top anonymous wallets holding large amounts of Bitcoin have remained dormant, indicating that these holders do not intend to sell in the near term. This strong holding pattern provides robust support for Bitcoin, reducing the likelihood of significant sell-offs by long-term holders in September. For instance, among the top 10 anonymous Bitcoin holding wallets, 7 have been inactive for over 2 years. These 7 wallets hold a total of 237,816 BTC (worth $14.04 billion), accounting for 1.2% of the circulating supply.
Conclusion
Will September be a frenzy of the crypto bull market or a turning point? The massive liquidity brought by interest rate cuts and increased issuance will change the current situation. Will Bitcoin in 2024 again become an unattainable "luxury"?
