After a hectic summer, does it look like Bitcoin is about to have a strong comeback in September?
September bad for Bitcoin?
September is traditionally a bad month for cryptocurrencies. And even less so during bear runs as was the case with Bitcoin (BTC) in 2014 and 2018. It would seem that 2022 does not escape this fate although all hopes are still allowed.
In addition, analysts argue that investors are pulling back from their market positions after returning from summer vacation in September to lock in gains, or even tax losses, before the year closes.
At the same time, they also note that individual investors are liquidating their assets in September to pay for their children’s annual school fees.
Indeed, according to the cryptocurrency’s historical performance data reported by Coinglass, it has almost always seen its price fall in September: around -7% in September 2021 and 2020, -13% in 2019 or even -19% in 2014.
Moreover, the gains of the technical rebound of Bitcoin since mid-June evaporated within two weeks. History that sellers put a point of honor that the bear run of BTC prices since its last ATH in November 2021 is ready to restart. Whether they like it or not, the gloomy context on the financial markets would have more chances to lean on the wrong side of the fence. So much so that the king of cryptos would be at risk of losing big.
So what will the back-to-school season look like for the bitcoin asset? The crypto ecosystem remains weakened by the crypto crashes in May, after the Terra blockchain collapse, and in June, with liquidity issues on many cryptolending platforms including Celsius. It was also a turbulent summer in the cryptocurrency market (see our article on this topic), including the Tornado Cash case that rocked the crypto ecosystem.
Bitcoin ended the week on Friday trading at just over $20,000. That means it has lost more than 70% of its value since its all-time high last November. It even scared investors last Friday when it fell below this symbolic threshold. Such a stall can be explained by the speech of Jerome Powell, the chairman of the Federal Reserve (Fed), who hinted that the U.S. central bank would continue its policy of monetary tightening to cope with inflation. The last time bitcoin fell below $20,000 was in mid-June, in the midst of the second crypto-crash, bitcoin had fallen below $18,000.
The question arises: can bitcoin go even lower this September?
Will it go below $15,000?
By looking at various price models, we can analyze the formation of the next possible market floor. The delta price model shows a potential floor just below $15,000. This could be the most likely or closest possible to the actual floor, given the price movement in the recent past. The model’s price projection shows a potential bottom around $14,478, according to Crypto Quant’s findings.
It remains to be seen whether bitcoin will plunge further in the near future. Thanks to a series of unfavorable macroeconomic factors as of late, the cryptocurrency has been facing unprecedented external turbulence.
However, it should be noted that 2022 is different and the economic environment has changed. Most notably, in July, the central bank raised its policy rates by 75 basis points to combat inflation. As the U.S. central bank tightens monetary policy, investments in the riskiest assets are declining. There is less money in circulation in the financial markets, and this is penalizing the Nasdaq and cryptocurrencies.
In mid-August, James Bullard, a U.S. central bank (Fed) official, said that another Fed rate hike appeared necessary in September, in order to deal with inflation. The latest news is that the Fed meeting will take place on September 20th and 21st. An event that will be heavily followed by the crypto industry.