Bitcoin (BTC) prices have declined by 2.8% to
$56,726 this week, despite an earlier rise of 2.6% to $59,788 on Monday.
However, by Wednesday, BTC had not only lost these gains but also dipped to
$55,553, the lowest level since August 8.
This decline followed remarks from Bank of
Japan Governor Kazuo Ueda, who reiterated warnings that the BoJ might raise
interest rates if the macroeconomic situation aligns with the central bank’s
forecasts. The BoJ last raised rates unexpectedly on July 31, from 0.10% to
0.25%, which led to an 8.0% drop in the S&P 500 index over the following
five days and a 24.5% drop in Bitcoin to $49,035. Investors, concerned about
the potential impact of reduced access to cheap Japanese funds, reacted
strongly to Ueda’s renewed hawkish stance. U.S. stock index futures began to
decline early on Tuesday, and the drop was exacerbated by news of a weakening
U.S. Manufacturing PMI, which indicated that industrial production has been
contracting for a fifth consecutive month. The S&P index futures fell by
2.3%, while the tech-heavy Nasdaq 100 experienced a 3.5% decline in a single
day, marking the worst single-day drop since the panic on August 5.
Consequently, Bitcoin also lost all of its Monday gains and continued to fall
on Wednesday alongside U.S. stock benchmarks.
The situation is becoming increasingly tense,
particularly when considering historical trends. September is typically a
negative month for risky assets, with Bitcoin prices historically dropping by
an average of 4.8% and a 70% probability of decline during this month. The drop
could be as steep as 20.0%, followed by a partial recovery by the end of
September. However, this pattern could be less severe if Bitcoin has already
ended August in negative territory, which it did this year, with a 9.0% decline
in August.
Historical data also suggests that October is
the best month for the crypto market, so Bitcoin prices may not necessarily
fall in September this year. Instead, they could stabilize within the
$60,000-$70,000 range, particularly considering the post-halving cycle logic.
Large investors seem to be banking on this, as evidenced by the $227.1 million
poured into three major spot Bitcoin ETFs (IBIT from BlackRock, FBTC from
Fidelity, and GBTC from Grayscale) last week. However, this doesn’t rule out
the possibility of another drop towards $52,000.
These concerns are further amplified by the
situation with TON. Technical issues on CoinMarketCap briefly caused TON prices
to plummet by 94%, raising alarms given the political pressure on Telegram
founder Pavel Durov in France. TON is the cryptocurrency behind Telegram.
Although the issues were quickly resolved, the incident has left lingering
fears. While Bitcoin is generally more stable, it could also be vulnerable to
an emotional sell-off in September if market conditions continue to
deteriorate.