After a turbulent summer, the queen of cryptocurrencies is gearing up for a strong comeback in September. BFM Crypto is taking stock of the dates that will follow closely.
For the students it is back to school and for some it is back from vacation. For its part, the cryptocurrency market has not had time to breathe and is preparing for a strong comeback. Indeed, unlike traditional markets, the crypto market (whose capitalization remains below the token threshold of $1 trillion) never takes a break, even on weekends. BFM Crypto invites you to take stock of the most important data in September that should animate the ecosystem and that could have an impact on the price of bitcoin.
So what does back-to-school look like for the bitcoin asset? The crypto ecosystem continues to be weakened by the crypto crashes of May, following the collapse of the Terra blockchain, and June, with liquidity issues on many cryptocurrency lending platforms, including Celsius. Summer has also been turbulent in the cryptocurrency market (see our article on the subject), particularly with the Tornado Cash affair that rocked the crypto ecosystem.
Result: This Friday at 11:30 am, the queen of cryptocurrencies is trading at just over $20,000. It has therefore lost more than 70% of its value since its high in November last year. It even scared investors last Friday and fell below this symbolic threshold. Such stagnation can be explained by the speech by Federal Reserve (Fed) chairman Jerome Powell, who suggested that the US central bank 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.
A question arises: can bitcoin go even lower in September? The fact is, the $20,000 threshold remains very symbolic for cryptocurrency as it is most notably its old historical record set in December 2017. This threshold has therefore been “tested” twice on the crypto market in space weeks, an alternative for the market is emerging.
Towards a bitcoin at $14,000?
“Either we’re going to have a double dip of $19,000 – $20,000 and it’ll start all over again. Or we’ll risk crossing this major threshold and it’s almost technically certain to go for the next major threshold at $14,000.” said Vincent Ganne, technical analyst. in the financial markets, this week on BFM Business.
The latter is a “necessary” condition for bitcoin to keep the threshold of USD 20,000.
“It is imperative that the US dollar does not rise again. However, it has returned to its annual record and is stabilizing at the top. Interest rates in the United States are rising again, this could tempt the dollar to rise further and then the price of bitcoin it won’t survive, at least it won’t be able to maintain this technical threshold of $20,000,” added the technical analyst.
The other effect that affects the market is, of course, the power of the dollar, which will only increase thanks to the powerful “interest effect”. The US curve is only getting tighter and that is less strength for cryptocurrencies. Similarly, a strong dollar means that energy prices will be very high for a long time to come no matter what: oil, gas and coal in the international markets are paid in dollars and energy costs are the main parameter to consider for cryptocurrency mining.
In this context, and while the price of bitcoin remains highly volatile, what scenarios can we envision for the month of September? You should know that this month remains historically complicated for the cryptocurrency ecosystem, as the specialist media Cryptoast reminds us.
“If there’s one month that never fails, it’s September. Historically, since the start of Coinglass’s records in 2013, average losses have been close to 6% in that month. With the items listed above, investors have every right to fear are”, a message from Cryptoast points out.
Indeed, according to historical performance data for the cryptocurrency reported by Coinglass, it almost always saw its price fall in September: around -7% in September 2021 and 2020, -13% in 2019 or -19% in 2014.
Monday September 5, Black Monday on the market?
In addition, other events could affect the price of bitcoin in September. On the one hand, an article by The Corner Journal in particular, wonders if Monday, September 5, will be a “black” Monday in the market.
The White House had issued an executive order on March 9, and US President Joe Biden then “requested seven reports on digital assets from various agencies, which have until September 5 to submit them,” the media underlined.
Indeed, both the United States and Europe are considering the launch of a digital dollar (and euro). These initiatives are considered dangerous by many players in the crypto ecosystem, especially in the area of privacy tracking.
A few days later, on Thursday 8 September, it will be interesting to follow the press conference of the European Central Bank (ECB) on monetary policy in the eurozone. The crypto ecosystem will not be immune to new announcements from the institution regarding the crypto ecosystem, which in particular calls for regulation of the ecosystem. As a reminder, last May, Christine Lagarde stated that cryptocurrencies “are worth nothing”.
Another big event could also have an impact on the price of bitcoin: it’s supposed to happen on September 15th and we’re starting to hear about it. This is Ethereum’s The Merge event. The blockchain plans to move from a so-called “proof of work” operation (as used in particular by the Bitcoin blockchain) to that known as “proof of stake” (see our article on the subject).
“If you look at the technical analysis of ether, you tend to stay optimistic. Can you have both ether still going up because there’s The Merge in September and bitcoin Who would pick up at 14,000? I don’t know “The ideal scenario would be to see everything that happens around Ethereum allows bitcoin to hold $20,000. And that would be a great transfer or at least a rebalancing,” Vincent Ganne said.
In addition, for several months now, the price of the queen of cryptocurrencies has been correlated with traditional markets and in particular with Nasdaq, the US stock market index dedicated to technology companies, such as Google or Meta (formerly Facebook). In fact, technology stocks and cryptocurrencies are among the most sensitive assets to the policy of the central bank, especially the US central bank (the Fed). Overall, in the years 2020 and 2021, there was strong liquidity in the markets that was injected by central banks to support economies in the midst of a pandemic. This caused the cryptocurrency and Nasdaq market and other risky assets to soar.
But the year 2022 is different and the economic context has changed. In particular, in July, the central bank raised its key rate by 75 basis points to combat inflation. Faced with the tightening of monetary policy by the US central bank, investment in the riskiest assets is declining. Less money is circulating in the financial markets, which is detrimental to the Nasdaq and cryptocurrencies.
In mid-August, James Bullard, a US central bank (Fed) official, stated that a further Fed rate hike in September seemed necessary to stem inflation. The latest news is that the Fed meeting will take place on September 20-21. An event that will be heavily followed by the crypto ecosystem.