In the early morning of this morning (28th), the cryptocurrency market once again experienced a wave of decline. Bitcoin began to fall from around US$62,000 at 2 a.m., hitting a low of US$58,000. At the time of writing, it rebounded to US$59,900, a decline in the past 24 hours. Converged to 4%.
Ethereum's decline was even more dramatic. Its price began to fall from around US$2,580 at 5 a.m., falling to a low of US$2,392.96 and then rebounding. It is now at US$2,523, down 4.65% in the past 24 hours.
Analyst: Multiple factors create downward pressure
Against this background, according to The Block, Rachael Lucas, an analyst at cryptocurrency exchange BTC Markets, said:
Technical indicators show the U.S. Dollar Index (DXY) is oversold on the daily chart, which could signal a potential rebound in the U.S. dollar, which typically puts downward pressure on risk assets like cryptocurrencies.
Lucas added that seasonal factors may also be responsible for the decline, and historically the "September effect" often leads to poor market performance:
This was due to portfolio rebalancing, tax loss harvesting and an increase in cautious investing ahead of the US elections.
Augustine Fan, research director of DeFi non-profit organization SOFA.org, also pointed out that the current weak momentum on the chain has caused traders to be bearish:
Short-term volatility rises as traders rush to buy downside protection (put options) as fundamental momentum remains weak due to oversupply and a lack of near-term on-chain catalysts
According to Sosovalue data, the Ethereum spot ETF has experienced net outflows for 9 consecutive days. Augustine Fan said:
The performance of Ethereum spot ETFs continues to be sluggish because the Ethereum mainnet is currently in some kind of identity crisis (cannot find a clear direction or positioning)
Independent researcher Nick Ruck also added:
ETH will struggle more than other cryptocurrencies, as the Ethereum Foundation has been criticized for its $100 million budget for selling ETH, which could increase selling pressure in the market.
Extended reading: Where does the $100 million the Ethereum Foundation burns every year go? Expenditure transparency has been questioned and may be exhausted within 8 years
Financial markets are more likely to fall in September
On the other hand, based on the performance of the Nasdaq Index over the past ten years (2014 to 2023), there were 8 declines in September, with a probability of decline as high as 80%. Since there is a certain degree of correlation between cryptocurrencies and U.S. stocks, they may also be affected.
Next, we further observe the monthly returns of Bitcoin and find that in the past 11 years (2013 to 2023), Bitcoin has also performed poorly in September, with 8 declines and a probability of decline as high as 73%. In addition, judging from the average monthly return, September was the month with the largest decline, with a decline of as much as 4.78%.
Although judging from historical data, the cryptocurrency market also has a "September Curse", there are still many positive factors in the market (such as possible interest rate cuts in September, the effect before the US election, etc.). Therefore, investors can use the September effect as an auxiliary reference rather than the sole basis for decision-making.
