Bitcoin, the largest cryptocurrency by market cap, ended August down 8.73%, as expected based on past trends.
In a recent tweet, Ali Martinez noted that while Bitcoin played out its historical scenario in August, similar expectations exist for September, which is typically considered a negative month for Bitcoin.
However, recent findings from Spot On Chain, published in a tweet thread, point to five reasons why this year could be different.
First, negative Augusts may help avoid a negative September. For the other reasons mentioned, major selling pressures have disappeared and long-term holders remain strong. Fourth, Bitcoin ETFs may become new buying power, and finally, favorable interest rates, capital, and regulation may help stimulate the market in September.
Bitcoin Will Overcome the September Curse? Here Are Five Signs
Spot On Chain's analysis begins with a historical observation: While it's true that September typically sees a downturn, that's not a given. Nearly 43% of negative Augusts were followed by a positive September. This year, with Bitcoin experiencing a negative August, there's a chance the worst may be behind us, setting up a potential rebound.
5/ Potential purchase simulators:
• The Fed may cut interest rates in September, which could increase demand for risky assets such as $BTC or a Bitcoin ETF.
• #FTX will pay creditors $16 billion in cash, not crypto, which can be re-injected into $BTC and the broader market.
• Both US… pic.twitter.com/a2ycWxLYoc
— Spot On Chain (@spotonchain) September 1, 2024
Second, selling pressure has eased significantly for Bitcoin. Three major selling forces dumped 170,917 BTC, or $10.69 billion, into the market in July and August, including the German government, which sold 49,859 BTC worth $3 billion in early July and no longer holds any BTC. Mt Gox redeemed 95,958 BTC in July and August and still holds 44,898 BTC worth $2.65 billion, or only a third of its original supply. GenesisTrading allocated 24,068 BTC for redemption on August 2 and no longer holds any BTC.
However, the US government still holds 203,650 confiscated BTC worth $12 billion, and like the German government, this could be a major selling force. However, recent actions indicate limited risk of a sell-off in the short term.
In 2023 and 2024, the US government transferred 35,516 BTC worth $1.48 billion to Coinbase at a price of around $41,637, but overall there was only a weak price reaction as most sales were made through the over-the-counter market with minimal market impact.
Long-term holders, who increased their supply by 262,000 BTC in August, bringing their total holdings to 14.82 million BTC, or 75% of the total supply, remain another positive factor. Likewise, BTC ETFs could become a renewed buying force if the cycle of positive and negative months continues.
Other potential buying simulators include the possibility of a Fed rate cut in September, which could boost demand for risk assets like BTC or a Bitcoin ETF. FTX will pay creditors $16 billion in cash rather than crypto, which could be injected back into BTC and the broader market.