September was a reality check for the cryptocurrency market, with its total value dropping by nearly $20 billion in just 24 hours, to around $2.03 trillion. Bitcoin, the leading cryptocurrency, is facing significant selling pressure, falling to around $57,270, a level not seen since mid-August.
The market is currently bearish, with traders keeping a close eye on Bitcoin’s key support at $55,724. If Bitcoin falls below this level, it could fall further to around $49,000.
Historically, September has been a tough month for Bitcoin, often marked by price drops or stagnant performance. In previous years, losses of 5-10% were typical, and this year seems to be following that trend.
You won’t want to miss this information. Read on.
All eyes on stablecoins?
Bitcoin recently hit resistance at $65,000 and has been falling since then. This decline aligns with a shift in capital flows to stablecoins, suggesting that investors are becoming more cautious. The market cap of stablecoins has now reached an all-time high, close to $170 billion.
This trend reflects the growing uncertainty investors have about Bitcoin and other cryptocurrencies at the moment.
Should we expect huge sales ahead?
Fears of a possible selloff are also weighing on the market. The U.S. government holds more than 203,000 bitcoins, worth about $12.1 billion.
Additionally, Mt. Gox is set to release an additional 46,000 bitcoins, worth over $2.7 billion, to its creditors. Together, these sources could flood the market with over $14.8 billion worth of bitcoins, potentially driving prices lower.
Activity on the channel is decreasing
Analysts have also seen a decline in on-chain activity related to exchanges, indicating that fewer people are trading Bitcoin and other cryptocurrencies. Each recent drop in Bitcoin’s price has been deeper, with smaller recoveries, indicating a potential drop in demand as September progresses.
Could a Fed Rate Cut Trigger a Rebound?
Despite the current difficulties, there is still hope for a market rebound. Some experts believe that if the US Federal Reserve decides to cut interest rates on September 18, it could give Bitcoin and other cryptocurrencies a boost.
The FedWatch tool suggests there is a 30% chance of a 50 basis point rate cut, which could trigger a rise in Bitcoin. For now, Bitcoin needs to climb back above its moving averages to start a meaningful recovery, with targets set at $65,000 and potentially $70,000.
Key support levels in focus
For now, the focus is on holding key support levels. If Bitcoin fails to hold these levels, it could see further declines, with the next major support being at $54,000.
Also read: US Election 2024: Trump and Harris in a tight race! Will cryptocurrencies reveal the winner?
Will Bitcoin Rebound or is this the start of a new crypto winter?
