Uncertainty over US interest rates and the upcoming election keeps Bitcoin in a challenging trading range
Bitcoin's poor trading performance may continue for another month as traders wait for clarity on US interest rate cuts and the upcoming presidential election, according to CNBC.
In August, Bitcoin saw a 10.25 percent decline, marking its worst month since April. Ether dropped even more sharply, by 23.66 percent, making August its third consecutive month of losses and its worst performance since June 2022.
While Bitcoin has benefitted from ETF-related gains in 2024, the broader cryptocurrency market has not followed suit, with many cryptocurrencies struggling despite Bitcoin's isolated success.
Rob Ginsberg, a chart analyst at Wolfe Research, noted the challenging market conditions, stating, “It’s not a pretty picture across the crypto landscape at the moment. Bitcoin is still stuck in a descending trading range as price gradually deteriorates off the March high.”
Ginsberg added that while a breakout would be very bullish, the current trend suggests Bitcoin will likely revisit the lower end of its range, around the $50,000 mark, in the coming weeks.
Since peaking in March, Bitcoin has formed a pattern of lower highs and lower lows. Ginsberg explained, “Until that changes, either through a breakout or a gradual reversal, we remain bearish on Bitcoin’s short- to mid-term price outlook.”
As Bitcoin approached $58,000 during the holiday weekend, traders took note of September's historical trend as a tough month for the cryptocurrency. Over the last 11 Septembers, Bitcoin has closed lower eight times, with an average monthly loss of 4.8 percent, according to CoinGlass.
While last year broke a six-year losing streak for Bitcoin in September, it has been stuck in a range between $50,000 and $70,000 since April and is expected to remain there for at least another month.
Supply-related issues contributed to Bitcoin's difficult August, though most have now been resolved, according to Alex Thorn, head of research at Galaxy Digital. Thorn highlighted that much of the US government's recovered Bitcoin from theft is expected to be returned, rather than sold.
He also mentioned that Germany has completed its Bitcoin sales, and the Mt. Gox estate has largely distributed its coins. Thorn stated, “From a supply perspective, Bitcoin looks to be in a better position moving forward.”
Additionally, Thorn noted that the FTX cash distributions, expected over the next six months, could be a positive factor for the market. Many of the creditors in line to receive these distributions are crypto investors who may choose to reinvest in the sector.
Bitcoin may remain rangebound until November, with the looming US presidential election heavily influencing investor sentiment. Thorn suggested that a Trump victory could provide a positive catalyst for Bitcoin, while a Harris victory would likely have minimal downside impact.
John Todaro, an analyst at Needham, also commented on the current uncertainty, saying, “I would expect to see volatility until there is more clarity on interest rate cuts and the election.”
Although the market has already factored in expectations of significant rate cuts, the key question remains how many cuts will be implemented and when. Thorn pointed out that only a surprising move by the Federal Reserve might impact Bitcoin's price in the near term.
The Federal Reserve's next policy meeting is scheduled for September 17-18.
