With the addition of traditional financial institutions, the cryptocurrency market has moved away from its previous independent market trend and become increasingly closely related to macroeconomic cycles. Since the beginning of this year, the prices of mainstream cryptocurrencies such as Bitcoin have fluctuated repeatedly with the global market.
On the morning of September 14th, Bitcoin surged in the short term, breaking through the $60000 mark, with a daily increase of over 4%. However, prior to this, Bitcoin continued to decline, and as of now, its trading price has still fallen by about 20% from the historical high of $73500 set this year. After entering September, Bitcoin spot ETFs also experienced a wave of capital outflows, with outflows exceeding $1 billion.
September every year is a challenging period for Bitcoin, and based on historical data, September is usually one of the worst months for Bitcoin's performance. "Uweb President and Co Chairman of the Blockchain Committee of the China Communications Industry Association, Yu Jianing, told Huaxia Times reporters that since 2010, Bitcoin's average return rate in September has been negative, and in the past 13 years, 9 September months have experienced a decline. This seasonal effect has gradually formed a psychological expectation among investors. Even this' September effect 'is manifested in a wider range of financial markets, especially risk assets such as Nasdaq, which often experience volatility and pullbacks in September.
In the short term, there may still be fluctuations
The direction of the Federal Reserve's monetary policy, especially the expectation of interest rate cuts, has had a significant impact on market sentiment and the prices of risk assets. Although interest rate cuts are usually seen as positive news, they may also be accompanied by concerns about economic recession, and this dual impact exacerbates market uncertainty, "said Yu Jianing.
According to a report released by Bitfinex, cryptocurrency investors had hoped for a bull market driven by the Federal Reserve's September interest rate cut due to months of sluggish price movements. However, escalating concerns about an economic recession could lead to a deeper pullback. If a loose cycle and an economic recession occur simultaneously, Bitcoin may fall by 15% -20% after the September interest rate cut. Assuming BTC's price was around $60000 before the rate cut, the potential bottom would be between $40000 and $50000.
Markus Thielen, founder of 10x Research, also believes that if the Federal Reserve cuts interest rates in September this year solely due to the inflation crisis, it will be a short-term positive for Bitcoin. However, if an economic recession leads to a rate cut, whether in September or later, Bitcoin will face enormous selling pressure.
Regarding the volatility of Bitcoin prices, Wang Yingbo, an economics PhD from the Shanghai Academy of Social Sciences, told reporters from the Huaxia Times that due to the uncertain value standards of computing power, digital currencies are still more of an investment asset, and their monetary attributes have yet to be verified. Therefore, the price fluctuations are severe, making it difficult for investors who lack a long-term perspective to control risks. It is recommended to be cautious.
Yu Jianing also reminded that during periods of significant market sentiment fluctuations, investors should do a good job in risk management and avoid chasing after gains and selling losses, which is an important strategy to protect investment returns.
The upcoming US election has also increased the uncertainty of Bitcoin's trend, as candidates' different political stances and policy tendencies may lead to drastic fluctuations in the price of cryptocurrency. The presidential election cycle is usually accompanied by policy uncertainty, which has a significant impact on market sentiment. Especially if candidates have unclear attitudes towards digital assets or tend to increase regulatory efforts, the market may experience short-term fluctuations, "said Yu Jianing.
Based on Trump's policy inclination towards cryptocurrency friendliness, American fund company Bernstein predicts that if Trump wins the election, it will bring new opportunities to the cryptocurrency industry and may stimulate investor confidence, with Bitcoin potentially reaching a range of $80000 to $90000 by the end of the year. But if Harris wins, it may cause Bitcoin to fall below $50000, or even drop to the range of $30000 to $40000.
It is worth mentioning that in the first debate of the US election, neither Trump nor Harris mentioned cryptocurrency. After the debate, Trump related Meme coins generally fell.
In addition, there are many factors that affect the volatility of Bitcoin prices. A research report released by encrypted data provider Kaiko recently pointed out that although the liquidity of the encrypted market has improved since the collapse of FTX, the potential impact of clearing large positions still needs to be viewed with caution.
Kaiko stated that there are still approximately 46000 bitcoins (worth over $2 billion) awaiting distribution to creditors in the bankruptcy case of Mt. Gox, which may become a major source of market concern. In addition, Bitcoin held by governments such as the United States and the United Kingdom, as well as positions held by institutions such as Tesla, may also create potential selling pressure in the coming months.
Despite the tense market sentiment, there are also voices of optimism. The report released by Grayscale believes that if the US dollar weakens and interest rates continue to decline, it will benefit Bitcoin. The main downside risks of cryptocurrency valuation are further increase in unemployment rate and possible recession, but US policy makers will start to release water and promote consumption when signs of economic recession appear.
The head of research at ETC Group stated that the recent illiquid supply of Bitcoin has reached a historic high of 74%, indicating that the supply shock caused by the halving is actually intensifying, which will provide increasing impetus for Bitcoin and other cryptocurrency assets in the coming months.
Yu Jianing believes that the future price trend of Bitcoin will continue to be influenced by a combination of these factors. In the short term, Bitcoin may seek new support or resistance levels amidst volatility. In the medium to long term, if global liquidity increases, economic prospects improve, and regulatory attitudes become more favorable, the price of Bitcoin is expected to strengthen again.
Cryptocurrency fines have reached $4.7 billion this year
September is often the peak period of financial market volatility, and with the increasing annual enforcement activities of the US SEC at this time, the digital asset market is facing greater regulatory pressure. "Yu Jianing said that the SEC's enforcement actions not only have a direct impact on individual digital asset projects, but also trigger a chain reaction in the broader market, enhancing the tension of market participants.
Recently, the US Securities and Exchange Commission (SEC) issued an investor statement reminding investors to be aware of speculative behavior surrounding Bitcoin and Ethereum exchange traded products (ETPs). The announcement clearly states that Bitcoin and Ethereum are highly speculative investments, and even if investing in Bitcoin and Ethereum through an ETP structure, significant risks related to price fluctuations and potential market inefficiencies need to be addressed.
Prior to the announcement, the US Bitcoin spot ETF had just experienced a significant outflow of funds. Data shows that the US Bitcoin spot ETF recorded its largest daily net outflow since the product's listing on September 9th. In the previous trading days, investors withdrew over $1 billion from Bitcoin ETFs.
With the rapid development of the cryptocurrency market, regulatory agencies have realized its potential risks. With the continuous improvement of regulatory policies, the cryptocurrency industry will gradually move towards compliance. At the same time, as the market matures, investor education will be increasingly valued to enhance investors' risk awareness and investment capabilities. "Wu Gaobin, Vice Chairman of the Integration Committee of China Communications Industry Association, told reporters from Huaxia Times.
Recently, with the arrest of Telegram founder and CEO Durov in France, the entire cryptocurrency industry has once again fallen into panic caused by regulatory tightening. Subsequently, NFT platform OpenSea received a Wells notice from the US SEC, becoming another cryptocurrency project targeted by the SEC after Coinbase, Bittex, Uniswap, and Robinhood. It can be seen that the global market is tightening its regulation of the cryptocurrency market.
According to a report released by Social Capital Markets, the US SEC carried out nearly $4.7 billion worth of enforcement actions against cryptocurrency companies and their executives in 2024, an increase of over 3000% compared to 2023. The report shows that since 2013, the SEC has imposed fines of $7.4 billion on the cryptocurrency industry.
The digital asset industry is facing unprecedented compliance pressure, "said Yu Jianing. Compliance is not only an important means to deal with market risks and protect investor interests, but also a key factor in promoting further integration between the digital asset industry and traditional financial markets. By establishing a stricter regulatory framework, regulatory agencies can guide the market towards a healthier and more sustainable direction, providing a foundation for the industry to attract more institutional investors and mainstream funds.
Yu Jianing believes that in the future, the development trend of the digital asset industry will revolve around compliance and transparency. During this process, companies within the industry will face stricter regulatory requirements and need to actively adjust their operational strategies to comply with the laws and regulations of various countries. At the same time, compliance will also bring more development opportunities to the industry, promoting deeper integration with traditional financial markets and making digital assets a more important part of the global economic system.