The Bitcoin (BTC) price is expected to end Monday with losses of close to 3%, marking a sour end to the month. This is due to commentary from US Federal Reserve Chairman Jerome Powell that was not as dovish as hoped for, as well as concerns about Japan’s incoming PM and his policy stance. Powell indicated a preference for steady interest rate cuts of 25bps intervals going forward, which was seen as a disappointment to the market. Bitcoin, which was trading in line with its 200DMA, was also weighed down by news of the incoming Japanese PM, who is thought to support policy normalization. Bitcoin is down just over 4% from its recent highs in the upper $63,700s, after reaching as high as $66,000 last week.
Despite the month-end stumble, Bitcoin is set to end the month with 8% gains, which is highly unusual for September, as it is normally a bearish month for the Bitcoin price. This sets a strong tone for October, which is traditionally Bitcoin’s strongest month of the year, known as “Uptober.” The average September return is -4.4%, compared to an average return of 27% in October. However, some are concerned that pre-US election uncertainty may hinder bullish momentum in pursuing higher prices. Risks are tilted to the upside for BTC, driven by factors such as Fed/global central bank easing, the delayed arrival of post-Bitcoin halving tailwinds, and the alleviation of US election uncertainty. The US economy is a wild card in this narrative, as further weakening could trigger a return of recession fears.
The potential for a major rally in Bitcoin may wait until November or could come as soon as next month. Factors such as Fed/global central bank easing, delayed post-Bitcoin halving tailwinds, and the resolution of US election uncertainty are expected to drive BTC higher. However, the US economy remains a risk factor, and further weakening could cause a return of recession fears, impacting risk appetite. US ISM PMI activity data and the September jobs report will be closely scrutinized this week, as strong data could support risk appetite and potentially kick off “Uptober” on a strong footing. A test of $70,000 for Bitcoin could happen very soon, depending on market developments and economic data.
In conclusion, despite the month-end losses for Bitcoin, the cryptocurrency is still on track to end the month with gains, which is unusual for September. The outlook for October remains positive, as it is traditionally Bitcoin’s strongest month of the year. Factors such as global central bank easing, post-halving tailwinds, and the resolution of US election uncertainty are expected to drive BTC higher in the coming months. However, risks remain, particularly related to the US economy and upcoming economic data releases. Overall, the market sentiment for Bitcoin is bullish, and a potential rally could happen in the near future, possibly reaching $70,000. Investors should remain cautious and monitor market developments closely to make informed decisions.
