What will happen to Bitcoin in September?

Experts analyzed the situation on the crypto market and told how it could change in the next month

On September 1, bitcoin is trading at $20,000, and in August its price fell by 13%. Since the beginning of the year, the first cryptocurrency has fallen in price by 58%. In summer, the asset rate updated a local minimum of $17.6 thousand, after which it immediately rose above $25.2 thousand, but continued to fall.

Experts explained what factors affect cryptocurrency quotes, whether it is worth waiting for new lows in the next month, and in which case bitcoin will begin to recover in price.

“The technical picture for bitcoin has worsened”

The situation in the cryptocurrency market is completely dependent on the dynamics of US stock indices, which collapsed after the speech of the head of the Federal Reserve, J. Powell, at a conference in Jackson Hole. Over the past 30 days, the correlation between Bitcoin and the S&P500 is 0.77. Accordingly, if the US stock market collapses, then all risky assets will collapse, including cryptocurrency.

The Fed is set to take control of inflation and is ready to aggressively raise rates to the detriment of the economy. Fed interest rate futures point to a 75 basis point rate hike with a probability greater than 70%.

After the Jackson Hole symposium, the technical picture for bitcoin worsened. Sellers broke the trend line from the $17.6k low (June 18, 2022). They are held back by the support of $18-19 thousand. Below it, the nearest target is in the region of $12.5 thousand.

Now the attention of investors is riveted to the data on employment in the US non-farm sector (NFP) for August. According to the forecast, they are expected to show an increase in the number of employed by 300 thousand against an increase of 528 thousand in July. The report will be released on Friday , it is important for the Fed. A strong employment report will reinforce expectations that the Fed will continue its aggressive rate hike by 75 basis points. A sharp increase in rates is a rally in the dollar and a decline in the price of bitcoin.

Another negative factor also appeared, which had a negative impact on all risky assets in Asia. The Chinese authorities have imposed a lockdown in Chengdu due to the outbreak of COVID-19. Over the past two weeks, about 600 cases of COVID-19 and about 300 asymptomatic carriers of coronavirus have been identified in Chengdu. 21 million people will remain in their homes. Businesses will close. European markets opened lower behind Asian markets. As a result, futures on the S&P500 went negative and pulled the BTC/USDt pair with them.

Also, the US dollar draws strength from the weakening of the single currency. Due to the energy crisis in Europe, gas prices are rising in Asia and the United States. And this, in turn, leads to inflation in the world. Gas prices in the US and Asia are rising behind European ones. And the US Federal Reserve is fighting inflation by raising rates. Since the share of the euro in the dollar index is approximately 57%, the dynamics of the euro / dollar pair quickly changes the direction of the index.

It can be seen that the $18-19 thousand zone for bitcoin is very strong and buyers are protecting it. It is important for them that on Friday the indices closed with growth after the release of the report on the labor market. This will allow to raise the rate above $20.5 thousand over the weekend. The faster the price fixes above $22 thousand, the higher the probability of recovery to $25 thousand by the end of September.

The key event of September will be the meeting of the US Federal Reserve. Investors fear a recession from the tightening of the monetary policy of the US Federal Reserve and a sharp “cooling” in the crypto market. The collapse of indices will provoke a flight from cryptocurrencies. Since buyers failed to pass the $25.5 thousand level in mid-August, sellers continue to control the market. The more the indices fall, the more the bitcoin rate will collapse.

“In the coming year, the market will be restless”

So far, the situation for the technology sector and cryptocurrencies, which is highly correlated with the shares of IT companies, is alarming. The latest statements by Jerome Powell about a possible next increase in the key rate and continuing inflationary risks have signaled to investors that the next year the market will be restless and it is worth being patient or exiting high-risk assets and praying that this will help preserve capital.

In September, in my opinion, Bitcoin will continue to trade between $18,000 and $21,000. A temporary break down to $17,000 is possible. I don’t think that the cryptocurrency will be able to rise even to $25,000 during September.