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Crypto at a Crossroads: Bitcoin Accumulation, ETF Decision Delays, and More




Crystall Ball at the Center

Bitcoin price continues to stay below $26,000, having wiped out all of its gains made last Tuesday when it surpassed $28k in response to Grayscale's legal victory over the US Securities and Exchange Commission (SEC). However, Bitcoin prices went under $25,500 ahead of the weekend, as the Commission delayed decision on multiple Spot Bitcoin ETF applications, including those from BlackRock and Fidelity. 

According to JP Morgan, the SEC would be forced to approve several Spot Bitcoin ETFs following Grayscale's win, as the SEC's reasons for denying a spot Bitcoin ETF are not sufficient. The approval, some say, could happen by the end of the year. German investment bank Berenberg, meanwhile, has warned that the Commission may prepare alternative arguments to justify continued rejections of a Spot Bitcoin ETF.

Despite expecting approval, JPMorgan analyst Nikolaos Panigirtzoglou wrote, “Such an approval is unlikely to prove a game changer for the crypto market.” However, others expect this to be a big deal and attract sizable flows, given that the US accounts for a vast majority (80%) of the total assets invested in listed Bitcoin fund products.

The latest move in BTC's price also came as on the macro front, the US reported adding 187,000 jobs in August, more than the 157,000 in July. However, the unemployment rate for August was 3.8% versus last month's 3.5%, as per the Bureau of Labor Statistics report. 

As for average hourly earnings, they rose 0.2% in August but down from a 0.4% increase in July, and on a year-over-year basis, the jump was 4.3%, but it was again down from 4.4% in July. 

At the time of writing, BTC/USD has been trading at $25,894 while Ether is exchanging hands at $1,633. The total crypto market cap is also stuck at $1.08 trillion. 

Currently, the market lacks a positive catalyst, meaning a bearish scenario could even send Bitcoin sub $20k level. Meanwhile, if the market turns bullish, we can reclaim $26,000 and, from there, a continuation for a Q4 higher low. However, this seems less likely.

As for stablecoins, which are used as units of accounts and as stores of value, the market cap of the top six stablecoins has collectively declined by 25.9% in the past 18 months. But for the first time since the FTX collapse last November, the market is seeing growth, with the combined market caps growing by $663.2 million since Aug. 22nd.

Bitcoin Accumulation Continues 

Amidst the ongoing bearish market trends, the number of Bitcoin holders, for the first time, has now also surpassed the milestone of 48.5 million, exceeding the entire population of Spain. This surge in holder count indicates an optimistic outlook among investors, which isn't unfounded given several regulatory winnings the crypto industry has gained over the regulators recently in the form of XRP, Grayscale, and Uniswap. 

Additionally, despite the market downturn, investors are taking this opportunity to accumulate Bitcoin. The latest data from crypto analytics firm IntoTheBlock reveals a significant increase in Bitcoin holders while the price of the largest cryptocurrency has plunged to a two-month low.

A whopping $1.5 billion has been added to Bitcoin holdings in just the last two weeks of August alone. IntoTheBlock noted that this accumulation was made by addresses holding at least 0.1% of the bitcoin supply — worth more than $500 million. These entities are called whales as they control large amounts of digital assets, and their activity can have a sizable impact on markets.

These large holders first added to their Bitcoin stash after Aug. 17th, when BTC plunged more than 10% to below $26K and then following asset manager Grayscale's court victory earlier last week.

Surge in Bitcoin Accumulation

This increase occurred while inflows into centralized exchanges (CEXs) were near zero, suggesting that “there is organic buying demand rather than just funds moving to exchange addresses,” wrote Lucas Outumuro, head of research at IntoTheBlock, in a report.

Ethereum, meanwhile, continues to see even more significant exchange outflows, with $380M leaving CEXs last week and approximately $1.5 million this past month. The 2nd largest cryptocurrency has also exceeded 467K unique address interactions in a single day, the most since ETF announcements first began breaking back on June 16th, noted crypto data provider Santiment. “Upticks in utility are typically a common necessity for ETH and other assets to increase in value,” it added.

Meanwhile, according to a recent Reuters report, Singapore-based digital assets financial services firm HashKey Capital's Hong Kong-regulated fund will invest a significant chunk of its assets in altcoins. Less than half of the fund's investments will be in BTC and ETH, so it can diversify allocations to smaller cap assets, said portfolio manager Jupiter Zheng.

The fund, which was unveiled a month ago and opened for business Friday, has attracted high-net-worth individuals (HNWIs) and investment firms serving rich Asian families as clients. It aims to raise $100 million to invest entirely in digital assets after Hong Kong re-emerged as a global crypto hub following the creation of a digital asset regulatory framework in the region.

Click here to learn all about investing in Bitcoin (BTC).

Bitcoin Seasonality, September Dump

Bitcoin has already started September on a negative note, falling to $25.4K, its lowest price level since June 16th. And it's possible we would see further downside, especially amidst the low volume and thin liquidity, as well as the dominance of outflows over inflows in the market and the current economic environment.

For Bitcoin, September has been historically a bloody month, having not posted any green performance since 2016.

And if we look at Bitcoin's historical September performance, 2014 was the most brutal at negative 19%, and after that was 2019 at negative 13.4%. In recent times, 2020 saw the price falling by 7.5% and 2021 by 7% in September. Last year wasn't as harsh, with BTC's price only being down by 3.1% in the month. So, it remains to be seen just how this month will turn out. Notably, a decline in the value of Bitcoin would result in a more severe sell-off in altcoins.

Bitcoin's returns broken down by months

Looking at the past performance, the market is now anticipating a bloody month and preparing for a major correction. With Bitcoin already losing momentum and showing weakness, the price could not only drop under $25k, but the crypto asset could very well test the $23,000 level. 

This seasonality isn't limited to Bitcoin, though. It actually comes from the traditional finance (TradFi) world. Known as the September Effect, investors have long been wary of this month's reputation as the worst month for investing. During this month, the market returns are historically weak, with the S&P 500 generally posting losses since 1945. 

The S&P 500 has averaged a negative return of 0.60% over the last two decades during September due to profit-taking on gains made in previous months, tax loss harvesting, and the close of the fiscal year for many funds, forcing them to sell positions.

The month being bearish means good news might have no impact, while bad news may cause significant drops. Although oversold conditions and the S&P 500 are doing well, we could see a change in market direction for BTC. After all, the correlation between cryptocurrency and the stock market has also been strong for a long time.

Having said that, while September is a bad month, October might bring in some good news as it tends to be a good month. So, this month's price drop could see a bounce in the next. 

Historically, October has been a green month, with the only exception being 2014 and 2018, when BTC prices dipped 12.95% and 3.83%, respectively. As a result, this could be seen as a good opportunity for traders and investors to buy the dip.

Click here to learn all about buying Bitcoin (BTC).

Upcoming Token Locks

Data aggregated by TokenUnlocks shows that the first three days of the week will see token unlocks by sub-$100 mln market cap coins like Liquity (LQTY), Galxe (GAL), LooksRare (LOOKS), Pendle (PENDLE), and Hashflow (HFT). 

In the past week, these tokens have recorded performance of +7%, +2.7%, -12.2%, +1%, and +0.3% respectively. These tokens recorded between $17.5 mln to $14 mln in trading volume in the past 24 hours, except for LOOKS, which did less than $2 mln, as per CoinGecko.

On Sept. 8th, Moonbeam will unlock 3.04 million GLMR tokens worth $562K belonging to founders and early employees. The $293.6 million market cap token is recording just over $9 mln in trading volume, down 10% over the past week and 38% over the past month.

The next day, 18.08 million IMX tokens worth $10 million will be released by ImmutableX. The project has just 58% of its supply currently unlocked. These newly released tokens are part of private sales and project development. IMX is a $621 million market cap token managing just over $13 mln in 24-hour trading volume. Price-wise, the token is down 24.2% over the past month, 32.5% over the past year, and 94.2% since its all-time high (ATH).

With token unlocks increasing the supply in the market, it tends to create fear among market participants. So, how will the price react before and after these token unlocks happen? For this, let's take a look at last week's unlocks. 

On Aug. 26th, 2023, about $100 million worth of AVAX tokens were released amid falling Avalanche network activity. A day before the unlock, the altcoin rose by over 5.8% only to drop back down to pre-pump price after the token unlock. But over the next four days, the price jumped 11%, although it has lost 6% of its value since then. 

Last week also saw Sui (SUI) and Hedera (HBAR) increase in circulating supply, which gave early investors and project team members the opportunity to finally sell their tokens. Sui increased its token allocations earmarked for staking subsidies from 967,740 to 1 million SUI, while Hedera allocated 1.15 billion HBAR to network governance, purchase agreements, and ecosystem development.

Since the day of the unlock, Sept. 1st, HBAR has lost 9.43% of its value, though the token rallied last month after being integrated into the US Federal Reserve's FedNow platform. SUI's unlocking meanwhile was on Sunday, prior to which the price jumped 3% only to drop 5.2% afterward but has recovered 2.5% of its value.


Currently, the market participants aren't feeling bullish about Bitcoin, which spells bearish for altcoins as well. In the near term, the tight monetary policy remains a challenge for Bitcoin's price.

The largest cryptocurrency by market cap has resistance present at the $23,000 level, which is also its 100-hourly Simple Moving Average (SMA). This means, on the downside, if BTC fails to hold on to this level, the next support would be at $22,000, which it has been constantly rejecting, as a result further sending it down to not just $19k once again but maybe even below that.

Not just this week, but the rest of 2023 is expected to not see any major positive price movements. But things could turn around next year with the major Bitcoin halving event happening in April. Moreover, 2024 is an election year, so it is expected to bring more uncertainty and volatility for both traditional and crypto markets. 

For now, the Bitcoin Spot ETF remains a headwind, with the market anticipating delays beyond October. The SEC versus Coinbase (COIN) is also in the focus, with investors awaiting Judge Katherine Polk Failla's ruling on the motion to dismiss. Legal experts believe that if she grants or partially grants the dismissal, the SEC may have to settle the case against Ripple. Additionally, the CME FedWatch Tool continues to show traders expecting the Federal Reserve to put a hold on raising the rates at its upcoming meeting in mid-September.

Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.