Bitcoin Faces Significant Decline Amid Market Downturn

Bitcoin Struggles Amid Market Downturn

Bitcoin (BTC) experienced a significant decline, falling to approximately $57,500 on Monday. This drop extended its weekly losses to over 10%, reflecting a broader downturn in the cryptocurrency market. Over the past 24 hours, BTC has decreased by 1.2%, with other major cryptocurrencies such as Solana (SOL), BNB Chain’s BNB, XRP (XRP), and Cardano’s ADA witnessing declines of up to 3%. Leading the losses among the largest cryptocurrencies, Dogecoin (DOGE) plummeted by 5%. Meanwhile, the CoinDesk 20 Index (CD20), a liquid fund that tracks the largest tokens in the market, fell by 1.88%.

In recent developments, U.S.-listed exchange-traded funds (ETFs) that track Bitcoin reported total net outflows amounting to $175 million on Friday, marking a four-day streak of losses. Interestingly, Ether (ETH) ETFs recorded no net inflows or outflows, despite trading volumes reaching $173 million, as highlighted by data tracked by SoSoValue. It’s important to note that traditional markets in the U.S. will remain closed due to the Labor Day holiday.

Some traders have pointed out that Bitcoin’s recent decline aligns with the historical bearish trend observed during September. However, there is speculation that potential interest rate cuts by the U.S. Federal Reserve could alter this trend. “Historically, September has been a challenging month for Bitcoin, with an average depreciation rate of 6.56%,” stated Innokenty Isers, founder of the cryptocurrency exchange Paybis, in a Monday email. “If the Federal Reserve decides to cut interest rates this September, it could positively impact Bitcoin’s performance, as such cuts typically lead to increased liquidity in the economy, thereby enhancing Bitcoin’s appeal as a store of value.”

Seasonality refers to the tendency of assets to undergo regular and predictable changes throughout the calendar year. While these patterns may seem random, they can be attributed to various factors, including profit-taking during the tax season in April and May, which often leads to market pullbacks, and the generally bullish “Santa Claus” rally in December, indicative of heightened demand.

“Overall, the current macroeconomic indicators, the adoption of spot Bitcoin ETFs, and a favorable hashrate could make September a relatively more promising month for BTC this quarter,” Isers added.