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The crypto market has had a rough start this September, with its total value dropping by nearly $20 billion to around $2.03 trillion in the last 24 hours. Bitcoin, the biggest cryptocurrency, is facing strong selling pressure and has fallen to around $57,270, a level last seen in mid-August.
However, the market sentiment is currently bearish, with traders closely watching the $55,724 support level. If Bitcoin falls below this level, it could drop further to around $49,000.
Investor Shift to Stablecoins
Historically, September has been a challenging month for Bitcoin, often marked by consolidation or downward movements. Over the years, September has often been a month when prices go down or stay flat, with typical losses of about 5-10%. This year seems to be following that trend.
Recently, after facing resistance at the $65,000 mark, Bitcoin’s price has been falling. This decline comes as capital flows for Bitcoin have shifted towards stablecoins, suggesting that investors are becoming more cautious.
This shift shows that people are uncertain about Bitcoin and other cryptocurrencies at the moment. As a result, the market cap for stablecoins has surged to an all-time high, nearing $170 billion.
Big Sell-Offs from Mt. Gox & U.S. Govt
Another factor adding to the market’s decline is the potential for big sell-offs. The U.S. government holds a large amount of Bitcoin, over 203,000 coins worth about $12.1 billion.
Meanwhile, Mt. Gox is set to release another 46,000 Bitcoins, worth over $2.7 billion, to its creditors. Together, these two sources could flood the market with over $14.8 billion worth of Bitcoin, potentially pushing prices down even further.
Decline in On-Chain Activity
Analysts have also noticed a drop in exchange-related on-chain activity, indicating that fewer people are trading Bitcoin and other cryptocurrencies. Additionally, each recent drop in Bitcoin’s price has been deeper, and the recoveries have been weaker.
The data from August indicates that Bitcoin could be nearing a critical turning point this September, which may lead to a further decrease in demand.
Hope for Recovery
Despite the current challenges, there is still a chance for the market to bounce back. Some experts believe that if the U.S. Federal Reserve decides to cut interest rates on September 18, it could boost Bitcoin and other cryptocurrencies.
According to the FedWatch Tool, there is a 30% chance of a 50 basis point rate cut, which could trigger a rally in Bitcoin. For now, Bitcoin needs to climb back above its moving averages to start a meaningful recovery. If it succeeds, the price could rise toward $65,000 and possibly even reach $70,000.
However, the immediate focus is on maintaining key support levels. If Bitcoin fails to hold these levels, it could face further declines, with the next major support at $54,000.