Source: Blockchain Knight.
The BTC and Crypto asset markets are undoubtedly in a challenging environment, and the seasonal changes in September have made the situation worse.
In a recent report, researchers at Kaiko explored how potential US interest rate cuts and other key economic events could affect BTC.
The four charts provided by the analysts explain the future trends of BTC in the coming weeks.
According to Be In Crypto's report, the third quarter has always been challenging for BTC and the broader Crypto asset market, and September is often the worst time for returns. Kaiko emphasizes that BTC has fallen in September for seven out of the past twelve years.
In 2024, this pattern continues as BTC fell 7.5% in August and has fallen 6.3% so far in September.
So far, the trading price of BTC has dropped 20% from its all-time high of nearly $73,500 set over five months ago.
However, according to Kaiko Research, the upcoming US interest rate cuts may boost risk assets such as BTC. Alvin Kan, Chief Operating Officer of Bitget Wallet, also holds the same view.
At the Weibo conference in Jackson Hole, Fed Chairman Jerome Powell hinted at the possibility of policy adjustments, triggering expectations of future interest rate cuts. The US dollar index plummeted sharply, currently fluctuating around 100.
Kan stated, "As the September rate cut becomes a consensus expectation, the official start of rate cut trades may improve overall market liquidity, providing momentum for Crypto assets."
The report shows that September will be a highly volatile month, with BTC's 30-day historical volatility soaring to 70%. This indicator measures the price volatility of assets in the past 30 days, reflecting the sharp price fluctuations during this period.
BTC's current volatility is nearly double that of last year, and is approaching the peak in March, when BTC hit a historical high of over $73,000.
Ethereum has also experienced dramatic fluctuations, surpassing the levels of March and BTC. This is mainly driven by specific events for Ethereum, such as Jump Trading's liquidation and the launch of Ethereum ETFs.
Since early September, BTC's implied volatility (IV) has risen after a decline in late August. The IV indicator measures the market's expectations of future price volatility based on current options trading activity.
The higher the IV value, the greater the traders' expectations of future price volatility, but it does not indicate the direction of the volatility.
It is worth noting that the largest increase in short-term option expiration dates is on September 13, jumping from 52% to 61%, surpassing the end-of-month contracts.
For ordinary people, when the short-term implied volatility exceeds the long-term volatility, it indicates an increase in market pressure, which is called an "inverted structure".
Risk managers typically view the inverted structure as a signal of increased uncertainty or market pressure. Therefore, they may interpret this as a warning to reduce the risk exposure to unstable assets or hedge potential downside risks to reduce the risk of the investment portfolio.
Kaiko researchers pointed out, "Market expectations align with last week's U.S. employment report, which dampened hopes for a 50 basis point rate cut. However, the upcoming U.S. CPI data could still influence market expectations."
The BTC trading volume chart also highlights the volatility of the current market, showing an increase in trader participation. The cumulative trading volume is approaching a record-breaking 3 trillion US dollars, with a nearly 20% increase in the first eight months of 2024 since reaching the previous peak in 2021.
Traditionally, BTC investors view rate cuts as positive market catalysts. However, the market is still concerned about the interpretation of rate cuts exceeding expectations.
Markus Thielen, founder of 10X Research, warns that a 50 basis point rate cut could be seen as a signal of urgency and could trigger a pullback in risk assets such as BTC.
Thielen said in a statement to clients, "Although a 50 basis point rate cut by the Federal Reserve may signal deeper concerns to the market, the Fed's primary mission is to mitigate economic risks, not manage market reactions."
In addition to interest rate speculation, other factors causing fluctuations in the Crypto assets market include the upcoming election in the usa.
According to reports, the debate between Trump and Harris is expected to cause market volatility, especially for BTC and ethereum.