Macro crypto currency market outlook

Bitcoin remains confined to a well-defined uptrend, with setbacks exceptionally well supported into dips. The most recent round of meaningful weakness has bottomed out at $49,050 and a higher low is now sought out ahead of an eventual push to a fresh record high. Above the $73,840 record high from March would open the next measured move upside extension targeting $95,000. Only a weekly close back below $49,050 would delay the bullish structure.

August was a tough month for crypto assets. Bitcoin closed the month down nearly 9%, while ETH was hit much harder, down 22%. On the one hand, the weakness didn’t come as much of a surprise given historical performance warning of a tough August. Looking back at bitcoin monthly performance from 2013 to 2023, August had been the worst performing month on a median return basis. Thus, the stage was already set for some ugly price action in the thinner summer month.

Of course, the weakness in bitcoin filtered through to the rest of the crypto market as well. Yet, the interesting thing about the price action in August was that there really weren’t too many negative headlines to justify the bearish price action. Indeed, there were some outflows in the bitcoin and ETH ETFs. However, at the same time, we continued to see signs of more institutional adoption, more interest from traditional market participants, and a warmer political climate with the Harris campaign making its own efforts to embrace crypto friendly policy.

Perhaps even more interesting is the fact that crypto assets traded lower in August despite a well offered US Dollar and a strong bid in US equities. If anything, the silver lining here is that it shows more evidence of crypto assets being uncorrelated with traditional assets, something that should be viewed as a net positive for traditional investors seeking portfolio diversification. It’s also worth highlighting that even with all the August weakness, bitcoin remains the standout outperformer year-to-date, up some 37% versus gold (+16%) and the S&P500 (+14%).

Looking ahead, it’s possible we see more chop in September before an end of year surge in demand. September is bitcoin’s worst month on an average return basis since 2013. The good news here is that September 2023 was a positive month, perhaps marking an end to the bad streak. The other good news is that bitcoin shines bright when it comes to performance in the fourth quarter.

Technically speaking, the outlook remains highly constructive for both bitcoin and ETH and the current weakness is viewed as nothing more than setbacks within a bullish consolidation. As per today’s technical insights, evidence of a stronger ETH relative to bitcoin is a welcome development as it often reflects a market with a healthier appetite for investment in the crypto space.