The last quarter of the year is often a bullish one for digital assets. This means that the majority of price gains are achieved in Q4 and Q1 of a year, so that market participants anticipate this cyclical behaviour. Whether this will materialise will be exciting to watch, but above-average volatility should be expected, so appropriate risk management precautions must be taken.
Thought of the week
Digital Asset News
BlackRock’s iShares Ethereum ETF has surpassed the $1bn mark in assets under management in just two months, establishing itself as the leading crypto investment product. At the same time, the SEC has postponed its decision on options trading on Ethereum ETFs, creating uncertainty about the further expansion of the market. A key factor in the rapid success of the iShares Ethereum ETF is the growing demand for spot ETFs that allow direct investment in the underlying asset – in this case, Ethereum. These products offer a straightforward way to invest in cryptocurrencies without having to deal with the complexity and risks of buying and holding Ethereum directly. Through regulation by the US Securities and Exchange Commission (SEC), these ETFs have gained the trust of a broad investor base, particularly institutional investors who have been hesitant to enter the volatile crypto market, and despite the ETF’s success, the SEC recently postponed its decision to allow options trades on Ethereum ETFs. These decisions affect not only BlackRock’s iShares Ethereum ETF, but also similar products such as the Bitwise Ethereum ETF and the Grayscale Ethereum Trust. The new dates for the decisions have been postponed to November 2024.
The Bitcoin price is currently walking a dangerous tightrope, because while many traders are confident that the crypto market leader will soon continue to rise, others are warning that a crash back to USD 60,000 is still within the realms of possibility.
These prophecies of doom come just after BTC climbed back above USD 65,000 on 26 September for the first time since the beginning of August.
Analysts at the crypto exchange Kraken comment soberly on the current price trend:
‘The current price range is quite narrow, indicating indecision in the market. This indecision is in turn confirmed by a series of small doji candles that have appeared on the daily chart.’ The analysts also explain that a daily close above USD 65,000 “could likely consolidate the bullish momentum and clear the path to the upside.” Nevertheless, the experts at Kraken explicitly warn that Bitcoin needs a “significant” jump above USD 65,000 to avoid a crash back to USD 60,000.
In their opinion, the Bitcoin price is ‘in a balancing act, which is why traders should observe the next price movements very closely in order to get an important indication of the further direction of travel’.
Capital inflows for the new Bitcoin spot ETFs currently total USD 365.7 million, which at least proves that institutional interest in the crypto market leader appears to be unbroken.
The latest capital inflows were the largest since mid-July, when a whopping USD 486 million flowed in. At the same time, this was the sixth consecutive day of positive net capital inflows, which further emphasises the strength of the Bitcoin index funds.
According to the Fed Watch Tool, the financial markets are currently expecting the Federal Reserve to cut interest rates by a further 50 basis points after the Core PCE Index, a key inflation indicator for the Fed, fell short of forecasts. With a year-on-year increase of 2.6%, just below the expected 2.7%, the new inflation data makes a further aggressive rate cut more likely. The market is split, with 53% backing a rate cut of 50 basis points and 47% favouring a milder cut of 25 basis points.
At the same time, the Dow Jones reached a new all-time high, gaining almost 183 points. The current economic measures taken by the Chinese central bank PBoC also contributed to the rally in risk assets.
There is relevant political news not only in the USA and China, but also in Japan. The possible future Prime Minister Shigeru Ishiba is known for his critical stance towards the Bank of Japan’s extremely loose monetary policy. Should he take the helm, this could mean the end of the low interest rate policy in Japan, which would put the global markets under pressure again, as the Yen-Cary trade could no longer be profitable. Many investors are currently borrowing cheap money from Japan and investing it in risk assets such as cryptocurrencies and US equities, but also in government bonds. These investments would have to be sold if the low interest rate policy in Japan were to end in order to service the loans.
Developments on the financial markets also had a positive effect on the crypto market. Bitcoin rose above the USD 66,000 mark and Ethereum remained stable at USD 2,700. At the same time, Bitcoin ETFs recorded massive inflows of USD 494.4 million. Ether ETFs also followed suit, albeit at a slower pace, closing the week with $58.7 million in inflows.
Ethereum’s implied volatility increased by 8%, indicating that the market situation remains unstable. Nevertheless, the ETH/BTC ratio remains stable above 0.04, showing that the markets are able to maintain a certain balance despite the uncertainty.
Digital Asset Market:
Market report including trading idea
The majority of digital assets experienced positive trends and thus upturns in September. These came about for several reasons. Among other things, the historically and cyclically weak ‘summer quarter’ is coming to an end and the last and therefore one of the stronger quarters for digital assets is just around the corner. In addition, the US Federal Reserve announced that key interest rates had been cut by 0.5%, ushering in a new era in monetary policy. Meanwhile, the Chinese government is trying with all its might to strengthen the property sector and the economy through large capital injections. This ‘new’ sponge of capital is driving the markets in the short term and thus ensured a positive September, which was an unexpectedly strong month in fundamental terms.
This does not mean that low interest rates should be expected again quickly, but it will drive the markets in the medium term, as the past crises have now finally been overcome.
Jerome Powell’s ‘announcement’ that the US Federal Reserve is considering further interest rate cuts and has published its expectations for the period up to 2028 has once again led to markets being analysed with confidence and a long-term view, resulting in a fundamentally optimistic mood in the digital asset market. This means that we are now facing a month that has historically been a positive one for digital assets and, in cyclical terms, the last quarter of the year will also be dominated by bullish price movements. The fundamental strengthening of the market must therefore be confirmed. Expectations for the markets are high, but they are close to / at all-time highs. If these expectations are not met, a few setbacks could still be expected, but the overall trend remains positive!
Institutional investments in the Bitcoin and Ethereum spot ETFs rose again over the course of September and should continue to rise in the coming weeks, which would support the positive trend. If these factors create an overall picture, Bitcoin could jump back above the $70,000 resistance level over the course of the month and set course for a new all-time high.
The message for the coming month is that altcoins in particular, which have not been able to keep pace with Bitcoin, could outperform if they are positive!
Chart technology
From a chart technical perspective, Bitcoin is now well above half of the $60,000 support zone and was thus able to shape September positively and confirm important zones, allowing bullish momentum to build up. It is currently not very useful to categorise the market using classic indicators, as the market is dominated by momentum and cyclically anticipated positivity. In the coming weeks, analyses should therefore always take into account that support and resistance zones are the most important parameters for anticipating short-term price developments.
The zone between $60,000 and $65,000 is a strong springboard towards an all-time high should the momentum turn into an above-average positive and long-term trend. However, should the global financial markets suffer setbacks (historically, price trends after interest rate cuts are often slightly negative in the short term, but very positive in the long term), sell-offs to ~$57,000 cannot be ruled out. However, the momentum would not change here, but would strengthen the support level and provide good entry points for the coming months. A look at altcoins in particular makes it clear that they run contrary to Bitcoin’s performance and appear more lucrative in terms of the risk/reward ratio, but they often lack institutional capital, making price movements more volatile.
The general optimism and the categorisation at the current price level should mean that with suitable strategies and risk management, October will provide opportunities to position oneself in the market for digital assets.
The next price targets in the event of a positive development: ~$66,000, ~$68,500, ~$71,000
The next price targets in the event of negative performance: ~$62,500, ~$60,000 ~$59,000
Trading idea
Bitcoin after setbacks and high-cap altcoins could offer good entries in the coming weeks, especially after trend reversals and momentum growth.
Weekly overview
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