Despite strong September gains, Bitcoin faces uncertainty in the near term
Key receivers
Bitcoin's recent price surge has been driven primarily by institutional investors, not retail. Despite geopolitical tensions and market uncertainty, Bitcoin recorded a 7% gain in September.
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Despite Bitcoin's rally near $66,000, key indicators suggest it is not ready for a new all-time high. Stable coin data focused on China and low retail participation point to a slowdown, while broader global demand remains muted.
Although institutional investors have fueled recent Bitcoin price hikes, the situation in China is different. Stablecoins such as USDT have been trading at a discount in China, which typically reflects bearish sentiment. This lack of interest contrasts with earnings from US spot ETFs, suggesting that broader global investor interest in crypto may still be muted.
Ironically, China remains a major hub for global markets, with the Chinese government's recent economic stimulus leading to historic stock buybacks.
Chinese ETF call volume hit 3.4 million contracts last week, the highest since 2020, according to a report tweeted by Kobeisi Letter. The likes of $FXI and $KWEB rose 18.5% and $KWEB rose 18.5% and 26.8%, respectively, while China's CSI 300 index posted its best week since 2008. It showed an increase of 15.7 percent. Despite this boost to Chinese equities, Bitcoin's price still faces challenges in aligning with broader market optimism.
Retail investor participation, a key indicator of market excitement, remains subdued. During past bull markets, retail activity has increased, with Coinbase ranking as the number one downloaded app. Currently, the Coinbase app is ranked 417th, down from its peak during previous rallies.
Data on the chain also showed that short-term bond supply was also shrinking, indicating that retail investors are not yet stacking up. The lower retail activity indicates that Bitcoin's rally may still have room to grow before hitting the top.
Bitcoin fell 3% today as rising tensions in the Middle East, particularly Israel's airstrikes on Beirut, sent shockwaves through global markets. In times of extreme geopolitical uncertainty, investors seek safe haven assets like gold and government bonds, avoiding risky investments like crypto.
Additionally, US traders are bracing for key economic updates, including jobs data and Fed Chairman Jerome Powell's guidance on interest rates, released earlier today. Powell stressed that the Fed is not on a fixed path and that it will assess conditions as they evolve, potentially reducing them based on incoming data. With traders anticipating a 25-basis-point rate cut, this cautious approach has left the market on edge, contributing to continued uncertainty.
Regardless of Bitcoin's recent dip, the token is still poised to close September with a 7% gain, its best performance since 2013, according to CoinGlass metrics. Historically, October has been a strong month for Bitcoin, which has earned the nickname “Uptober” due to a series of positive reactions.
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