These quiet market conditions can frustrate even the most experienced crypto investors. In this post, I break down how I’m seeing things and why I still expect a very strong ending to 2024 for crypto.
Key Takeaways
- These lull periods are a standard part of all bull and bear markets. They can be challenging and frustrating, but they are ultimately necessary.
- I expect the next month or two to be more of the same, especially because August and September are historically two of BTC’s worst months.
- The setup for Q4 is incredibly strong, in my opinion, and I expect prices to be significantly higher by year-end.
Contents
Trying Times For Crypto Investors
Times like these can be difficult for us crypto investors. The Nasdaq and S&P 500 have fully recouped their losses from the brutal start of August. Gold is near record highs.
Meanwhile, cryptocurrency prices are still well below where they were when the carnage started on August 2—BTC (-12.2%), ETH (-19.6%) and SOL (-15.3%)—and the Fear & Greed Index has been at ‘Fear’ or ‘Extreme Fear’ for most of August.
There’s no denying that things are quiet. Many investors have become apathetic after seeing BTC bounce around in the same price range for many months, while their altcoin holdings have fallen. Some are questioning their level of conviction.
For me, I’m fortunate to have experienced several of these months-long periods of choppiness since I started investing in crypto in 2017. Regardless of whether these periods are taking place in a bull or bear market, they never fail to test you and challenge your assumptions.
My Short-Term Outlook: More Chop
We are in a seasonally terrible period for crypto. You can’t ignore the data.
BTC really doesn’t like August and September. Taking the median average of monthly returns since 2013, August (-8.4%) and September (-5.6%) are literally the worst and second-worst months for BTC, as per Coinglass. Using the mean average, August (+1.5%) is the third-worst and September (-4.8%) is the worst.
Couple this with the fact there are currently no clear catalysts for crypto, and I expect more rangebound price action for the next month or two. For altcoins, I think it makes the most sense to wait for BTC to break above its months-long range.
Due to this lack of short-term catalysts, I expect macro to have a larger-than-typical impact on crypto prices. For this reason, the below dates may be of significance. (Emphasis on ‘may’.)
- Jackson Hole Symposium (Aug. 22–24). The annual event where the world’s central bankers convene to discuss monetary policy. These are hit-and-miss in terms of their significance.
- Trump vs Harris presidential debate (Sep. 10). If there is a clear winner, this debate will likely affect the outcome of November’s election. (There will be subsequent debates, but ultimately most voters will only remember the first—if any.)
- U.S. interest rate decision (Sep. 18). While a rate cut is all but certain, its size is still unknown. As per CME FedWatch, a cut of 25 basis points is a 74% chance, with 50 basis points a 26% chance. As always, Chair Powell’s press conference will arguably have a greater impact on markets than the decision itself.
Why I Expect Much Higher Prices By Year-End
Nothing lasts forever. This rangebound price action is no exception. When I look to Q4, I can’t help but get excited for the crypto market. Consider these factors:
- Global liquidity will have continued strengthening if the current trend holds.
- Rate cutting will have started in the U.S. and continued for many other central banks.
- Accessibility to the spot Bitcoin ETFs will have improved. Other wirehouses are expected to follow Morgan Stanley, which last week became the first to allow its financial advisors to offer Bitcoin ETFs to eligible clients. As I’ve said all year, I believe most investors are unaware of how limited access to these new ETFs is.
- Most of, if not all, Mt. Gox creditors will have received their BTC redistributions from their designated exchange. No longer will this enormous balance of ~142K BTC (~$8.3B) weigh on the minds of crypto investors.
There are some wildcards, too, such as November’s U.S. election and the possibility of regulatory progress in the U.S.
As for my outlook for beyond 2024, I expect the peak of this cycle to happen around May or June. Of course, this is subject to change based on a long list of variables. It makes zero sense to ignore these variables.
By this stage of 2024, BTC would well and truly be in the window where it typically hits its cycle high. (Of course, last cycle was an exception, and there are other reasons I’d never rely on this stat at the exclusion of all else… but I still think the below chart from _checkonchain is a useful visualisation.)
Recap
These lull periods are a standard part of all bull and bear markets. While I expect this choppiness to persist for another month or two, the setup for Q4 is incredibly strong, in my opinion. For this reason, I still expect prices to be significantly higher than year-end.