Key Points
- Bitcoin traders’ activity has decreased due to ongoing price consolidation.
- Seasonality and the ‘sell in May and go away’ mantra are cited as reasons for Bitcoin’s weak performance.
Since the major sell-off in early August, Bitcoin (BTC) has been struggling to maintain a price above $60K. This stagnant price action has continued into the first half of September.
A report from Glassnode suggests that this lackluster price action has resulted in a “reduced trading appetite” amongst BTC traders. The report points to lower crypto exchange volumes as evidence of this decline in investor demand and speculative trading.
Weak Demand and Increased Sell Pressure
The report further explains that crypto exchanges are central to price discovery and speculative activity. Therefore, a decrease in volume on these platforms indicates weak demand from BTC traders and investors.
Glassnode also observed an increase in sell pressure in the spot market throughout August and the entire third quarter. The Cumulative Volume Delta (CVD), a metric that measures the net balance between buy and sell volumes, was predominantly negative in Q3.
Seasonality Affects BTC Performance
Bitwise suggests that seasonality may be a contributing factor to BTC’s poor performance in Q3, especially in September. The asset management company noted that BTC typically yields negative returns in August and September.
This trend aligns with the general trend of poor summer performance across all assets, as investors often adhere to the ‘sell in May and go away’ strategy. However, October has historically been a strong month for BTC, with an average return of nearly 30%.
If this pattern continues, it could indicate a strong rebound for BTC in Q4. However, crypto trading firm QCP Capital warns that the upcoming US election could trigger a risk-off event. According to QCP Capital, the lack of a clear frontrunner and unclear policy positions from both parties could lead to a risk-off move in risk assets as Election Day approaches.
At the time of writing, BTC is trading at $57k, just hours before the release of the US August CPI (Consumer Price Index) data.
